In recent years, a number of serious scandals and the low performance of government operations have increased the need for government auditors. In addition, because government audit reports are an important source of information in the decision-making process, it is not uncommon for audits to take place before significant decisions are made. These and other events are placing unprecedented performance pressures on government audit departments in China. To meet increasing compliance demands, Chinese government auditors and internal auditors around the world are starting to rely on the use of continuous online auditing COA.
Accordingly, knowledge of computer terminology, computer systems, and related audit procedures is essential to any auditors in this era. The overall need of individuals and organizations for credible information, combined with changes currently taking place in information technology, is also leading to rapid changes in the role of the public accounting profession.
CPA firms are already embracing a broader concept of the attest function that is being referred to as the assurance function, which includes providing assurance on a broad variety of types of financial or non-financial information.
Techniques used by auditors in assessing control risk on a financial data and report based on computer program. If you just landed on this page with expectation that it is a discussion about information technology IT Auditing, it is not. Also, audit procedures may include computerized and manual procedures for considering internal control and for performing substantive tests.
The various professional pronouncements addressing computer processing include: Consideration of Internal Control in a Computer Environment: Result in transaction trails that exist for a short period of time or only in computer-readable form.
Include program errors that cause uniform mishandling of transactions—clerical errors become much less frequent. Include computer controls that need to be tested in addition to the segregation of functions. Involve increased difficulty in detecting unauthorized access. Allow increased management supervisory potential resulting from more timely reports.
Include less documentation of initiation and execution of transactions. Include computer controls that affect the effectiveness of related manual control activities that use computer output.
As is the case for all controls, the auditor needs to test operating effectiveness only when control risk is to be assessed below the maximum. General application controls may be tested through inquiry, observation, and inspection techniques.
In addition, application controls may be tested using re-performance techniques outlined in the following section. I am going to describe these techniques further on the next paragraphs.
Because these techniques ordinarily are relatively time-consuming and require a high level of computer expertise, they are infrequently used in financial statement audits. Here are techniques commonly incorporated by auditor to analyze computer—programmed—based—financial reports: The primary advantage is that the auditor obtains a detailed understanding of the program.
Difficulties with the approach include the fact that it is extremely time-consuming, it requires a very high level of computer expertise, and difficulties involved with making certain that the program being verified is in fact the program in use throughout the accounting period.
Comparison programs — These programs allow the auditor to compare computerized files. For example, they can be used in a program analysis to determine that the auditor has the same version of the program that the client is using.
A difficulty involved is that the flowcharts of large programs become extremely involved. Program tracing and mapping — Program tracing is a technique in which each instruction executed is listed along with control information affecting that instruction.
These techniques allow an auditor to recognize logic sequences or dormant section of code that may be a potential source of abuse. The techniques are infrequently used because they are extremely time consuming.
This technique helps an auditor to analyze the processing logic of specific programs. Techniques For Program Testing Program testing involves the use of auditor-controlled actual or simulated data.
The approach provides direct evidence about the operation of programs and programmed controls. Historically, knowledge of these techniques has been tested relatively frequently. Some of these dummy transactions may include errors to test effectiveness of programmed controls and to determine how transactions are handled e.
When using test data, each control generally need only be tested once.
Several possible problems include: Determining that the program tested is actually used by the client to process data. Adequately developing test data for every possible control.
Developing adequate data to test key controls may be extremely time-consuming. Integrated test facility ITF — This method introduces dummy transactions into a system in the midst of live transactions and is usually built into the system during the original design. One way to accomplish this is to incorporate a simulated or subsidiary into the accounting system with the sole purpose of running test data through it.
The test data approach is similar and therefore its limitations are also similar, although the test data approach does not run simultaneously through the live system. The running of dummy transactions in the midst of live transactions makes the task of keeping the two transaction types separate more difficult.
After processing the data the auditor compares the output obtained with output obtained from the client. The method verifies processing of actual transactions as opposed to test data and ITF that use dummy transactions and allows the auditor to verify actual client results.create-audit-module– adds an audit-module.
SYNOPSIS. create-audit-module Adds the named audit module for the plug-in module that implements the audit capabilities. This command is supported in remote mode only. Password=admin sampleAuditModule Command create-audit-module executed successfully: EXIT STATUS.
0. embedded audit module. generalized audit software. Embedded Audit Module. An ongoing module which filters out non-material transactions. The chosen, material transactions are used for sampling in substantive tests.
HALL, ACCOUNTING INFORMATION SYSTEMS Last modified by: mkubale. insight into the traditional audit approach, how it has evolved, and how it might continue to evolve into the future audit.
This paper is also intended to provide an improved understanding of movements that have taken and are taking place relative to.
An auditor examining a firms accounting information system sets an embedded audit module to record all credit transactions in excess of $1, and store the data in an audit log a system control audit review file. 1. Embedded audit modules Providing an audit trail of transactions by accumulating the results of all processing.
6 2. Test data Using software packages and programs to identify the data files used in processing transactions. 8 3. Parallel simulation Identifying transactions at input and obtaining a computer trail of all processing steps related to %(8). Embedded Audit Module Definition Integral part of an application system that is designed to identify and report specific transactions or other information based on pre-determined criteria.