Efficient Auditing Process for Company Financial Status Order Instructions: The report should have the first section should be an introduction and the last section should be conclusions, but the main body of the report can be structured in any way that suits your arguments.
You must find at least three other academic journal articles or conference papers published in conference proceedings. These three publications should directly relate to the chosen topic or be useful in supporting the arguments you make in the report.
SAMPLE ANSWER
Efficient Auditing Process for Company Financial Status Introduction
Auditing refers to the process of going through the financial statements of an organization. This process is usually carried out for the purpose of establishing the state of affairs in an organization. According to Cascarino (2012, p. 78) it is evident that technology has emerged as one aspect that cannot be left out in auditing. Being stakeholders in the audited reports, consumers of the products of an organization strive to know the opinion expressed by auditors. This is because they are aimed at establishing whether the services they receive from a business will continue to flow. This is because the benefits associated with the use of information technology in the audit process have been found to be many. This essay will focus on the impact of information technology on auditing. The essay will be aimed at highlighting the benefits that have been gained as a result of increased use of information technology in auditing. The change in perspective in auditing brought about by increased use of information technology will be highlighted and a fitting conclusion of the same done at the last part.
Efficient audit process
The aim of subjecting the financial reports of an organization is to form an opinion regarding the state of affairs. Previously, the true state of affairs has not been reported as expected. This is because the use of manual resources to audit financial reports had many challenges. Additionally, many organizations had crossed to information technology supported systems while auditors were still manual in their work and approach. With the emergency of information technology in auditing, it has been easy to catch up with accountants whose financial reports had discrepancies hidden within the settings of the system. This has made the auditors unearth all shady transactions carried out in an organization thus giving better results. On the other hand, it has been easy to track the progress of audit work. This is because with information technology, accessibility of the working papers of auditors is easy. This means that rogue auditors have no place in the auditing environment.
Al-udah et al. (2013, p.428), in their journal titled The Impact of Information Technology on the Auditing Profession, Retrieved from http://www.academia.edu/4722293/The_Impact_of_Information_Technology_on_the_Auditing_Profession_By_Dr._Anas_Ali_Al-udah_Dr._Ahmad_Yahiya_Baniahmad_and_Dr._Nawwaf_Al-Fawaerah explain how information technology has been able to increase chances of increased audit efficiency. However, the authors of this journal highlight the need to have proper utilization of information technology for efficiency to be a reality. The journal insists that there should be a deep use of information technology since a shallow use is not adequate.
Additionally, information technology has been able to empower auditing to be able to make fraudsters shy away. Previously, cases of fraud have been rampant because people thought that auditing was shallow and incapable of finding out some malpractices. According to Moorthy et al. (2011, p 3531) in the journal titled “The impact of information technology on internal auditing”, retrieved from http://www.academicjournals.org/article/article1380899273_Moorthy%2520et%2520al.pdf , information technology has made identification of fraudulent actions easy. Currently, information technology has been phenomenal in making people belief that audit exercises are able to unearth all fraud related transactions. It is worth noting that information technology has been very useful in auditing through identifying instances of system violations. Whenever any individual attempts to go against the requirements of a system, the auditors are able to know as soon as possible and advise accordingly.
Efficient Auditing Process for Company Financial Status and the Impact on internal controls
Internal controls are a major requirement in auditing. An internal control refers to the procedure put in place to ensure that there are checks and balances. The internal controls are meant to ensure that processes within an organization are handled in a manner that is accepted by the organization and international financial reporting standards. With the introduction of information technology to auditing, the creation and management of internal controls has become something easy. In the journal titled “The impact of information technology on internal auditing”, retrieved from http://www.academicjournals.org/article/article1380899273_Moorthy%2520et%2520al.pdf
Moorthy et al. (2011, p.3527) states that upon the entry of information technology into auditing, there has been higher need to have strong internal controls. These authors explain how the auditor is supposed to ensure that the data generated by the computerized system is tested keenly. This shows that in a way, information technology has brought some little fear regarding the evidence presented to the auditors, thus the need to ensure that the internal controls are working.
