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a) A micro-computer (including laptop) may be used by the auditor in the following ways to assist his audit work: -
1. Flowcharting clients systems
Specialist flowcharting packages can assist the auditor in the production of clear, well presented flowcharts. The use of such packages ensures that the flow charts are legible and can be easily updated when systems change, unlike manually produced flowcharts.
2. Preparation of audit programmes
Audit programmes can be typed into a word processor, which again will allow for easy updating in the following years. Some firms may also have standard audit tests kept on a database within the word processor when such tests are required, they are simply copied into the audit program.
3. Analytical procedures
A standard template can be set up on a spreadsheet package. Onto this template, the auditor inputs key details such as balance sheet totals from the financial statement. The spreadsheet then calculates key accounting ratios to assist the auditor with the analytical procedures.
4. Preparation of audit working papers
Word processing packages can be used in documenting the audit evidence gathered.
5. Preparing correspondences with the client such as faxes, management letters and engagement letter among others.
6. In random sample selection statistical packages can assist in sample selection and in performing the required mathematical computations
b)
i. Embedded audit facilities
This module is a CAAT in which code prepared by the auditor is embedded in the client's software. The code may be designed, for example, to replicate a specific aspect of a control procedure, or to record details of certain transactions in a file accessible only to the auditor. Thus, it may be used as both a test of control or as a substantive procedure. (This CAAT is particularly applicable to continuous auditing.
ii. Integrated test facilities (ITF)
Is a facility forming part of the client's software that enables the auditor's test data to be integrated and processed with the client's live input data. The facility ensures that the test data updates special dummy files, rather than actual operating files. The dummy files are examined to ensure that the test data has been processed in the manner expected. This procedure provides evidence of the effectiveness of design of programmed control procedures as well as aspects of the effectiveness of operation.
c)Types of audit software
1. A spreadsheet package
This provides the auditor with a large worksheet which he can be able to use to carryout mathematical functions regarding his audit work such as casting client ledgers and carrying out analytical procedures.
2. Word Processing
This is a package that enables the auditor to carry out his word processing work such as editing, copying, typing and typesetting
d) The controls that must be exercised by the auditor include:
1. Back up of files
Backup copies of all audit files kept on the computer should be made regularly at least once per day. These backup copies should be kept in a separate location from the microcomputer or laptop. If the microcomputer is lost or damaged, the copy
files will be used to continue work on that client. When an audit is finished, the client files are taken off the computer to make room for the next clients‘ files, at least two or three backup copies should be made to ensure that if one copy becomes corrupted or lost, then the files can be retrieved from the second copy of the files.
2. Security of files
Audit information on clients can be very sensitive. Adequate procedures must therefore be in force to ensure that only authorized audit staff can gain access to the audit information. All audit computers should therefore be protected by passwords and disks with client data stored in safe locations e.g. in a fireproof safe. Care must also be taken to ensure that computers holding client data are not stolen. If a computer is left at a client‘s premises overnight, then it should either be locked in a safe or securely chained and padlocked to a table
3. Adequacy of information
There is a danger with computers that not all the data or reasoning used to reach a particular decision will be documented. This can arise due to lack of ability to use the system. Adequate documentation must therefore be kept including print outs of all major documents for future reference, together with the reasons for decisions made.
4. Testing of programs
Before any program is used on audits, it should be tested to ensure that it is as far as possible error free.
Wilfykil answered the question on February 21, 2019 at 12:34
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