Disadvantages Of Manual Spreadsheets

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Technology and Techniques Used In Auditing. Computers have become the primary means used to process financial accounting information and have resulted in a situation in which auditors must be able to use and understand current information technology IT to audit a clients financial statements. Article on the pros and cons of consignment inventory. OR2Z8o/hqdefault.jpg' alt='Disadvantages Of Manual Spreadsheets' title='Disadvantages Of Manual Spreadsheets' />Introduction to Chemical Engineering Thermodynamics Solution Manual Ebook download as PDF File. Text File. txt or read book online. 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. Advertisement. Through this post, I am going to overview the use of technology and techniques to perform audits. 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. But, if you are looking for information about technology used by auditor in financial auditing, then yes, stay, keep reading Computer processing historically referred to as electronic data processing or EDP does not necessitate modification of the basic diagram of audit shown below However, the auditors consideration of internal control includes an assessment of computerized as well as manual controls. 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 AU 3. SAS 5. 5 and SAS 7. AICPA Audit Guide, both titled Consideration of Internal Control in a Financial Statement Audit. AICPA Auditing Procedures Studies  Consideration of Internal Control in a Computer Environment A Case Study Auditing with Computers Auditing in Common Computer Environments Audit Implications of EDI. Auditors Consideration of Internal Control When a Computer Is Present. The auditors responsibilities with respect to internal control over computer systems remain the same as with manual systems, that is, to obtain an understanding adequate 1 to aid in planning the remainder of the audit and 2 to assess control risk. Yet the auditors consideration of internal control may be affected in that computer systems 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 transactionsclerical 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. Samantha James Rise Acoustic Sessions Download Games. Because general controls affect all computer applications, the auditors initial focus should be on them since the effectiveness of specific application controls depends upon the effectiveness of the general controls. Computerized Audit Tools CAAT for Tests of Controls. Tests of controls divided into the following categories of techniques  a program analysis, b program testing, c continuous testing, and d review of operating systems and other systems software. I am going to describe these techniques further on the next paragraphs. Read onTechniques For Program Analysis. These techniques allow the auditor to gain an understanding of the clients program. 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 computerprogrammedbasedfinancial reports 1. Code review This technique involves actual analysis of the logic of the programs processing routines. 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. Flowcharting software Flowcharting software is used to produce a flowchart of a programs logic and may be used both in mainframe and microcomputer environments. 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. Program mapping identifies sections of code that can be entered and thus are executable. 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. Snapshot This technique in essence takes a picture of the status of program execution, intermediate results, or transaction data at specified processing points in the program processing. Live Upgrade Solaris 10 Update 11. 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. Test data A set of dummy transactions is developed by the auditor and processed by the clients computer programs to determine whether the controls which the auditor intends to test not necessarily all controls to restrict control risk are operating effectively. 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 Making certain the test data is not included in the clients accounting records. 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.