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Suriname College of Accountancy

CISA DOMAIN 1:
THE PROCESS OF AUDITING INFORMATION SYSTEMS

Cyril Soeri MA RA CISA CIS LI


Gregory Tai-Apin CISA CIS LI COBIT Foundation

Day 1
Suriname College of Accountancy
CISA Program
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The CISA program consists of the following five domains:

1. The Process of Auditing Information Systems (3 -26 Feb 2015);


2. Governance and Management of IT (17 March – 9 Apr 2015);
3. Information Systems Acquisition, Development and Implementation
(28 Apr – 21 May 2015);
4. Information Systems Operations, Maintenance and Support
(11 Jun – 2 Jul 2015);
5. Protection of Information Systems (21 Jul – 13 Aug 2015).

 September 2015: expected early registration date for CISA exam


 Exam training sessions: 5 Oct – 9 Oct (daily sessions)
 CISA Exam in December 2015
Suriname College of Accountancy
Program of Domain 1 (1a)
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DAY 1 The Process of Auditing Information Systems

 The universe of an IT auditor

 The ISACA route

 Management of the IS Audit Function


 Organization of the IS audit function
 Audit Planning
Suriname College of Accountancy
Program of Domain 1 (1b)
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DAY 1 (Cont’d): The Process of Auditing Information Systems

 ISACA IT audit and Assurance Standards and Guidelines


 ISACA Code of Professional Ethics
 ISACA IT Audit and Assurance Standards Framework
 Auditing Standards
 ISACA IT Audit and Assurance Guidelines
 ISACA IT Audit and Assurance Tools and Techniques
 Information Technology Assurance Framework (ITAF)
Suriname College of Accountancy
Program of Domain 1 (2)
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DAY 2 The Process of Auditing Information Systems (cont’d)

 Risk Analysis

 Internal Controls
 Internal Control Objectives
 IS Control Objectives
 COBIT
 General Controls
 IS Controls
Suriname College of Accountancy
Program of Domain 1 (3)
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DAY 3 The Process of Auditing Information Systems (cont’d)

 Performing an IS Audit (1):

 Classification of Audits
 Audit Programs
 Audit Methodology
 Fraud Detection
Suriname College of Accountancy
Program of Domain 1 (4)
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Day 4 The Process of Auditing Information Systems (cont’d)

 Performing an IS Audit (2):

 Risk-based Auditing
 Audit Risk and Materiality
 Assessing & Treating Risks
 Risk Assessment Techniques
Suriname College of Accountancy
Program of Domain 1 (5)
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Day 5 The Process of Auditing Information Systems (cont’d)

 Performing an IS Audit (3):


 Audit Objectives

 Compliance versus Substantive Testing

 Audit Evidence

 Interviewing and Observing Personnel in Performance of their Duties

 Sampling
Suriname College of Accountancy
Program of Domain 1 (6)
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DAY 7 The Process of Auditing Information Systems (cont’d)

 Performing an IS Audit (5):


 Using Services of Other Auditors and Experts

 Computer-Assisted Audit Techniques

 Evaluation of Strengths and Weaknesses

 Communicating Audit Results

 Management Implementation of Recommendations

 Audit Documentation
Suriname College of Accountancy
Program of Domain 1 (7)
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DAY 8 The Process of Auditing Information Systems (cont’d)

 Control Self-assessment (CSA)


 Objectives
 Benefits
 Disadvantages
 Auditor Role in CSA
 Technology drivers for CSA
 Traditional vs. CSA approach
Suriname College of Accountancy
Program of Domain 1 (8)
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DAY 8 The Process of Auditing Information Systems (cont’d)

 The evolving IS Audit Process


 Integrated audit
 Continuous auditing

 Exam training
 CISA’s road ahead
 Closing session
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Suriname College of Accountancy

OVERVIEW

CISA Domain 1: The process of IS Auditing


Suriname College of Accountancy
Learning objectives
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There are five tasks within the domain covering the process of auditing information
systems:

1. Develop and implement a risk-based IT audit strategy in compliance with IT


audit standards to ensure that key areas are included.

2. Plan specific audits to determine whether information systems are protected,


controlled and provide value to the organization.

3. Conduct audits in accordance with IT audit standards to achieve planned audit


objectives.

