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When an auditor tests the internal controls of a computerized accounting system, which of the following is true of the test data approach?

When an auditor tests the internal controls of a computerized accounting system, which of the following is true of the test data approach? a. Test data are coded to a dummy subsidiary so they can be extracted from the system under actual operating conditions. b. Test data programs need not be tailor-made by the auditor for each client's computer applications. c. Test data programs usually consist of all possible valid and invalid conditions regarding compliance with internal controls. d. Test data are processed with the client's computer and the results are compared with the auditor's predetermined results.

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Question added by Deleted user
Date Posted: 2013/09/06
Mir Mujtaba Ali
by Mir Mujtaba Ali , Internal Audit Manager , Confidential

d

Moiz Saifuddin Gabaji
by Moiz Saifuddin Gabaji , Internal Auditor (Financial & Operational Audit) , Attock Petroleum Limited (part of Attock Group a vertically integrated oil conglomerate)

"D" is the answer. As predetermined result (criteria/ standard), is compared with actual result. Less variance means better internal control.

Yasir Ammar Mehmood
by Yasir Ammar Mehmood , Senior Accountant , Al-Mustufa Medical Centre

Option D) is the right answer.

When an auditor test the internal controls, He/she usually use the sequential method starting from creating the purchase requisition to the end of the payment cycle. He/she checks the impact of each transaction on the General ledger and compare it with predetemined results to check the internal controls of the computerized accounting system  

 

Shariful Islam
by Shariful Islam , Manager, Internal Audit , BARC Pakistan

Test data programs usually consist of all possible valid and invalid conditions regarding compliance with internal controls.

Divyesh Patel
by Divyesh Patel , Assistant Professional Officer- Treasury , City Of Cape Town

The answer is:

d. Test data are processed with the client's computer and the results are compared with the auditor's predetermined results.

Rajan Antony Palliparambil
by Rajan Antony Palliparambil , Assistant Section Officer , Craigmore Plantations (India) Private Limited

In my opinion option d is correct.  Test data contains all tables which have to be combined under process to extract required results.

 

Mustafa Fida Hussain karimi
by Mustafa Fida Hussain karimi , Head Of Internal Audit , Al Fardan Exchange LLC

d

Aditya Sarangapani
by Aditya Sarangapani , Head - Cyber Threat Response Group , WNS Global Services

Test data will vary with the business control requirements, which in turn will depend on factors like the industry the client is in, regulatory requirements for the accounting data, etc. Having said that, one or more of the4 options will be true for a particular client. 

i.e.

  1. Option a may not be true if by moving the accounting to a subsidiary, the accounting entries will cause other entries to be passed based on regulatory requirements.
  2. For clients in the same industry and geographical location, the same test data can be reused
  3. Test data should ideally have all possible correct and incorrect values, however, it is practically difficult to identify all incorrect and/or correct scenarios
  4. Testing means comparing actual to expected results. However, any differences do not mean that the control is incorrectly implemented but needs to be investigated further.

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