Page 135 - DCOM509_ADVANCED_AUDITING

Advanced Auditing

Notes had a relatively short yet rich history when compared to auditing as a whole and remains
an ever changing field.

The introduction of computer technology into accounting systems changed the way data
was stored, retrieved and controlled. It is believed that the first use of a computerized
accounting system was at General Electric in 1954. During the time period of 1954 to the
mid-1960s, the auditing profession was still auditing around the computer. At this time
only mainframe computers were used and few people had the skills and abilities to
program computers. This began to change in the mid-1960s with the introduction of new,
smaller and less expensive machines. This increased the use of computers in businesses
and with it came the need for auditors to become familiar with EDP concepts in business.
Along with the increase in computer use, came the rise of different types of accounting
systems. The industry soon realized that they needed to develop their own software and
the first of the Generalized Audit Software (GAS) was developed. In 1968, the American
Institute of Certified Public Accountants (AICPA) had the Big Eight (now the Big Four)
accounting firms participate in the development of EDP auditing. The result of this was
the release of Auditing & EDP. The book included how to document EDP audits and
examples of how to process internal control reviews.
Around this time EDP auditors formed the Electronic Data Processing Auditors Association
(EDPAA). The goal of the association was to produce guidelines, procedures and standards
for EDP audits. In 1977, the first edition of Control Objectives was published. This publication
is now known as Control Objectives for Information and related Technology (CobiT).
CobiT is the set of generally accepted IT control objectives for IT auditors. In 1994, EDPAA
changed its name to Information Systems Audit and Control Association (ISACA). The
period from the late 1960s through today has seen rapid changes in technology from the
microcomputer and networking to the internet and with these changes came some major
events that change IT auditing forever.
The formation and rise in popularity of the Internet and E-commerce have had significant
influences on the growth of IT audit. The Internet influences the lives of most of the world
and is a place of increased business, entertainment and crime. IT auditing helps
organizations and individuals on the Internet find security while helping commerce and
communications to flourish.

Source: From Wikipedia, the free encyclopedia
8.2 Specific Aspects of Auditing in a Computer-Based Environment

Information Technology (IT) is integral to modern accounting and management information
systems. As auditors have to assure proper functioning of the systems of an organization, in a
computerized environment we can divide the normal activity of audit in two parts. One is the
normal audit in which actual transactions are looked in detail to ensure that they are in accordance
with the business objective.

In a computerized environment, as the data resides on computer systems, it is far easier to
process the same using computers themselves rather than depending on print-outs or hard
copies and processing them manually for ensuring accuracy of auditing.

Notes It is imperative that auditors should be fully aware of the impact of IT on the audit
of a client’s financial statements, both in the context of how it is used by a client to gather,
process and report financial information in its financial statements, and how the auditor
can use IT in the process of auditing the financial statements.

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