Internal Control

1 Explain how client internal controls can be improved through the proper installation of IT.

2 Identify risks for accounting systems that rely heavily on IT functions.

3 Define what is meant by an audit trail and explain how it can be affected by the client’s integration of IT.

4 Distinguish between random error resulting from manual processing and systematic error resulting from IT processing and give an example of each category of error.

5 Identify the traditionally segregated duties in noncomplex IT systems and explain how increases in the complexity of the IT function affect that separation.

6 Distinguish between general controls and application controls and give two examples of each.

7 Identify the typical duties within an IT function and describe how those duties should be segregated among IT personnel.

8 Explain how the effectiveness of general controls affects the auditor’s tests of automated application controls, including the auditor’s ability to rely on tests done in prior audits