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Cms 303 Computer Auditing (Day) Question Paper
Cms 303 Computer Auditing (Day)
Course:Bachelor Of Commerce
Institution: Kca University question papers
Exam Year:2011
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UNIVERSITY EXAMINATIONS: 2010/2011
THIRD YEAR EXAMINATION FOR THE BACHELOR OF COMMERCE
CMS 303 COMPUTER AUDITING (DAY)
DATE: DECEMBER 2011 TIME: 2 HOURS
INSTRUCTIONS: Answer question one and any other two Questions
Question One
You are the audit senior in charge of the audit of the receivables balance for Delphic Company. For
the first time, you have decided to use the audit software to assist with the audit of receivables
balance. Computer staff at Delphic Company are happy to help the auditor, although they cannot
confirm completeness of the systems documentation, and warns that the systems have very old
operating systems in place, limiting file compatibility with modern programs.
All information is stored in Delphic computer systems although previous audits have tended to
adopt an ‘ audit around the computer approach’.
The change in audit approach has been taken mainly to fully understand Delphic computer
systems prior to new internet modules being added next year. To limit the possibility of damage to
Delphic computer files, copy files will be provided by Delphic computer staff for the auditor to
use their own audit software.
Required:
a) Explain the audit procedures that should be carried out using audit software on the receivables
balance at Delphic Company. For each procedure, explain the reason for that procedure.
(6 Marks)
b) Explain the potential problems of using audit software at Delphic Company .For each problem
, explain how it can be resolved (10 Marks)
c) Explain the concept of ‘auditing around the computer’ and discuss why this increases audit risk
for the auditor (6 Marks)
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d) Discuss the effects if the company adopted ‘auditing through the computer’ approach
(8 Marks)
Question Two
With reference to ISA 520 Analytical Procedures and ISA 315 Identifying and assessing the risks
of material misstatement through the entity and its environment
Explain
a) What is meant by the term ‘analytical procedures’ (4 Marks)
b) The different types of analytical procedures available to the auditor and the situation in the
audit when analytical procedures can be used (4 Marks)
c) Computer-Assisted Audit Techniques are used to assist an auditor in the collection of audit
evidence from computerized systems
Required
List and briefly explain four advantages of CAATs (8 Marks)
Question Three
The directors of Wananchi Coffee Exporters Ltd have resolved to introduce an improved
computer based accounting system to replace the existing one.Live running of the new
system is planned to commence on 1st December 2004 and will run parallel with the
present computer system for a period of three months thereafter.
Required;
a) Explain why Wananchi coffee Exporters Ltd should run both the existing and the new
systems alongside each other prior to live running of the new system and give reasons
why you,as the auditor,would wish to be involved at this stage of the development process of
the new system (6 Marks)
b) On the assumption that the new computer based accounting system will be run as live with
effect from 1st December 2004.Briefly describe what effect this will have on your audit of the
company’s account for the year ended 31st December 2004. (6 Marks)
c) An auditor using a computerized accounting system may encounter different problem in his
audit work.Explain some of the problems that he may face (4 Marks)
Question Four
(a) ISA 530 Audit sampling states that the objective of the auditor,when using audit sampling,is to
provide a reasonable basis for the auditor to draw conclusions about the populations from
which the sample is selected. You are an auditor who has been assigned to audit a corporate
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company which deals with many financial transactions .You are required to use sampling
method of collecting audit evidence.
Required:
i) Describe the sampling steps that you would take in the sampling approach (10 Marks)
ii) Distinguish between audit risk and sampling risk (4 Marks)
iii) Summarize the difficulties encountered by auditors when using computer audit programs in
their audit assignments (6 Marks)
Question Five
(a) A certain company would like to roll out an information system to solve some persistent
problems that it has been going through for along period of time.Describe the stages it would
have to go through in its system development cycle (12 Marks)
(b) In the context of computer based accounting system ,explain the meaning of the following
terms
(i) Application controls (4 Marks)
(ii) General controls (4 Marks)
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