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Cms 303 Computer Auditing Question Paper
Cms 303 Computer Auditing
Course:Bachelor Of Commerce
Institution: Kca University question papers
Exam Year:2011
UNIVERSITY EXAMINATIONS: 2011/2012
YEAR III EXAMINATION FOR THE BACHELOR OF COMMERCE
CMS 303 COMPUTER AUDITING
(DAY)
DATE: APRIL 2012 TIME: 2 HOURS
INSTRUCTIONS: Answer Question One and Any other Two Questions
QUESTION ONE
Porthos, a limited liability company, is a reseller of sports equipment, specializing in racquet sports
such as tennis, squash and badminton. The company purchases equipment from a variety of different
suppliers and then resells this using the internet as the only selling media.The company has over 150
different types of racquet available in inventory, each identified via a unique product code.
Customers place their orders directly on the internet site. Most orders are for one or two racquets
only.the ordering/sales software automatically verifies the order details,customer address and credit
card information prior to orders being verified and goods being dispatched.The integrity of the
ordering system is checked regularly by an internet service company.
You are the audit manager working for the external auditors of Porthos, and you have just started
planning the audit of the sales system of the company. You have decided to use test data to check the
input of details into the sales system. This will involve entering dummy orders into the Porthos system
from an online terminal.
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Required:
a) List the test data you will use in your audit of the financial statements of Porthos, to confirm
the completeness and accuracy of input into the sales system, clearly explaining the reason for
each item of data. (6 Marks)
b) You are also considering using your audit software as part of your substantive testing of the
data files in the sales and inventory systems of Porthos,
i. List and briefly explain some of the difficulties of using audit software; (4 Marks)
ii. List the audit tests that you can program into your audit software for the sales and inventory
system in Porthos, explaining the reason for each test (6 Marks)
c) Where an auditor decides to test the controls in a data base system her procedures may include
using the functions of the data base management system. (4 Marks)
d) Explain how computer system auditing is different from manual system auditing (10 Marks)
QUESTION TWO
When the computerised information system is significant,the auditor should obtain an understanding of
the environment and whether it may influence the various risks involved:
Required:
a) Explainthe internal control characteristics in a computerised environment (10 Marks)
b) Discuss the problems encountered by an auditor in a computerised environment (4 Marks)
c) Clearly identify the audit objectives in a computerised system (6 Marks)
QUESTION THREE
You are a consulting company involved in developing systems. A client company has approached you
and wants to roll out a system. Discuss the stages that the company would need to go through in
developing the computerized system and identify the audit procedures involved in each (20 Marks)
QUESTION FOUR
Computer-Assisted Audit Techniques (CAATs) are used to assist an auditor in the collection of audit
evidence from computerized systems.
Required:
a) List and briefly explain four advantages of CAATs (4 Marks)
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b) Many auditors now use laptop computers to perform various audit tasks. However, if audit
firms use laptop computers they risk data being corrupted and appropriate controls must
therefore be put in place to prevent the corruption of data.
Explain six ways which auditors can use laptop computers in their audit work (other than the
computer assisted techniques) (6 Marks)
c) Explain the computer assisted audit techniques listed below:
i. Embedded audit facilities (2 Marks)
ii. Integrated test facilities (2 Marks)
d) Discuss the three approaches to testing computer programs and explain why the auditor would
prefer to select each one of them (6 Marks)
QUESTION FIVE
a) Explain the meaning of the following terms in relation to audit risk: (10 Marks)
i. Inherent risk
ii. Control risk
iii. Detection risk
iv. Sampling risk
b) Explain the following terms and give examples of circumstances when an auditor may adopt them
i. Auditing through the computer (4 Marks)
ii. Auditing around the computer (2 Marks)
iii. Auditing with the computer (4 Marks)
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