Page 38 - DCOM204_AUDITING_THEORY

Auditing Theory

Notes 2. Completeness: The objective deals with including all transactions and files in the final
function point count. It is important that the application team review the final function
point count to insure all transactions and files have been included. The valuation and
completeness objectives emphasize opposite audit concerns. Valuation deals with potential
overstatement and completeness with unrecorded transactions and files.

3. Classification: Classification involves determining whether all transactions and files have
been correctly classified. It is important to make sure the external input and external
interface file have been classified correctly for example.
4. Rating: This objective deals with determining if the transactions and files were appropriately
ranked as low, average or high. To complete this objective a detail examination of the data
elements and files referenced.
5. Mechanical Accuracy: Testing the mechanical accuracy involves rechecking a sample of
the computations and transfers of information from one document to the next. Rechecking
of computations consists of testing the original function point counters arithmetical
accuracy. This is most important if an automated tool was not used while counting function
points.

6. Analytical Analysis: This procedure is another way that a function point count can be
validated. For example, the ratio of external inputs, external output, external inquiry,
internal logical file, and external interface file can be compared with other applications
meeting similar business needs. Also, the general system characteristics can be reviewed
and compared to similar applications. Analytical procedures should be performed early
in the audit so to help the auditor determine areas that need to be more thoroughly
investigated.

Self Assessment

Fill in the blanks:
10. All evidence should be evaluated based upon ....................; ....................; ....................;
....................; ....................; .................... .

11. Testing the .................... involves rechecking a sample of the computations and transfers of
information from one document to the next.
12. Auditors shall conduct the audit of the financial statements of an entity with ....................;
.................... and ....................

2.8 Auditing in Depth

Audit in depth involves the examination of books of accounts in depth. Such a system of checking
is adopted in big business houses, where detailed examination of all the records in not possible.
This system of checking is undertaken with a view to check the incidence of errors or frauds in
the books of accounts.

2.8.1 Base of Audit in Depth

The technique of audit in depth is based on test checking. It is very difficult for an auditor to
make detailed examination of all the record of a big business house. Thus, the auditor has to
verify about the reliability of internal check. Along this, he selects some items on the basis of
random sampling. After that the auditor makes a detailed examination of all the records.

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