Today’s auditors must possess additional skills in order to perform their work. As more and more businesses use information technologies (IT) and set up an information system (IS) to process all their data, auditors must get acquainted with essential aspects of their clients’ information systems and also make use of information technology in order to perform their duties. In this essay, we will attempt to answer the following two questions: 1) “What aspects of clients' accounting information systems must be understood by auditing professionals?” and 2) “How should auditing professionals use their firm's information technology in performing their work?”
As the use of information systems has extended over the past decade and continues to do so, auditors must understand that many business entities are in the process of going “paperless”, that is keeping all records in electronic form only. Hence, tasks which were previously performed manually are now completely automated.
Another aspect that the auditor is concerned with when performing an audit for an entity which uses information systems is the process by which authorization to information systems related to financial reporting is granted to certain individuals. The auditor must know who has access and what type of access is authorized, especially because this affects internal control issues.
In other words, the auditor must understand that an information system is as efficient as the people who operate it. If the personnel operating the information system is not well-informed and sufficiently trained in using the IS, mistakes are more likely to happen. Likewise, the engineers in charge of designing the information system might not have a good understanding of the company’s op...
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Works Cited
AU Section 314. Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement (Supersedes SAS No. 55). Source: SAS No. 109. Understanding the Entity and Its Environment, .83 page 137.
AU Section 314. Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement (Supersedes SAS No. 55). Source: SAS No. 109. The Standards of Field Work, .60 page 132.
AU Section 314. Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement (Supersedes SAS No. 55). Source: SAS No. 109. Understanding the Entity and its Environment, .74 page 135.
AU Section 314. Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement (Supersedes SAS No. 55). Source: SAS No. 109. Understanding the Entity and its Environment, .86 page 138.
1. Accounting for R&D does not appear to be in compliance with SFAS No. 2. The work is of the nature described in SFAS No. 2, para. 9, and is not being conducted for others under contract.
In addition, by deciding not to inform the limited partners of Ed’s deceit, Andrea would be disregarding the American Institute of Certified Public Accountants Code of Professional Conduct in her being unreliable, dishonest and deceitful. Andrea has the responsibility of protecting her client, which involves encouraging the correction of financial statements in order to prevent suspicion during audits that could lead to fines and imprisonment.
n. The legal or regulatory obligation imposed on an officer or other person for keeping accurate record of property, documents, or funds. The person having this obligation may or may not have actual possession of th...
ARB43, Ch.4, Par.9 ?Where evidence indicates that cost will be recovered with an approximately normal profit upon sale in the ordinary course of business, no loss should be recognized...?
Table 3-4. Likelihood Definitions, National Institute of Standards and Technology (NIST): Risk Management Guide for Information Technology Systems. Special Publication 800-30, 2002.
Creditability for the IMA standards has three parts to it, 1) Communicate information fairly and objectively. 2) Disclose all relevant information that could reasonably be expected to influence an intended user 's understanding of the reports, analyses, or recommendations. 3) Disclose delays or deficiencies in information, timeliness, processing, or internal controls in conformance with organization policy and/or applicable law. Molly broke the ethical code of credibility when she changed the calculation of manufacturing overhead to based on machine hours. She was not objective with her data; she didn’t disclose the relevant information that was asked of her. She changed the calculation because the original would influence Mr. Robert’s.
as, if there was secondary data utilised, there should be a discussion of why this was done and
As technology progresses it can truly change how a business operates in terms of accounting and financial reporting. Online software has become a widely used system by many businesses around the globe. Financial reporting is essential to any business especially when seeking for potential investors or stakeholders. The reason being is because a financial report contains all of the records of how a business is performing financial wise. Likewise there are purposes of securities regulations and the main one is to disclose any schemes.
...eputation of honesty, quality, and integrity. It is also each employee’s responsibility to report to the company any situation where the standards or the laws are being violated.
As audit firms look to invest in big data, it will be even more critical to understand the implications of using big data and analytics on the audit profession. There are multiple ways in which data analytics would enhance the effectiveness and efficiency of external audits. From looking at the complete population, to finding trends, to allowing employees to do less routine tasks, there are multiple ways big data benefits audits. Big data would also enhance critical procedures performed for the sales and collection cycle. These benefits are not without some drawbacks that would need to be addressed by the profession.
44 U.S.C.3506 (b) (2). Quoted from FEDERAL CHIEF INFORMATION OFFICERS Responsibilities, Reporting Relationships, Tenure, and Challenges.).July 2004. United States Government Accountability Office. Retrieved Feb 2 2011 from http://www.gao.gov/ new.items/ d04823.pdf.
AASB, Australian Accounting Standards Board, Statement of Accounting Concepts SAC4 ‘Definition and recognition of the elements of financial stat
In many cases, the additional time and cost to conduct a quantitative analysis is not justified. Some risks with qualitative consequences, e.g. reputation damage, must be transformed into a quantitative amount. Quantitative assessments may be required in some instances, due to regulations, industry norms, or high-risk environments (ISO/IEC, 2009). It is important to be aware that while quantitative assessments look extremely precise, they are only as accurate as the data used to generate the estimate.
Accountants are able to make better decisions and direct business owners better on how to grow their businesses. Individuals have also benefited from the technology; one can easily access to their bank information and keep track of their expenses. Technology helped accountants eliminate papers, pens, calculations, errors and time. Today, with the help of computers, printers everything is being done faster and with very little mistakes. As technology grew, accountants have been introduced to new equipments, software, Internet based communication systems and better security systems. Most of the accountants have computers, printers, and fax machines in the offices. Everything is being calculated, stored, and organized in the computerized programs. Time is very valuable for everybody; with these inventions accountants accomplish their job responsibilities much better and faster. One does not need to travel long distances to provide finance reports; instead they can easily connect to each other via Internet and provide their results online. Beside Internet, accountants also can fax over the document to the firms they
An Accounting Information System (AIS) can be defined as software that helps accountants to collect data and process it to create information ((Bagranoff, Simkin and Norman 2010)