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ACC 491 Internal Controls, Audit Techniques, and Sampling Methods in Auditing

An assignment focused on internal controls, audit techniques, and sampling methods in the context of auditing.

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    ACC 491 Internal Controls, Audit Techniques, and Sampling Methods in Auditing ACC 491 Week 5 Individual Assignments From the Text Learning Check 11 - 6 a. Briefly describe three strategies for testing internal controls when information technology is used for significant accounting processing. The three strategies for testing internal controls when information technology is used for significant account processing are: (1) a ssessing control risk based on user controls , (2) p lanning for a low control risk assessment based on application controls , (3) p lanning for a high control risk assessment based on general controls and manual follow - up . b. Identify two strategies that might be used to support a low control risk assessment. Discuss the difference between the two strategies. Two strategies that might be used to support a low control risk assessment are the user controls and the application controls. When testing user controls auditors can test the controls directly and there is no need to test the complexity of computer programs. When testing the application controls, auditors must test the computer application controls, the computer general controls, and test the manual follow - up or exceptions noted by application controls. c. Discuss a third audit strategy that might be used to assess control risk at a high level. Explain why this strategy will not support a low control risk assessment. The third audit strategy that might be used to assess control risk at a high level is the general controls and manual follow - up procedures. This strategy will not support a low control risk assessment because it is a detailed test where the auditor learns about the effectiveness general controls and manual follow - up procedures. In addition, while testing general controls the auditor also learns about the effectiveness of the design and testing of application controls. Learning Check 11 - 8 What are the advantages and disadvantages of the computer - assisted audit technique known as parallel simulation? Some advantages of parallel simulation are that the auditor can verify data by tracing them to source documents and approvals, the sample size can be greatly expanded at little costs, and the auditor can run the test independently. Some disadvantages of parallel simulation is that there is a possibility that the client’s system may perform operations that are beyond the capacity of the auditor’s software, and the auditors have to make sure that the data selected for simulations are representative of actual client transactions. Learning Check 11 - 9

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