Which of the following would BEST guide an IS auditor when determining an appropriate time to schedule the follow-up of agreed corrective actions for reported audit issues?
Progress updates indicate that the implementation of agreed actions is on track.
Sufficient time has elapsed since implementation to provide evidence of control operation.
Business management has completed the implementation of agreed actions on schedule.
Regulators have announced a timeline for an inspection visit.
This is because the follow-up of agreed corrective actions for reported audit issues should be done after the auditee has had enough time to implement the corrective actions and demonstrate their effectiveness and sustainability. The follow-up audit should not be too soon or too late, but based on a reasonable and realistic timeframe that allows for adequate testing and verification of the control operation12.
Answer A. Progress updates indicate that the implementation of agreed actions is on track. is not the best answer, because progress updates are not sufficient to guide the follow-up audit timing. Progress updates are useful for monitoring and communicating the status and challenges of the corrective actions, but they do not provide conclusive evidence of the control operation. The follow-up audit should be based on actual results and outcomes, not on expectations or projections12.
Answer C. Business management has completed the implementation of agreed actions on schedule. is not the best answer, because the completion of the implementation of agreed actions is not enough to guide the follow-up audit timing. The completion of the implementation only indicates that the auditee has taken the necessary steps to address the audit issues, but it does not guarantee that the corrective actions are effective and sustainable. The follow-up audit should be based on the evaluation and validation of the control operation, not on the completion of the control implementation12.
Answer D. Regulators have announced a timeline for an inspection visit. is not the best answer, because the regulators’ inspection visit is not relevant to guide the follow-up audit timing. The regulators’ inspection visit is an external factor that may or may not coincide with the internal follow-up audit schedule. The follow-up audit should be based on the internal audit plan and objectives, not on the external audit requirements or expectations12.
An IS auditor is reviewing a client's outsourced payroll system to assess whether the financial audit team can rely on the application. Which of the following findings would be the auditor's
GREATEST concern?
User access rights have not been periodically reviewed by the client.
Payroll processing costs have not been included in the IT budget.
The third-party contract has not been reviewed by the legal department.
The third-party contract does not comply with the vendor management policy.
The third-party contract has not been reviewed by the legal department is the auditor’s greatest concern because it poses a significant legal and financial risk to the client. A third-party contract is a legally binding agreement between the client and the outsourced payroll provider that defines the scope, terms, and conditions of the service. A third-party contract should be reviewed by the legal department to ensure that it complies with the applicable laws and regulations, protects the client’s interests and rights, and specifies the roles and responsibilities of both parties. A third-party contract that has not been reviewed by the legal department may contain clauses that are unfavorable, ambiguous, or contradictory to the client, such as:
Inadequate or unclear service level agreements (SLAs) that do not specify the quality, timeliness, and accuracy of the payroll service.
Insufficient or vague security and confidentiality provisions that do not safeguard the client’s data and information from unauthorized access, use, disclosure, or loss.
Unreasonable or excessive fees, penalties, or liabilities that may impose an undue financial burden on the client.
Limited or no audit rights that may prevent the client from verifying the effectiveness and compliance of the payroll provider’s internal controls.
Inflexible or restrictive termination clauses that may limit the client’s ability to cancel or switch to another payroll provider.
A third-party contract that has not been reviewed by the legal department may expose the client to various risks, such as:
Legal disputes or litigation with the payroll provider over contractual breaches or performance issues.
Regulatory fines or sanctions for noncompliance with tax, labor, or other laws and regulations related to payroll.
Financial losses or damages due to errors, fraud, or negligence by the payroll provider.
Reputation damage or customer dissatisfaction due to payroll errors or delays.
Therefore, an IS auditor should be highly concerned about a third-party contract that has not been reviewed by the legal department and recommend that the client seek legal advice before signing or renewing any contract with an outsourced payroll provider.
User access rights have not been periodically reviewed by the client is a moderate concern because it may indicate a lack of proper access control over the payroll system. User access rights are the permissions granted to users to access, view, modify, or delete data and information in the payroll system. User access rights should be periodically reviewed by the client to ensure that they are aligned with the user’s roles and responsibilities, and that they are revoked or modified when a user changes roles or leaves the organization. User access rights that are not periodically reviewed by the client may result in unauthorized or inappropriate access to payroll data and information, which may compromise its confidentiality, integrity, and availability.
