CHAPTER 9 AUDITING COMPUTER-BASED INFORMATION SYSTEMS SUGGESTED ANSWERS TO DISCUSSION QUESTIONS 9.1 Since most organizations make extensive use of computer-based systems in processing accounting data, it is essential that computer expertise be available in the organization's audit group. Such expertise should include: * Extensive knowledge of computer hardware, software, and accounting applications
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It is a type of fraud that involves the crediting of one account through the abstraction of money from another account. An attempt to hide missing funds by delaying the recording of cash receipts in a business's books. Continuous audit: An auditing process that examines accounting practices continuously throughout the year. Continuous audits are usually technology-driven and designed to automate error checking and data verification in real time. Independence in appearance: The auditor’s ability
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the low 30s. If the large majority of my contemporaries are employed by accounting / auditing rms, why is the pass rate so low? And what chance do I have - I have absolutely no auditing experience at all?” ‣ around 70% - 75% of your contemporaries are employed by audit rms. Yet there is a pass rate in the low 30s. Does this not tell you that, even if no non-auditors were to pass, the majority of those with auditing experience still fail? there have to be some underlying reasons for this! ‣ •
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Company’s History WorldCom, a long distance discount telephone service, was founded by Bernard Ebbers in 1983. Bernard Ebbers became the CEO in 1985 and the company went public in 1989. Bernard Ebbers was also listed in Forbes as one of the richest men in the U.S. At its peak, WorldCom had about 20 million customers and 80,000 employees and was the second largest long distance carrier in the U.S. WorldCom grew largely by aggressively acquiring other telecommunication companies like MCI Communications
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http://pcaobus.org/Standards/Auditing/Pages/default.aspx 1. After the report release date – can the auditor delete or discard or add information to the audit work papers? Information cannot be deleted or discarded from the audit work papers after the report release date, but information can be added to the work papers after the release date. 2. Certain audit matters may be documented in a central repository for the public accounting firm or in the particular office participating
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that generates reliable information for decision-making purposes. The importance of internal control to the auditor is rooted in the second standard of fieldwork. The controls that are relevant to the entity's ability to initiate, record, process, and report financial data consistent with management's assertions are the auditor's main concern. The auditor needs assurances about the reliability of the data generated within the entity's internal control system in terms of how it affects the
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U.S. VS. International Auditing Standards 4-22-08 In the last few years, the world's financial centers have grown increasingly interconnected. This increase in the global business climate can attributed in part to dramatic changes in the business and political climates, increasing global competition, the development of more market-based economies, and rapid technological improvements. With the seemingly unlimited advances in technology, it has become feasible and in most cases very necessary
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CHAPTER 1 The Role of the Public Accountant in the American Economy Review Questions 1–1 The “crisis of credibility” largely arose from the number of companies that restated their previously issued financial statements as a result of accounting irregularities and fraud. Especially responsible were the very visible Enron and WorldCom fraud cases. Both companies filed for bankruptcy and constituted the largest companies in American history to do so. The extent of the accounting
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Financial statements are produced internally by a company’s accounting department and certified to be accurate by the CEO and CFO. The information contained in the financial statements is used by investors, management, creditors, and the government to make decisions. An audit from and independent firm gives these users of the financial statements a level of assurance that the information is presented fairly, in accordance with GAAP, and free from material error as well as an opinion on the internal
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Chief Auditor of the Public Company Accounting Oversight Board. His responsibility as Chief Auditor was to advise the Board and the head of the PCAOB’s professional standard-setting division on matters of policy and technical issues relating to the auditing of public companies as well as what the auditor’s role was. His role of advisor helped keep the PCAOB from being influenced by the accounting industry and their standards. 2. What does Carmichael see as the underlying mission of the PCAOB?
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