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    HW Chap 6

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    Management establishes strong internal controls to help auditors identify key controls, recognize potential misstatements, and design audit tests. Without effective controls, management may be unable to make informed decisions and external reports may not be useful. Information technology can benefit internal controls by consistently applying rules, enhancing information timeliness and accuracy, facilitating analysis, and improving monitoring. However, it also risks reliance on inaccurate systems, unauthorized access or changes to data or systems, failure to update systems, and potential data loss.

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    HW Chap 6

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    Thiện Nhân
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    Management establishes strong internal controls to help auditors identify key controls, recognize potential misstatements, and design audit tests. Without effective controls, management may be unable to make informed decisions and external reports may not be useful. Information technology can benefit internal controls by consistently applying rules, enhancing information timeliness and accuracy, facilitating analysis, and improving monitoring. However, it also risks reliance on inaccurate systems, unauthorized access or changes to data or systems, failure to update systems, and potential data loss.

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    HW chap 6

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    HW chap 6

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    Management establishes strong internal controls to help auditors identify key controls, recognize potential misstatements, and design audit tests. Without effective controls, management may be unable to make informed decisions and external reports may not be useful. Information technology can benefit internal controls by consistently applying rules, enhancing information timeliness and accuracy, facilitating analysis, and improving monitoring. However, it also risks reliance on inaccurate systems, unauthorized access or changes to data or systems, failure to update systems, and potential data loss.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    13 views1 page

    HW Chap 6

    Uploaded by

    Thiện Nhân
    Management establishes strong internal controls to help auditors identify key controls, recognize potential misstatements, and design audit tests. Without effective controls, management may be unable to make informed decisions and external reports may not be useful. Information technology can benefit internal controls by consistently applying rules, enhancing information timeliness and accuracy, facilitating analysis, and improving monitoring. However, it also risks reliance on inaccurate systems, unauthorized access or changes to data or systems, failure to update systems, and potential data loss.

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    Name: Võ Nguyễn Phương Uyên Class: Auditing_S219DH42ISB-2

    ID: 31161024233

    HOMEWORK CHAP 6

    6-1 What are management’s incentives for establishing and maintaining strong internal controls?
    What are the auditor’s main concerns with internal controls?
    Incentives:
     help auditor identify key controls
     recognize the types of potential misstatements that are relatively likely to arise
     design tests of controls and substantive procedures.
    Concerns: management may be unable to make informed decisions about issues such as product
    pricing, cost of production, and profit information, and external reports may not be useful to
    investors and other stakeholders.

    6-2 What are the potential benefits and risks to an entity's internal control from information
    technology?
    Benefits
     Consistent application of predefined business rules and performance of complex calculations
    in processing large volumes of transactions or data
     Enhancement of the timeliness, availability, and accuracy of information
     Facilitation of additional analysis of information
     Enhancement of the ability to monitor the performance of the entity activities and its policies
    and procedures
     Reduction in the risk that controls will be circumvented
     Enhancement of the ability to achieve effective segregation of duties by implementing
    security controls in applications, databases, and operating systems

    Risks
     Reliance on systems or programs that inaccurately process data, process inaccurate data, or
    both
     Unauthorized access to data that may result in destruction of data or improper changes to
    data, including the recording of unauthorized or nonexistent transactions or inaccurate
    recording of transactions
     Unauthorized changes to data in master files
     Unauthorized changes to systems or programs
     Failure to make necessary changes to systems or programs
     Inappropriate manual intervention
     Potential loss of data

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