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Zou's Fencing Controls

In: Business and Management

Submitted By luoyeshashaxiang
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Fall
15
Fall
15
Case II report
Shasha Chen Professor: Dr. Maureen Mascha Date: 11/09/2014

Case II report
Shasha Chen Professor: Dr. Maureen Mascha Date: 11/09/2014

08
Fall
08
Fall

1.
Auditors should always evaluate the design and test the operating effectiveness of a company’s internal control. The key procedures of the evaluation of design are fulfilled by inquires, observations, and inspections. The same procedures can be used to test the operating effectiveness as well. Re-performance of controls is another method to test the operating effectiveness depending on different situations. Some of the key considerations related to the evaluation of design and the testing of operating effectiveness are summarized as follows:
Information technology considerations
Auditors should understand a company’s information technology (IT), including the system-generated data and reports, which are required by PCAOB. When assessing a company’s risk of material misstatement, auditors should pay great attention towards both manual and automated controls equipped by the company. Auditors should identify the control activities from the internal IT system performed by management. Just like the case stated, when testing the risk #1 and #2, auditors use the company’s manual or automated IT controls. This obviously requires auditors to obtain enough understandings over ZOU’s IT system. Auditors use the knowledge to identify the preventive and detective controls, which helps to evaluate the design. Information technology general controls (ITGC) are important aspects of a company’s manual or automated controls. The effectiveness of a...

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