Page 160 - DCOM204_AUDITING_THEORY

Auditing Theory

Notes 6. User requirements are bound to change over a period of time, primarily due to the experience
gained. The systems must be flexible enough to accommodate such changes.

Task Visit a company of your choice which maintains its accounts on computers. Discuss
with system manager and prepare a note on problems encountered by them in processing
accounting data.

Self Assessment

Fill in the blanks:
3. The usual controls based on proper segregation of incompatible functions may be absent
or may be less .......................... in an EDP environment.
4. Transactions and master file data are often concentrated either in one computer installation
located centrally or in a number of .......................... distributed throughout the enterprise.

8.8.1 Internal Audit Practices in Relation to Computerized System

The continuous expansion of the range of internal auditing services, together with the limited
resources available, have created increased interest in finding new ways which the internal
auditor can achieve his audit objectives more efficiently. At the same time the major developments
in electronic data processing have provided new capabilities. All of these factors have led
internal auditors to make greater use for computers in their audit work. That use of especially
advantageous when there are voluminous data and processing involved. Computers also make
possible to a greater extent the use of the many types of statistical sampling. It is appropriate,
therefore, that we examine in more depth how internal auditors can utilize computers in achieving
their audit objectives in all operational areas.
The extended use of computers by companies of all size has stimulated changes in the auditor’s
approach. The auditor can no longer be satisfied with only manual audit procedures to fulfill
audit objectives. The whole internal control environment may change from those in a manual
setting. The nature of the audit evidence changes when information is a manual setting. The
nature of the audit evidence changes when information is readable only by electronic means.
The use of computer assisted audit techniques may result in the performance of audit tests by the
computer which were previously done manually. In addition, these techniques may enable the
auditor to carry out audit procedures that were hitherto impracticable. As new systems are
acquired or developed he can determine whether data can be accumulated and stored in a
manner that will facilitate later audit. Through maximum utilization of computer assisted audit
techniques, the internal auditor may not only improve the quality of audits, but also sharpen his
capabilities to perform special reviews for management thus provide better service.

8.8.2 Requirements for a Computer Audit Program System

Prior to selecting a computer audit package, a review should be made of the generalized computer
audit program systems that have been developed by other organizations. No single software
package may satisfy all the requirements of every audit group or assignment. The following are
some characteristics of an effective system.
1. Simplicity
2. Understandability

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