To Do an Audit, It Is Necessary for Information to Be

question 2

Essay

To do an audit, it is necessary for information to be in a verifiable form and some criteria by which the auditor can evaluate the information. Detail the information and criteria that would be used for:
(A) an independent CPA firm audits a company's historical financial statements.
(B) an Internal Revenue Service auditor who audits that same company's tax return.
(C) an internal auditor use when performing an operational audit to evaluate whether the company's computerized payroll processing system is operating efficiently and effectively.

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Definitions:

Cash Equivalents

Short-term, highly liquid investments that are easily convertible to known amounts of cash with original maturities of three months or less.

Physical Controls

Measures and procedures implemented to safeguard assets, manage risk, and ensure the integrity of financial information, including locks, safes, and access control systems.

Natural Disasters

Natural disasters are severe and sudden events caused by environmental factors that cause damage to property, economies, and loss of life, such as earthquakes, floods, and hurricanes.

Unauthorized Use

The use of property or resources without permission, often leading to legal consequences or breaches of security.