4. Report audit findings and make recommendations to key stakeholders to


communicate results and effect change when necessary.

5. Conduct follow-ups or prepare status reports to ensure that appropriate actions


have been taken by management in a timely manner.
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Suriname College of Accountancy

MANAGEMENT OF THE IS AUDIT FUNCTION

CISA Domain 1: The process of IS Auditing


Suriname College of Accountancy
Organization of the IS Audit function
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 Internal IS Audit services:


 Audit charter approved by senior management;

 External IS Audit services:


 Formal contract or statement of work
Suriname College of Accountancy
Exam training
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A1-15 (Q) Audit charter


An audit charter should:

A. be dynamic and change often to coincide with the changing nature


of technology and the audit profession.

B. clearly state audit objectives for, and the delegation of, authority to
the maintenance and review of internal controls.

C. document the audit procedures designed to achieve the planned


audit objectives.

D. outline the overall authority, scope and responsibilities of the audit


function.
Suriname College of Accountancy
Exam training
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A1-15 (A)
 D) is the correct answer.

Justification:
A. The audit charter should not be subject to changes in technology and should not
significantly change over time. The chartcr should be approved at the highest level of
management.

B. An audit chartcr will state the authority and reporting requirements for the audit, but
not the details of maintenance of internal controls.

C. An audit charter would not be at a detailed level and, therefore, would not include
specific audit objectives or procedures.

D). An audit charter should state management's objectives for and delegation of
authority to IS auditors.
Suriname College of Accountancy
Exam training
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 A1-72 (Q) IS audit charter


An organization's IS audit charter should specify the:

A. short- and long-term plans for IS audit engagements.

B. objectives and scope of IS audit engagements.

C. detailed training plan for the IS audit staff.

D. role of the IS audit function.


Suriname College of Accountancy
Exam training
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 A1-72 (A)
D is the correct answer.

Justification:
 A. Short-term and long-term planning is the responsibility of audit
management.
 B. The objectives and scope of each IS audit should be agreed on in an
engagement letter. The charter would spccify the objectives and scope of
the audit function but not of individual engagements.
 C. A training plan, based on the audit plan, should be developed by audit
management.
 D). An IS audit charter establishes the role of the information systems
audit function. The charter should describe the overall authority, scope
and responsibilities of the audit function. It should be approved by the
highest level of management and, if available, by the audit committee.
Suriname College of Accountancy
IS Audit Resource Management
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 Professional competence through continuing


professional education (CPE);

 Necessary IT resources to properly perform IS


audits of a highly specialized nature (e.g., tools,
methodology, work programs).
Suriname College of Accountancy
Audit planning (1)
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 Annual planning:
 Short term – audit issues to be covered;
 Long term – changes in IT strategic direction;

 Individual Audit assignments – considerations:


 the results of periodic risk assessments,
 changes in the application of technology,
 evolving privacy issues and regulatory requirements,
 system implementation/upgrade deadlines,
 current and future technologies,
 requirements from business process owners,
 IS resource limitations.
Suriname College of Accountancy
Audit planning (2)
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To perform audit planning, the IS auditor should perform the following steps:
1. Gain an understanding of the business's mission, objectives, purpose and
processes, which include information and processing requirements such
as availability, integrity, security and business technology, and
information confidentiality.

2. Identify stated contents such as policies, standards and required


guidelines, procedures and organization structure.

3. Perform a risk analysis to help in designing the audit plan.

4. Set the audit scope and audit objectives.


5. Develop the audit approach or audit strategy.

6. Assign personnel resources to the audit.


7. Address engagement logistics.
Suriname College of Accountancy
Effect of laws and regulation on
23 IS Audit planning (1)
 The contents of IS legal regulations regard:
 Establishment of the regulatory requirements
 Organization of the regulatory requirements
 Responsibilities assigned to the corresponding entities
 Correlation to financial, operational and IT audit functions

 There are two major areas of concern:


 legal requirements placed on audit or IS audit;
 legal requirements placed on the auditee and its systems, data
management, reporting, etc.
Suriname College of Accountancy
Effect of laws and regulation on
24 IS Audit planning (2)
The following are steps an IS auditor would perform to determine an
organization's level of compliance with external requirements (to be
continued):

