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DC 9-1 Backup Procedures, Availability of Data for Audit tests. LO1 , LO2 , LO3 , LO4 , LO5 , LO6 Whistler Corp. is a

DC 9-1

Backup Procedures, Availability of Data for Audit tests. LO1, LO2,LO3, LO4, LO5, LO6 Whistler Corp. is a new audit engagement for your firm. Whistler backs up all its sales transaction detailed data for each month on a portable hand-held disk drive. The drive is retained offsite for three months and then reused. This system is used because the company only has four drives, which cost over $100 each, and offsite storage charges are on a per-drive basis. The Whistler information system manager considers this to be a cost-effective backup procedure. Following the request of their former auditors, Whistler retains backup drives for December (the year-end) and the following January until the financial statement audit is completed. The audit is usually completed by the end of April.

Required:

a. Discuss the impact of this backup procedure on Whistler's control risk. Suggest alternate feasible approaches Whistler's management could use to improve internal control and explain fully how your recommendations improve control and reduce risk. How would you communicate such recommendations to management?

b. Discuss the impact Whistler's backup procedure has on your audit approach. Consider any limitations it may impose on audit tests or analytical procedures, or the possibility of your firm's using a combined audit approach. Suggest alternative feasible approaches that may improve your audit scope.

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