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) assessing control risk based on user controls, (2) planning
for a low control risk assessment based on application controls, (3) planning 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
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) assessing control risk based on user controls, (2) planning
for a low control risk assessment based on application controls, (3) planning 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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Document Details
University
Grand Canyon University
Subject
Accounting