With the introduction of personal computers, conventional accounting systems and methods employing papers, pens and abacuses have been through drastic adjustments, therefore making a great impact on internal control and review trails in following review procedures. Also, the introduction of computer has brought an immense increase in the availability of electronic assets. My topic is titled auditing in a Computerized Details System (CIS). One purpose why this topic is roofed in auditing is due to the rampant changes that are going on in our world.


We could say that each day, everything about us goes through the process of evolution. Example, the government structure, educational structure, sociable structure, technological structure, financial structure while others are going into extensive and widespread adjustments. Work today involve the application of computer, hence, the need for computerized information system in auditing erupted. Around the globe, computer takes on an important function in the development of one’s region. That is why, here in the Philippines, we are aiming to muddle through by together with the drastic and radical changes in order to be globally competitive.

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In fact , technology experts stated that when it comes to new enhancement and improvement of technology, the Israel is not far behind, but instead one of the fastest country to acclimatize and adopt with this unbelievable wave of adjustments. With the quick progress in technology in recent times, computer details systems have turn into feasible and practicable, maybe essential, to be used even in small scale organization operations. Just about all entities utilize computers to some degree in their accounting systems.

The widespread utilization of computers features offered fresh opportunities pertaining to professional accountancy firm and had as well created several challenging and exigent concerns to auditors. Additionally , in auditing, the need for computer is now more important and significant due to increasing and growing demand of auditing. Without computer, then auditing would not manage to deal with this kind of growing demand. Ever picture, conducting an audit without the usage of computer, isn’t that that it will always be very difficult for the auditor because we all know, we individuals are engrossed and innate with mistakes. Incorporating CIS in auditing is difficult.

This is because; there are technical and methodological concerns that an auditor doesn’t have any kind of idea with, for instance, the program, such as functioning program, power program, etc . Auditors don’t have any notion of these things, essential auditor attempts to broaden their particular knowledge in order to be competitive. The consequence of that leads for the flourishing of auditing. Time and again, auditing will continue to evolve. Having said all of that, this theme contains a lot of different things which usually cannot be present in normal manual auditing. The complete objective and scope of your audit would not change in a CIS environment.

However , the use of a computer adjustments the finalizing, storage and communication of economic information and might affect the accounting and inner control systems employed by the entity. Appropriately, a CIS environment may possibly affect: a. ) the procedures and then the auditors in receiving a sufficient knowledge of the accounting and inner control devices; b. ) the account of natural risk and control risk through which the auditors arrive at the risk evaluation; and c. ) the auditors’ style and performance of tests of control and substantive procedures appropriate to satisfy the examine objective.

Anyway, regardless of the degree of computerization or the techniques of data finalizing being used, the establishment and implementation of appropriate inner control systems rests with the management and others charged with governance. The auditor’s responsibility is to get an understanding from the entity’s inner control program to be able to determine control risk and identify the nature, time and magnitude of tests to be performed. Before tackling the important information on my matter, let us first define precisely what is meant simply by Auditing and Computerized Info System (CIS). So , what is auditing?

PSA 200 specifies auditing simply by stating the purpose of a financial assertion audit, that may be, to enable the auditor to express an opinion whether the financial statements are prepared, in all of the material respects, in accordance with the applicable financial reporting framework. A more comprehensive definition of auditing is given by the American Accounting Association: “auditing is a organized process of objectively obtaining and evaluating proof regarding assertions about economic actions and events to ascertain the degree of correspondence between these kinds of assertions and established conditions and conversing the results to interested users. On the other hand, digital information system pertains to using computer to formulate and collect the information made in an review for the necessity of the auditor and third parties related.

Another definition of Electronic Information Program (CIS) contains, is often a monitor within the pc science discipline studying personal computers and algorithmic processes, which include their concepts and cortège, their computer software & components designs, their particular applications, and the impact on lots of people. (http://www. quora. om/Information-Systems) We would just like to give a brief history of Auditing in a CIS Environment. It commenced as Digital Data Method (EDP) Auditing and designed largely resulting from the within technology in accounting systems, the need for THIS control, as well as the impact of computers around the ability to conduct attestation solutions. The last few years have been a fantastic time in the field of CIS auditing as a result of the accounting scams and increased regulation. CIS auditing has had a relatively brief yet wealthy history in comparison to auditing overall and remains an ever changing field.

The development of computer technology in to accounting devices changed the way data was stored, retrieved and manipulated. It is believed that the initially use of a computerized accounting system was at General Electric power in 1954. During the time period of 1954 for the mid-1960s, the auditing profession was still auditing around the pc. At this time simply mainframe personal computers were applied and few-people had the relevant skills and skills to system computers. This kind of began to enhancements made on the mid-1960s with the launch of new, smaller and less pricey machines.

This kind of increased the utilization of computers in businesses and with it came the advantages of auditors for being familiar with EDP concepts in operation. Along with the embrace computer employ, came the rise of different types of accounting devices. The market soon realized that they necessary to develop their own software plus the first of the generalized audit software (GAS) was developed. In 1968, the American Commence of Qualified Public Accountancy firm (AICPA) got the Big 8-10 (now the Big Four) accounting firms be involved in the development of EDP auditing.

A result of this was the discharge of Auditing & EDP. The publication included how you can document EDP audits and examples of the right way to process inside control reviews. Around this period EDP auditors formed the Electronic Data Processing Auditors Association (EDPAA). The goal of the association was going to produce rules, procedures and standards pertaining to EDP audits. In 1977, the 1st edition of Control Objectives was printed. This publication is now generally known as Control Aims for Information and related Technology (CobiT). CobiT is the group of generally approved IT control objectives for IT auditors.

