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Assertions about account balances at the end of the period

Existence, rights and obligation, completeness, valuation and allocation

The electronic exchange of transactions, from one entity’s computer to another entity’s computer through an electronic communications network

Electronic Data Interchange (EDI)

A collection of data that is shared and used by many different users for different purposes

Database

Communication system that enables computer users to share computer equipment, application software, data, and voice and video transmissions

Network environment

Types of CIS application controls

controls over input, processing, and output

What happens to the overall objective and scope of an audit in a CIS environment?

Do not change

File system with exclusive access to and use of individual data

Flat file system

Transactions are accumulated and processed in a group

Batch processing system

Exists when a computer of any type or size is involved in the processing by the entity of financial information of significance to the audit, whether the computer is operated by the entity or by a third party

CIS environment

Which type of analytical procedures is not required for every audit?

Substantive analytical procedures

Criteria of control (CoCo) framework originated from which country?

Canada

PSA 315 is based on which internal control framework?

COSO ICIF

Audit approaches in relation to control risk assessment

Reliance and no reliance approach

Two Possible Risk Assessments

Maximum (high) control risk assessment; Below the maximum (less than high) control risk assessment

Understanding of the design and operation/implementation of internal controls would help the auditors identify

Potentially reliable controls

Tests of control are performed to obtain audit evidence about the effectiveness of the

Design and operation/implementation of controls

The auditor should document his understanding of internal control. The extent of documentation is a matter of the CPA’s judgment and the form of documentation depends upon

Preference and skills

Includes considering whether controls are operating as intended and that they are modified as appropriate for changes in conditions

Monitoring of controls

The policies and procedures that help ensure that management directives are carried out, for example, that necessary actions are taken to address risks that threaten the achievement of the entity’s objectives

Control activities

Involves providing an understanding of individual roles and responsibilities pertaining to internal control over financial reporting

Communication

Consists of infrastructure (physical and hardware components), software, people, procedures, and data

Information system

Risks can arise or change due to circumstances such as

Changes in operating environment, New personnel, New or revamped information systems, Rapid growth, New technology, New business models, products, or activities

Process for identifying and responding to business risks and the results thereof

Entity’s risk assessment process

Includes the attitudes, awareness, and actions of management and those charged with governance concerning the entity’s internal control and its importance in the entity

Control environment

Internal Control Components (PSA 315)

Control environment; Entity’s risk assessment process; Information system, Control Activities, Monitoring

All the policies and procedures adopted by the management of an entity to assist in achieving management’s objective of ensuring, as far as practicable, orderly and efficient conduct of its business, etc.

Internal Control System

Series of tasks and records of an entity by which transactions are processed as a means of maintaining financial records

Accounting system