Audit subject

BKAA3023 AUDIT AND ASSURANCE II QUESTION 2 (25 MARKS: 45 MINUTES) CymaTech Sdn Bhd is a well-known wholesaler of computer and its components in the northern region. CymaTech Sdn Bhd buys the computer and its component from eight major manufacturers and sells them to over 400 different customers. The receivables balance therefore includes customers owing up to RM50,000 to smaller balances of about RM5,000, all with many different due dates for payments and credit limits. All information is stored on CymaTech Sdn Bhd's computer systems, although previous audits have tended to adopt an 'audit around the computer' approach. You are the audit senior responsible for the audit of the receivables balance. For the first time auditing this client, you have decided to use audit software to assist you with the audit of the receivables balance. Computer staff at CymaTech Sdn Bhd are happy to help the auditor, although they cannot confirm completeness of systems documentation, and warn you that the systems have very old operating systems in place, limiting file compatibility with more modern programs. The change in audit approach has been taken mainly to fully understand CymaTech Sdn Bhd's computer systems prior to new internet modules being added next year. To limit the possibility of damage to CymaTech Sdn Bhd's computer files, copy files will be provided by CymaTech Sdn Bhd's computer staff for the auditor to use with their own audit software. (b) REQUIRED: Explain the concept of 'auditing around the computer and why this audit approach increases audit risk. (3 Marks) Explain THREE (3) potential problems of using audit software at CymaTech Sdn Bhd. (6 Marks) Recommend FOUR (4) examples of general controls that should be in place for CymaTech Sdn Bhd's information system. (8 Marks) (d) Recommend FOUR (4) examples of application controls that should be in place for CymaTech Sdn Bhd's information system. (8 Marks) 2