4 Answer

Shane Whitebone is getting to know his new client, Clarrie Potters, a large discount electrical retailer. Ben Brothers has been the engagement partner on the Clarrie Potters' audit for the past five years, but the audit partner rotation rules have meant that the engagement partner has had to change this year. Shane discovers that toward the end of last year, Clarrie Potters installed a new IT system for inventory control. The system was not operating prior to the end of the last financial year, so its testing was not included in the previous audit. The new system was built for Clarrie Potters by a Montreal-based software company, which modified another system it had designed for a furniture manufacturer and retailer. Which of the following audit risks are associated with the installation of the new inventory IT system at Clarrie Potters? (Several choices may be correct.) E. Whether there is an adequate backup policy for all company applications A. Whether the new system accurately processes transactions G. Whether there was the appropriate transfer of information from the old IT system to the new system H. Whether the new system produces sufficient management reports (e.g., exception reports) to show that the client is monitoring its performance F. Whether there are sufficient controls over program changes C. Whether there is limited access to posting journal entries D. Whether the system can be overridden or bypassed by management or staff B. Whether staff are changing passwords regularly