 Identify those government or other relevant external requirements


dealing with:
 Electronic data, personal data, copyrights, e-commerce, e-signatures, etc.
 Computer system practices and controls
 The manner in which computers, programs and data are stored
 The organization or the activities of information technology services
 IS audits
Suriname College of Accountancy
Effect of laws and regulation on
25 IS Audit planning (3)
Steps to determine an organization's level of compliance (cont’d):
 Document applicable laws and regulations;

 Assess whether the management of the organization and the IS function have
considered the relevant external requirements in making plans and in setting
policies, standards and procedures, as well as business application features;

 Review internal IS department/function/activity documents that address


adherence to laws applicable to the industry;
 Determine adherence to established procedures that address these requirements;

 Determine if there are procedures in place to ensure contracts or agreements with


external IT services providers reflect any legal requirements related to
responsibilities;
Suriname College of Accountancy
Exam training
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 A1-99 (Q) Planning


The effect of which of the following should have priority in
planning the scope and objectives of an IS audit:

 A. Applicable statutory requirements

 B. Applicable corporate standards

 C. Applicable industry best practices

 D. Organizational policies and procedures


Suriname College of Accountancy
Exam training
27

 A1-99 (A)
A is the correct answer.

Justification:
 A. The effect of applicable statutory requirements must be factored in while
planning an IS audit— the IS auditor has no options in this respect because there
can be no limitation of scope in respect to statutory requirements.

 B. Statutory requirements always take priority over corporate standards.

 C. Industry best practices help plan an audit; however, best practices are not
mandatory and can be deviated from to meet organization objectives.

 D. Organizational policies and procedures arc important, but statutory requirements


always take priority. Organizational policies must be in alignment with statutory
requirements.
Suriname College of Accountancy
Exam training
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 A1-101 (Q) Planning


An IS auditor is planning to evaluate the control design effectiveness
related to an automated billing process. Which of the following is the
MOST effective approach for the auditor to adopt?

 A. Process narrative

 B. Inquiry

 C. Reperformance

 D. Walk-through
Suriname College of Accountancy
Exam training
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 A1-101 (A)
D) is the correct answer.

Justification:
 A. Process narratives may not be current or complete and may not reflect the actual
process in operation.

 B. Inquiry can be used to understand the controls in a process only if it is


accompanied by verification of evidence.

 C. Repcrformance is used to evaluate the operating effectiveness of the control


rather than the design of the control.

 D. Walk-throughs involve a combination of inquiry and inspection of evidence


with respect to business process controls. This is the most effective basis for
evaluation of the design of the control as it actually exists.
Suriname College of Accountancy
Exam training
30

A1-3 (Q) Audit plan


An IS auditor is developing an audit plan for a repeat client. The IS auditor
reviews the prior-year audit plan and finds that the previous plan was
designed to review the company's network and email systems, which were
newly implemented last year, but the plan did not include reviewing the e-
commerce web server. The company IT manager indicates that this year the
organization prefers to focus the audit on a newly-implemented enterprise
resource planning (ERP) application. How should the IS auditor respond?

A. Audit the new ERP application as requested by the IT manager.


B. Audit the e-commerce server because it was not audited last year.
C. Determine the highest-risk systems and plan the audit based on the results.
D. Audit both the e-commerce server and the ERP application.
Suriname College of Accountancy
Exam training
31

A1-3 (A)
 C is the correct answer.

Justification:
 A. Auditing the new enterprise resource planning (ERP) application does not reflect a risk-based approach.
Although ERP systems typically contain sensitive data and may present risk of data loss or disclosure to the
organization, without a risk assessment, the decision to solely audit the ERP system is not a risk-based
decision.
 B. Auditing the e-commerce server because it was not audited last year does not reflect a risk-based
approach. In addition, the IT manager may know about problems with the e-commerce server and may be
intentionally trying to steer the audit away from that vulnerable area. Although at first glance e-commcrce
may seem to be the most risky area, an assessment must be conducted rather than relying on the judgment
of the IS auditor or IT manager.
 C. The best course of action is to conduct a risk assessment and design the audit plan to cover the areas
of highest risk. ISACA IS Audit and Assurance Standard 1202 (Risk Assessment in Planning), statement
1202.1: "The IS audit and assurance function shall use an appropriate risk assessment approach and
supporting methodology to develop the overall IS audit plan and determine priorities for the effective
allocation of IS audit resources."
 D. The creation of the audit plan should be performed in cooperation with management and based on risk.
The IS auditor should not arbitrarily decide on what needs to be audited.
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Suriname College of Accountancy

