Briefly describe three strategies for testing internal contr
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Briefly describe three strategies for testing internal controls when information technology is used for significant accounting processing.
Identify two strategies that might be used to support a low control risk assessment. Discuss the difference between the two strategies.
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.
What are the advantages and disadvantages of the computer-assisted audit technique known as parallel simulation?
What is the difference between the conventional test data approach and the integrated test facility approach?
In lieu of traditional testing, what approaches can be used in on-line entry/on-line processing systems?
List the steps involved in selecting and evaluating a nonstatistical or a statistical sample for tests of controls. Identify the professional judgments that must be made associated with each step.
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Solution Summary
Briefly describe three strategies for testing internal controls when information technology is used for significant accounting processing.
Identify two strategies that might be used to support a low control risk assessment. Discuss the difference between the two strategies.
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.
What are the advantages and disadvantages of the computer-assisted audit technique known as parallel simulation?
What is the difference between the conventional test data approach and the integrated test facility approach?
In lieu of traditional testing, what approaches can be used in on-line entry/on-line processing systems?
List the steps involved in selecting and evaluating a nonstatistical or a statistical sample for tests of controls. Identify the professional judgments that must be made associated with each step.
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**Briefly describe three strategies for testing internal controls when information technology is used for significant accounting processing.
1) The main strategy should be to assess the level of control risk directly based on user controls.
2) The auditor can also plan for a low risk control assessment on user controls which allow the auditor to determine which application controls need further review and analysis.
3) The auditor can plan for a high risk control assessment that is based on the general controls, and not user controls. This is primarily executed by assessing the evidence that has been obtained so far in the audit.
**Identify two strategies that might be used to support a low control risk assessment. Discuss the difference between the two strategies.
1) A low control risk assessment can be determined by evaluating user controls, which would include documentation obtained from management and from other internal source documents.
2) A second strategy would be to assess the control risk by evaluating the information technology controls.
- The difference between the two strategies is that with the first strategy, the auditor is gathering sufficient evidence to determine the effectiveness of the user controls, and in the second strategy, the main focus of the assessment is on the actual computer controls, and not on the user's controls.
**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 ...
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