Payroll processing costs have not been included in the IT budget is a minor concern because it may indicate a lack of proper planning and allocation of IT resources for payroll processing. Payroll processing costs are the expenses incurred by the client for using an outsourced payroll service, such as fees, charges, taxes, or penalties. Payroll processing costs should be included in the IT budget to ensure that they are adequately estimated, monitored, and controlled. Payroll processing costs that are not included in the IT budget may result in unexpected or excessive costs for payroll processing, which may affect the client’s profitability and cash flow.
The third-party contract does not comply with the vendor management policy is a low concern because it may indicate a lack of alignment between the client’s vendor management policy and its actual vendor selection and evaluation process. A vendor management policy is a set of guidelines and procedures that governs how the client manages its relationship with its vendors, such as how to select, monitor, evaluate, and terminate vendors. A vendor management policy should be consistent with the client’s business objectives, risk appetite, and regulatory requirements. A third-party contract that does not comply with the vendor management policy may result in suboptimal vendor performance or service quality, but it does not necessarily imply a breach of contract or a violation of law.
Which type of attack targets security vulnerabilities in web applications to gain access to data sets?
Denial of service (DOS)
SQL injection
Phishing attacks
Rootkits
A SQL injection attack is a type of attack that targets security vulnerabilities in web applications to gain access to data sets. A SQL injection attack exploits a flaw in the web application code that allows an attacker to inject malicious SQL statements into the input fields or parameters of the web application. These SQL statements can then execute on the underlying database server and manipulate or retrieve sensitive data from the database. A SQL injection attack can result in data theft, data corruption, unauthorized access, denial of service or even complete takeover of the database server. A denial of service (DOS) attack is a type of attack that aims to disrupt the availability or functionality of a web application or a network service by overwhelming it with excessive requests or traffic. A phishing attack is a type of attack that uses deceptive emails or websites to trick users into revealing their personal or financial information or credentials. A rootkit is a type of malware that hides itself from detection and grants unauthorized access or control over a compromised system. References: IS Audit and Assurance Tools and Techniques, CISA Certification | Certified Information Systems Auditor | ISACA
Which of the following should an IS auditor use when verifying a three-way match has occurred in an enterprise resource planning (ERR) system?
Bank confirmation
Goods delivery notification
Purchase requisition
Purchase order
A three-way match is a process of verifying that a purchase order, a goods receipt and an invoice are consistent before making a payment1. A three-way match ensures that the organization only pays for the goods or services that it ordered and received, and that the prices and quantities are accurate. A three-way match can prevent errors, fraud and overpayments in the accounts payable process.
An IS auditor should use a purchase order when verifying a three-way match has occurred in an enterprise resource planning (ERP) system. A purchase order is a document that authorizes a purchase transaction and specifies the items, quantities, prices and terms of the order2. A purchase order is the first document in the three-way match process, and it serves as the basis for comparing the goods receipt and the invoice. An IS auditor can use a purchase order to check if the ERP system has correctly recorded, matched and approved the three documents before making a payment.
The other options are not as useful for verifying a three-way match. A bank confirmation is a document that verifies the balance and activity of a bank account3. A bank confirmation can be used to confirm that a payment has been made or received, but it does not provide information about the details of the purchase transaction or the three-way match process. A goods delivery notification is a document that informs the buyer that the goods have been shipped or delivered by the seller4. A goods delivery notification can be used to track the status of the delivery, but it does not provide information about the quantity or quality of the goods or the invoice amount. A purchase requisition is a document that requests authorization to purchase goods or services from a specific supplier2. A purchase requisition can be used to initiate the purchasing process, but it does not provide information about the actual purchase order, goods receipt or invoice.
References:
Bank Confirmation - Overview, How It Works, Importance3
What is Goods Delivery Note? | Definition & Example4
What Is Three-Way Matching & Why Is It Important? | NetSuite1
Enterprise Resource Planning (ERP) - Definition, Types, Uses2
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