Which of the following e-commerce audit protocol items relates to the area of fraud?
Answer(s): D
With regard to the e-commerce audit protocol in the area of fraud, the internal auditor should be alert for the following conditions:· Unauthorized movement of money e.g., transfers to jurisdictions where the recovery of funds would be difficult).· Duplication of payments.· Denial of orders placed or received, goods received, or payments made. · Exception reports and procedures, and effectiveness of the follow up. · Digital signatures: Are they used for all transactions Who authorizes them Who has access to them Protections against viruses and hacking activities history file use of tools). · Access rights Are they reviewed regularly Are they promptly revised when staff members are changed?· History of interception of transactions by unauthorized persons.
Companies now can use electronic transfers to conduct regular business transactions.Which of the following terms best describes a system in which an agreement is made between two or more parties to electronically transfer purchase orders, sales orders, invoices, and/or other financial documents?
Answer(s): C
Electronic data interchange is the electronic transfer of documents between businesses. EDI was developed to enhance just-in-time JIT) inventory management. Advantages include speed, reduction of clerical errors, and elimination of repetitive clerical tasks and their costs. A multinational company has an agreement with a value-added network VAN) that provides the encoding and communications transfer for the company's electronic data interchange EDI) and electronic funds transfer EFT) transactions. Before transfer of data to the VAN, the company performs online preprocessing of the transactions. The internal auditor is responsible for assessing preprocessing controls. In addition, the agreement between the company and the VAN states that the internal auditor is allowed to examine and report on the controls in place at the VAN on an annual basis. The contract specifies that access to the VAN can occur on a surprise basis during the second or third quarter of the company's fiscal year. This period was chosen so it would not interfere with processing during the VAN's peak transaction periods. This provision was not reviewed with internal auditing. The annual audit plan approved by the board of directors specifies that a full audit would be done during the current year.
Which one of the following would not be included as a reason for the company to use EFT with the EDI system?
Answer(s): A
The float period is the time lag between transmittal of a regular check a negotiable instrument and its clearance through regular banking channels. Float is eliminated by EFT.A multinational company has an agreement with a value-added network VAN) that provides the encoding and communications transfer for the company's electronic data interchange EDI) and electronic funds transfer EFT) transactions. Before transfer of data to the VAN, the company performs online preprocessing of the transactions. The internal auditor is responsible for assessing preprocessing controls. In addition, the agreement between the company and the VAN states that the internal auditor is allowed to examine and report on the controls in place at the VAN on an annual basis. The contract specifies that access to the VAN can occur on a surprise basis during the second or third quarter of the company's fiscal year. This period was chosen so it would not interfere with processing during the VAN's peak transaction periods. This provision was not reviewed with internal auditing. The annual audit plan approved by the board of directors specifies that a full audit would be done during the current year.
Which one of the following is least likely to be recommended by the auditor when an EDI-EFT system is being designed?
One of the benefits of an EDI-EFT system is that it can provide remote access at any time from any place if telecommunications links are available. However, appropriate controls should prevent unauthorized access. A multinational company has an agreement with a value-added network VAN) that provides the encoding and communications transfer for the company's electrons.. data interchange EDI) and electronic funds transfer EFT) transactions. Before transfer of data to the VAN, the company performs online preprocessing of the transactions. The internal auditor is responsible for assessing preprocessing controls. In addition, the agreement between the company and the VAN states that the internal auditor is allowed toe :amine and report on the controls in place at the VAN on an annual basis. The contract specifies that access to the VAN can occur on a surprise basis during the second or third quarter of the company's fiscal year. This p n I was -hosen so it would not interfere with processing during the VAN's peak transaction periods. This provision was riot reviewed with internal auditing. The annual audit plan approved by the board of directors specifies that a full audit would be done during the current year.
Because the VAN did not provide the internal auditor with access to its system, that portion of the engagement work program was not completed.Which one of the following should not be done by the internal auditor?
Answer(s): B
A scope limitation is a restriction placed upon the IAA that precludes it from accomplishing its objectives and plans. Among other things, a scope limitation may restrict the performance of necessary engagement procedures A scope limitation and its potential effect should be communicated. preferably in writing, to the governing authority. A VAN is an alternative to direct EDI communications between transacting parties. Consequently, it is a vital component of internal control over these transactions, and the internal auditor's inability to obtain access constitutes a material limitation on the scope of the engagement to evaluate risk exposures and the adequacy and effectiveness of internal control. As a result, the original engagement program should be annotated but not rewritten.
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