ISACA IT AUDIT AND ASSURANCE


STANDARDS AND GUIDELINES

CISA Domain 1: The process of IS Auditing


Suriname College of Accountancy
ISACA Code of Professional Ethics (1)
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Members and ISACA certification holders shall (to be cont’d):

1. Support the implementation of, and encourage compliance


with appropriate standards, procedures and controls for
information systems.

2. Perform their duties with objectivity, due diligence and


professional care, in accordance with professional standards
and best practices.

3. Serve in the interest of stakeholders in a lawful and honest


manner, while maintaining high standards of conduct and
character, and not engage in acts discreditable to the
profession.
Suriname College of Accountancy
ISACA Code of Professional Ethics (2)
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Members and ISACA certification holders shall (cont’d):

4. Maintain the privacy and confidentiality of information obtained in the


course of their duties unless disclosure is required by legal authority.
Such information shall not be used for personal benefit or released to
inappropriate parties.

5. Maintain competency in their respective fields and agree to undertake


only those activities that they can reasonably expect to complete with
professional competence.

6. Inform appropriate parties of the results of work performed, revealing


all significant facts known to them.

7. Support the professional education of stakeholders in enhancing their


understanding of IS security and control.
Suriname College of Accountancy
ISACA IT Audit and Assurance Standards Framework
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The framework for the ISACA IT audit and assurance standards provides
for multiple levels as follows:

 Standards define mandatory requirements for IT audit and assurance


and reporting.

 Guidelines provide guidance in applying IT audit and assurance


standards. The IS auditor should consider them in determining how to
achieve implementation of the above standards, use professional
judgment in their application and be prepared to justify any difference.

 Tools & Techniques: Procedures provide examples of processes an IS


auditor might follow in an audit engagement. The procedure documents
provide information on how to meet the standards when completing IS
auditing work, but do not set requirements.
Suriname College of Accountancy

ISACA IS Auditing Standards


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S1 Audit Charter S9 Irregularities and Illegal Acts


S2 Independence S10 IT Governance
S3 Professional Ethics and Standards S11 Use of Risk Assessment in Audit Planning
S4 Professional Competence S12 Audit Materiality
S5 Planning S13 Using the Work of Other Experts
S6 Performance of Audit Work S14 Audit Evidence
S7 Reporting S15 IT Controls
S8 Followup Activities S16 Ecommerce
Suriname College of Accountancy

ISACA IT Audit and Assurance Guidelines


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G1 Using the Work of Other Auditors G22 Businesstoconsumer (B2C) Ecommerce Review
G2 Audit Evidence Requirement G23 System Development Life Cycle (SDLC) Review
G3 Use of ComputerAssisted Audit Techniques (CAATs) G24 Internet Banking
G4 Outsourcing of IS Activities to Other Organizations G25 Review of Virtual Private Networks
G5 Audit Charter G26 Business Process Reengineering (BPR) Project Reviews
G6 Materiality Concepts for Auditing Information Systems G27 Mobile Computing
G7 Due Professional Care G28 Computer Forensics
G8 Audit Documentation G29 Postimplementation Review
G9Audit Considerations for Irregularities G30 Competence
G10 Audit Sampling G31 Privacy
G11 Effect of Pervasive IS Controls G32 Business Continuity Plan Review From IT Perspective
G12 Organizational Relationship and Independence G33 General Considerations on the Use of the Internet
G13 Use of Risk Assessment in Audit Planning G34 Responsibility, Authority and Accountability
G14 Application Systems Review G35 Followup Activities
G16 Effect of Third Parties on Organization's IT Controls G36 Biometric Controls
G17 Effect of Nonaudit Role on IS Auditor's Independence G37 Configuration Management
G18 IT Governance G38 Access Control
G19 Irregularities and Illegal Acts G39 IT Organizations
G20 Reporting G40 Review of Security Management Practices
G21 Enterprise Resource Planning (ERP) Systems Review G41 Return on Security Investment (ROSI)
G42 Continuous Assurance
Suriname College of Accountancy

