New Staff Training - D3 - 04 Jul 23

Why we confirm our understanding of routine and non-routine SCOTs?

• Confirm the SCOT is correctly documented

• Test whether our documentation reflects what actually occurs

• Assess whether we have identified relevant WCGW

• All above

What is IT-dependent manual control?

• Controls that support the continued functioning of application and IT-dependent manual controls and the production of complete and accurate information produced by the entity.

• Manual controls are operated entirely by a person without reliance on the entity’s IT environment. However, manual controls may use IT-produced information from third parties

• Manual controls that are dependent upon complete and accurate processing to be fully effective

• Application controls are automated actions of the entity’s IT applications that occur without manual intervention and relate to procedures used in the critical path of transactions or other financial data.

Please select Control Objective and Type Activity applied for control below:

Month end journal entries are prepared and recorded in the General Ledger with adequate supporting documentation and are approved by a manager (or delegate) in accordance with the Journal Entry Policy.

• IT-Dependent Manual, Prevent

• IT-Dependent Manual, Detect and Correct

• Manual, Detect and Correct

• Manual, Prevent

How do we confirm our understanding?

• Making inquiries designed to identify any changes in the critical path of each routine and non-routine SCOT since the prior period. These are referred to as probing inquiries.

• Performing walkthrough procedures by selecting one transaction and tracing that transaction along its critical path, and observing them performing their duties.

• We can also confirm our understanding of a SCOT using data analytics. As we review the process map, we can validate the information documented in management’s narrative, ensuring that the narrative properly reflects the flow of the SCOT.

• All above

Please select Control Objective and Type Activity applied for control below:

Depreciation is calculated by the property, plant and equipment subledger in the Accounting System based on the asset type and life specified.

• Application, Prevent

• Application, Detect and Correct

• IT-Dependent Manual, Prevent

• IT-Dependent Manual, Detect and Correct

Which of following assertions primarily deals with the risk of overstatements?

• Completeness

• Existence

• Presentation & disclosure

• All of the above

What is the objective of control?

• Prevent misstatement

• Detect misstatement

• Correct misstatement

• B & C

• A, B & C

When will we test the control?

• Interim testing

• Final testing

• A&B

Read the following control:

The Assistant Controller reviews the Accounts Payable reconciliation on a monthly basis to ensure the data and reports from the system used in the operation of the control is completed and accruate and that reconciling items above 1,000 are supported by evidence.

What type of control is this control?

• Application

• Manual

• ITDM

To gain an understanding of accounts receivable, which of the following procedures could the auditor follow?

• Test of transaction

• Walkthrough of the process

• Sampling

• Confirmation