Following a competitive tender， your audit firm Cal & Co has just gained a new audit client Tirrol Co. You are the manager in charge of planning the audit work. Tirrol Co‘s year end is 30 June 2009 with a scheduled date to complete the audit of 15 August 2009. The date now is 3 June 2009.
Tirrol Co provides repair services to motor vehicles from 25 different locations. All inventory， sales and purchasing systems are computerised， with each location maintaining its own computer system. The software in each location is the same because the programs were written specifically for Tirrol Co by a reputable software house. Data from each location is amalgamated on a monthly basis at Tirrol Co‘s head office to produce management and financial accounts.
You are currently planning your audit approach for Tirrol Co. One option being considered is to re-write Cal & Co‘s audit software to interrogate the computerised inventory systems in each location of Tirrol Co （except for head office） as part of inventory valuation testing. However， you have also been informed that any computer testing will have to be on a live basis and you are aware that July is a major holiday period for your audit firm.
Following a discussion with the management at Tirrol Co you now understand that the internal audit department are prepared to assist with the statutory audit. Specifically， the chief internal auditor is prepared to provide you with documentation on the computerised inventory systems at Tirrol Co. The documentation provides details of the software and shows diagrammatically how transactions are processed through the inventory system. This documentation can be used to significantly decrease the time needed to understand the computer systems and enable audit software to be written for this year‘s audit.
Required：
Explain how you will evaluate the computer systems documentation produced by the internal audit department in order to place reliance on it during your audit. （6 marks）
参考答案：
Reliance on internal audit documentation
There are two issues to consider; the ability of internal audit to produce the documentation and the actual accuracy of the
documentation itself.
The ability of the internal audit department to produce the documentation can be determined by:
–Ensuring that the department has staff who have appropriate qualifications. Provision of a relevant qualification e.g.
membership of a computer audit related institute would be appropriate.
–Ensuring that this and similar documentation is produced using a recognised plan and that the documentation is tested
prior to use. The use of different staff in the internal audit department to produce and test documentation will increase
confidence in its accuracy.
–Ensuring that the documentation is actually used during internal audit work and that problems with documentation are
noted and investigated as part of that work. Being given access to internal audit reports on the stock software will provide
appropriate evidence.
Regarding the actual documentation:
–Reviewing the documentation to ensure that it appears logical and that terms and symbols are used consistently
throughout. This will provide evidence that the flowcharts, etc should be accurate.
–Comparing the documentation against the ‘live’ stock system to ensure it correctly reflects the stock system. This
comparison will include tracing individual transactions through the stock systems.
–Using part of the documentation to amend Cal & Co’s audit software, and then ensuring that the software processes
stock system data accurately. However, this stage may be limited due to the need to use live files at Tirrol Ltd.