ISACA IT Audit and Assurance Tools and Techniques


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P1 IS Risk Assessment
P2 Digital Signatures
P3 Intrusion Detection
P4 Viruses and Other Malicious Code
P5 Control Risk Selfassessment
P6 Firewalls
P7 Irregularities and Illegal Acts
P8 Security Assessment—Penetration Testing and Vulnerability Analysis
P9 Evaluation of Management Controls Over Encryption Methodologies
P10 Business Application Change Control
P11 Electronic Funds Transfer (EFT)
Suriname College of Accountancy
Information Technology Assurance Framework
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(ITAF) (1)
 General Standards—The guiding principles under which the IT assurance
profession operates.

 Performance Standards—Deal with the conduct of the assignment.

 Reporting Standards—Address the types of reports, means of


communication and the information communicated.

 Guidelines—Provide the IT audit and assurance professional with


information and direction about an audit or assurance area.

 Tools and Techniques——Provide specific information on various


methodologies, tools and templates.
Suriname College of Accountancy
Exam training
40

A1-37 (Q) Data flow diagrams

Data flow diagrams are used by IS auditors to:

A. order data hierarchically.

B. highlight high-level data definitions.

C. graphically summarize data paths and storage.

D. portray step-by-step details of data generation.


Suriname College of Accountancy
Exam training
41

A1-37 (A)
 C is the correct answer.

Justification:
A. Data flow diagrams do not order data in a hierarchy.

B. A data dictionary may be used to document data definitions, but the data flow
diagram is used to document how data move through a process.

C. Data How diagrams are used as aids to graph or chart data flow and storage.
They trace data from their origination to destination, highlighting the paths and
storage of data.

D. The purpose of a data flow diagram is to track the movement of data through a
process and is not primarily to document or indicate how data are generated.
Suriname College of Accountancy
Exam training
42

A1-39 (Q) Organizational chart


An IS auditor reviews an organizational chart PRIMARILY for:

A. an understanding of workflows.

B. investigating various communication channels.

C. understanding the responsibilities and authority of


individuals.

D. investigating the network connected to different employees.


Suriname College of Accountancy
Exam training
43

A1-39 (A)
 C is the correct answer.

Justification:
A. A workflow diagram would provide information about the roles of different
employees. This is not the purpose of an organizational chart.

B. The organizational chart is a key tool for an auditor to understand roles and
responsibilities and reporting lines, but is not used for examining communications
channels.

C. An organizational chart provides information about the responsibilities and


authority of individuals in the organization. This helps an IS auditor to know if
there is a proper segregation of functions.

D. A network diagram will provide information about the usage of various


communication channels and will indicate the connection of users to the network.
Suriname College of Accountancy
Exam training
44

 A1-88 (Q) Independence


Which of the following responsibilities would MOST likely compromise
the independence of an IS auditor when reviewing the risk
management process?

 A. Participating in the design of the risk management framework

 B. Advising on different implementation techniques

 C. Facilitating risk awareness training

 D. Performing a due diligence review of the risk management


processes
Suriname College of Accountancy
Exam training
45

 A1-88 (A)
A is the correct answer.

Justification:
 A. Participating in the design of the risk management framework involves
designing controls, which will compromise the independence of the IS auditor to
audit the risk management process.

 B. Advising on different implementation techniques will not compromise the IS


auditor's independence because the IS auditor will not be involved in the decision-
making process.

 C. Facilitating awareness training will not hamper the IS auditor's independence


because the auditor will not be involved in the decision-making process.

 D. Due diligence reviews are a type of audit generally related to mergers and
acquisitions.
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Suriname College of Accountancy

Q&A
CYRIL.SOERI@TAH.SR / GREGORY.TAI-APIN@BNETS.SR
MOB: 719 00 47 / 89 29 293

SURINAME COLLEGE OF ACCOUNTANCY


FLUSTRAAT 35
PARAMARIBO, SURINAME
TEL +597 - 531 330 / 531 350
FAX +597 - 531 340
WEBSITE: SURINAMECOLLEGEOFACCOUNTANCY.COM