You are on the staff of an external audit firm that audits a small to medium-size financial institution. One day you receive a copy of

Question

94 users unlocked this solution today!

You are on the staff of an external audit firm that audits a small to medium-size financial institution. One day you receive a copy of a letter from the president of the financial institution to the partner in charge of the audit. The letter indicates the client is considering replacing its existing minicomputer with 20 desktop computers, connecting these computers via a local area network, and converting all its application systems to run on the new platform. You are alarmed at this "radical" move and its audit implications. As a result, you go to the partner in charge to request time to investigate the proposed changes and, if need be, suggest some design alternatives. The partner in charge hesitates when you make your request. She explains that she believes you should not become involved at this stage be-

cause it will affect the firm's independence. She concedes there might be problems with the changes proposed, however, and she asks you to prepare a brief for her.

Required. Write a report to the partner outlining some of the control and audit problems that could arise with the proposed changeover to the desktop computers and local area network. In particular, indicate whether the new platform is likely to affect the inherent risk associated with the client's applications.