INF2004F Summary Notes.docx

Scope and objectives of audit 2 collection of audit

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Scope and objectives of audit 2. Collection of audit evidence: Observation Reviewing documentation Re-calculations Physical examination 3. Evaluation of evidence: Auditor’s conclusion Evidences that support or do not support 4. Communication of results: Written report Recommendations to management Computer audit software: Computer assisted audit software that can perform audit tasks on a copy of company’s data can be used to: 1. Query data files and retrieve records based upon specified criteria
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2. Create, update, compare, download and merge files 3. Summarize, sort and filter data 4. Access data in different formats and convert to common format 5. Select records using statistical sampling techniques 6. Perform analytical tests 7. Perform calculations and statistical tests Risk based framework: Identify fraud and errors (threats) that can occur and threaten each objective Identify control procedures (prevent, detect, correct the threats) Evaluate control procedures Review to see if control exists and is in place Test controls to see if they work as intended Determine effect of control weaknesses Compensating controls Compensating control: A control that is designed to satisfy the requirement for some other control deemed to difficult or impractical to implement Segregation of duties=internal control designed to prevent error and fraud by ensuring that atleast 2 individuals are responsible for the separate parts of any task. Fraud and error are risks in payroll management. To mitigate that risk e.g. a company may have an employee responsible for the accounting portion of the job and another responsible for signing checks. Segregation can be difficult for companies with small staff. Therefore, compensating controls may include maintaining and reviewing logs and audit trails
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Information Systems Audit: Review and evaluate internal controls that protect the system In order to meet following objectives: Threats Controls Protect overall system security Theft of hardware Damage of hardware (accidental and intentional) Loss, theft and Unauthorised access to programs and data Unauthorised modification or use of programs and data files Unauthorised disclosure of confidential data Interruption of crucial business activities Limited physical access to equipment Use authentication and authorisation controls Data storage and transmission controls File backup and recovery procedures Insurance Disaster recovery plan Virus protection and firewalls Preventative maintenance Program development and acquisition occur under management authorisation Negligent programming errors not resulting from or achieved through deliberate planning e.g. buffer overflow Unauthorised program code Review software license agreements Management authorisation for program development & software acquisition Management authorisation and approval for modifications
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