CIS Assign2

1. Discuss the differences between the attest function and advisory services.
 Attestation is an engagement in which a practitioner is engaged to issue. This written

communication expresses a conclusion about the reliability of a written assertion that is
the responsibility of another party. Public accounting firms offer advisory services to
improve their client organizations’ operational efficiency and effectiveness. A risk
management professional may perform a test of IT controls as an advisory service for a
non-audit client. The same professional may perform the very same test for an audit client
as part of the attest function.
2. A CPA firm has many clients. For some of its clients, it relies very heavily on the work of
the internal auditors, while for others it does not. The amount of reliance affects the fees
charged. How can the CPA firm justify the apparent inconsistency of fees charged in a
competitive marketplace?
 Clients that heavily rely on internal auditors may have higher risks associated with their
financial processes. The CPA firm can justify higher fees because of the increased
scrutiny, detailed assessments, and additional resources required to mitigate these risks
effectively.
3. Accounting firms are very concerned that their employees have excellent communication
skills, both oral and written. Explain why this requirement is so important by giving
examples of where these skills would be necessary in each of the three phases of an audit.
 In the audit planning phase, excellent communication skills play a vital role in risk
analysis. The risk analysis incorporates an overview of the organization’s internal
controls. The techniques for gathering evidence at this phase include conducting
questionnaires, interviewing management, reviewing systems documentation, and
observing activities.
 In the tests of control phase, determining whether adequate internal controls are in place
and functioning properly. Excellent communication with the external auditors is crucial
throughout this audit phase.
 The substantive testing phase involves a detailed investigation of specific account
balances and transactions. Some substantive tests are physical, labor-intensive activities,
such as counting cash, counting inventories in the warehouse, and verifying the existence
of stock certificates in a safe. These activities require good relations with the external
auditors for the process to go smoothly, hence the need for excellent communication
skills.
4. Discuss how the process of obtaining IT audit evidence is inherently different than it is in
a manual system.
 In the IT environment, obtaining evidence involves the reliability of computer controls as
well as the contents of databases that have been processed by computer programs. Hence,
manual systems are generally more secure from electronic tampering but have limits in
handling large volumes of data. IT evidence is collected by performing tests of controls,
which establish whether internal controls are functioning properly, and substantive tests,
which determine whether accounting databases fairly reflect the organization’s
transactions and account balances.
5. Explain the audit objectives of existence or occurrence, completeness, rights and

obligations, valuation or allocation, and presentation and disclosure
 Existence/Occurrence – ensures all assets, liabilities, and equity interests that are
recorded in the financial statements actually exist and have occurred.
 Completeness – ensures that all transactions and accounts that should be presented in the
financial statements are indeed included with no material omissions.
 Rights and Obligations – verifies the entity’s legal rights to its assets and is responsible
for its liabilities, ensuring both assets and liabilities belong to the entity.
 Valuation/Allocation - ensures that assets, liabilities, equity interests, revenues, and
expenses are recorded at their appropriate amounts in the financial statements.
 Presentation and Disclosure – to confirm that the financial statements are presented in
accordance with the applicable financial reporting framework and that all necessary
disclosures are made.

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1. Discuss the differences between the attest function and advisory services.

 Attestation is an engagement in which a practitioner is engaged to issue. This written

5. Explain the audit objectives of existence or occurrence, completeness, rights and

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