In 1994, EDPAA changed its name to Information Systems Review and Control Association (ISACA). The period through the late 1960s through today has found rapid within technology in the microcomputer and networking to the internet and with these adjustments came a few major situations that change IT auditing forever. The formation and rise in demand for the Internet and E-commerce have experienced significant affects on the growth of IT taxation. The Internet influences the lives of most of the world and is a location of elevated business, entertainment and offense.

IT auditing helps businesses and individuals on the Internet find protection while aiding commerce and communications to flourish. (www. trustsoft. com/pp_ha_1. php) In terms of needed abilities and skills of the auditor; he/she really should have sufficient understanding of the CIS to prepare, direct, regulate and review the work performed. The auditor should consider whether specialized CIS skills happen to be needed within an audit. These types of may be needed to a. ) obtain adequate understanding of the accounting and internal control systems with the CIS environment, b. decide the effect of CIS environment on the examination of related risks, c. ) design and style and carry out appropriate tests of control and hypostatic procedures.

In planning the portions of the audit which might be affected as a result of client’s CIS environment, the auditor will need to acquire a comprehension of the inference and complexity of the CIS activities as well as the availability of data for use in the audit. This kind of matter that needed understanding are the next; a. ) the significance and intricacy of computer digesting in every single significant accounting application, n. the organizational structure from the client and the extent of concentration or distribution of computer finalizing throughout the entity, c. ) the availability of information (e. g. source record, computer files). Computerized info systems have important and essential characteristics that distinguish these people from manual processing system.

These are the subsequent: a. ) lack of obvious transaction paths, b. ) consistency of performance, c. ) concentration of obligations, d. ) ease of access to data and computer courses, e. ) vulnerability of data and program storage press, f. Devices generated orders and g. ) Possibility of increased managing supervision. With reference to lack of obvious transaction trails, in manual system, it truly is normally possible to follow a transaction throughout the system; by simply examining source documents, entity’s records, and financial information. In a CIS environment, data can be came into directly and unswervingly in the computer system lacking supporting documents. Furthermore, records and data may not be branded and may not be read without using the computer.

The absence of these visible paperwork supporting the processing of transactions the actual examination of proof more difficult. With regards to the persistence of efficiency, CIS functions functions just as programmed. In the event the computer can be programmed to accomplish a specific data processing process, it will never get fed up of performing the assigned job in the exact same manner. Because of this capability of the computer to procedure transactions consistently, clerical problems that are normally associated with manual processing happen to be eliminated.

Alternatively, an incorrect plan could be extremely devastating because it will cause consistently erroneous data digesting. Third, attention of duties, in right here proper segregation of responsibilities is a vital characteristic of any sound inside control program. However , as a result of ability with the computer to process info efficiently, you will find functions which can be normally seperated in manual processing which have been combined in a CIS environment. As a particular example, in manual control the function of recording cash payments is contrapuesto with the responsibility for making up cash payment.

Since one of these functions is a check after the different, assigning equally functions to a single employee might enable and permit that employee to commit and hide errors and irregularities. An adequately programmed computer system, on the other hand, has no tendency or perhaps motivation to commit unevenness or hide its errors. Hence what appears to be a great incompatible mixture of functions can be combined in a CIS environment without deterioration and detoriorating the internal control provided appropriate and suitable compensating settings are applied.

Fourth, simplicity of access to info and laptop programs, within a CIS environment, data and computer applications may be reached and changed by not authorized persons going out of no visible and detectible evidence. It is necessary, therefore , that proper and appropriate regulates are integrated in the system to limit the access to data files and programs just to authorized staff. Fifth, weakness of data and program safe-keeping media, in a manual system the data are crafted in printer ink and considerable paper. In order to to lose the information is to lose or damage the physical records.

The situation is completely distinct in a CIS environment. The data on the computer may be easily improved, leaving zero trace of the original content. This modify could happen accidentally and huge volume of information may be quickly lost. Another, devices generated orders; certain ventures may be initiated by the CIS itself without the need for an input record. For example , curiosity may be calculated and recharged automatically to customers’ consideration balances on the basis of pre-authorized conditions contained in a pc program.

Last but not least, potential for augmented management supervision, CIS will offer management various analytical equipment that may be used to review and supervise the operation of the entity. The availability of these equipment may improve the entire internal control composition. There are certain benefits and drawbacks in using computer inside the conduct of audit. Take notice that the features of computer information system already handled above pertains to some pros and cons of CIS.

Advantages of it includes, it eliminates computational problems commonly made by human; helps reduce up and alleviate the effort of auditor especially when it comes to timeliness; more quickly and effective in finalizing of information; era and creation of accounting documents like invoices, cheques and statement of accounts are automated; more regular information could be produced; Together with the larger cutbacks in the cost of hardware and software and availability of useful accounting software program, it is relatively more affordable like keeping a manual accounting system; no more manual processing with the data therefore all info are automatically been placed to the various ledgers/accounts while others. On the other hand, the disadvantages of CIS would be the following: it removes part of the audit trek; subject to manipulation especially to unauthorized staff; the need for backup files, can result in to more price, especially if computer system is prone to power disruption and by infectious computer software; danger of computer fraud if proper level of control and security whether external and internal are not correctly been instituted and others.


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