cpa audit ch 7 review 6
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Many entities use the Internet as a network to transmit electronic data interchange (EDI) transactions. An advantage of using the Internet for electronic commerce rather than a traditional value-added network (VAN) is that the Internet
Permits EDI transactions to be sent to trading partners as transactions occur.
VAN services have typically used a proprietary network or a network gatewayed with a specific set of other proprietary networks. A direct Internet connection permits real-time computer-to-computer communication for client-server applications, so transactions can be sent to trading partners as they occur.
In auditing an entity’s computerized payroll transactions, an auditor would be least likely to use test data to test controls concerning
Control and distribution of unclaimed checks.
If wages are not directly deposited into employees’ bank accounts, paper checks must be physically distributed by the cash disbursements function. Any unclaimed checks should be turned over to an appropriate custodian for safe storage. Accordingly, the test data approach does not apply to the control and distribution of unclaimed checks. It is a method of testing computerized controls by processing dummy transactions, some of which should result in error listings.
What internal control activity most likely justifies reducing the assessment of the risks of material misstatement for plant and equipment acquisitions?
Periodic physical inspection of plant and equipment by the internal audit staff.
A periodic physical inspection by the internal audit staff is the best activity for verifying the existence of plant and equipment. Direct observation by an independent, competent, and objective internal audit staff helps to reduce the potential for fictitious acquisitions or other fraudulent activities. The result is a lower assessment of the RMMs.
The CFO’s ability to override internal control is a-------------------------------- .
What are appropriate questions on an internal control questionnaire concerning purchase transactions?
.Are an approved purchase requisition and a signed purchase order required for each purchase?
Are all goods received in a centralized receiving department and counted, inspected, and compared with purchase orders on receipt?
Are prenumbered purchase orders and receiving reports used and accounted for?
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