Al-udah et al. (2013, p.428), in their journal titled The Impact of Information Technology on the Auditing Profession, Retrieved from http://www.academia.edu/4722293/The_Impact_of_Information_Technology_on_the_Auditing_Profession_By_Dr._Anas_Ali_Al-udah_Dr._Ahmad_Yahiya_Baniahmad_and_Dr._Nawwaf_Al-Fawaerah State that there is need to have a control function within the computerized computer system. In this journal, the authors show that all technological tools used should have control capabilities. This journal brings out a negative perspective regarding the role of information technology in auditing. The authors show how extra burden is brought about by the technological advancements. Al-udah et al. (2013, p.428) say that there has to be a close monitoring of the computerized system to avoid weaknesses. Additionally, the extra work of transforming data from paperless to digital is a total burden to auditors.
On the other hand, ACCA (2005) in the journal auditing in a Computer-based Environment, states that there is need to have proper planning when it comes to putting controls in a computerized environment. This journal shows the need to have proper design of the control support function in the computerized system. The journal raises the fact that the design should be watertight covering the important aspects of control measures. On a negative perspective, the journal shows how the process of setting up a properly designed control function of a computerized audit system becomes expensive and tiring to auditors.
CAAT’s and the audit software for Efficient Auditing Process for Company Financial Status
Computer Audited Audit Techniques has emerged as a good additive to the audit profession. CAAT’s refers to the transition of audit system into computerized system. This is through the use of the capabilities of computers to ensure that efficiency is created in the audit processes. The emergence of Computer Assisted Audit Techniques has been able to bring several benefits to auditors. One of the major benefits brought about by the use of the CAAT’s is that sampling and handling population in audit is made very easy. Specifically, it is easy to test the whole population unlike before where only a small part of the population was used. Audit software comes in handy when handling computerized systems in audit. The audit software is developed to assist in putting the platform for giving instructions to the computer during audits.
According to Moorthy et al. (2011, p.3530), in the journal titled “The impact of information technology on internal auditing’, CAAT’s have been able to bring about several benefits to auditing. The authors of this journal show how compromise of auditors has been reduced. Secondly, CAAT’s have been able to improve the involvement of all skills that auditors have.
Efficient Auditing Process for Company Financial Status for Improvement of accounting systems
As a result of emergency of information technology in auditing, firms have been forced to be more compliant when it comes to information technology related platforms. This means that organizations have been able to switch from the old analogue accounting systems to the digital systems. Under this factor, auditing has emerged as the driving force towards complete use of digital systems in organizations. This is because organizations have been striving to make sure that they can be audited through the use of the current information technology motivated systems.
Efficient Auditing Process for Company Financial Status and Risk management
Through the use of information technology, it has become easy to manage risks in organizations. It is worth noting that information technology has been able to make the process of setting up control procedures much easier. In the journal titled “The impact of information technology on internal auditing Moorthy et al. (2011, p.3533) state that the auditor is able to handle risk related matters better through the use of information technology supported aids. This is through breaking down the risks involved by preparing computer generated schedules for that purpose. ACCA (2015) advises that there is need to carry out proper trials on the procedures and controls.
Information update Efficient Auditing Process for Company Financial Status
Auditors are known to rely a lot on the information from the books of accounts of an organization. Basically, the auditors are supposed to receive the financial reports from an organization so that they start their audit work. The entrance of information technology has changed this audit approach. With information technology, it has become easy for an auditor to monitor the information as it is being keyed into the financial system of an organization. This enables an auditor to follow as transactions get updated in the accounting system. Al-Qudah et al. (2013, p. 427) explains how information technology enables an auditor to have control and close following of accounting events, something which reduces risks. Moorthy et al. (2011, p. 3527) shows how information technology has been able to change the timelines of performing audit work. According to Moorthy et al. (2011, p.3527), information technology has translated auditing into an ongoing exercise unlike before where it was being carried out at a given time within the financial year.
Efficient Auditing Process for Company Financial Status and Simplifying audit process
The audit has been known to be quite complex. This is brought about by the fact that audit has been handled through reliance of manual system. This has been phased out by the introduction of information technology based audit system. It has been found that the availability of information system has ended up making the process of carrying out audit very simple. This has been through the ability of information technology to breakdown complex scenarios into simple units. With this simplified form of audit input, auditors have been able to handle their work with ease. The hours consumed in auditing the reports of an organization have also reduced to a great extend. The reduction in the duration taken when auditing the books of account of a business has been received with jubilation by the various users. This has been the case since the period that the management of an organization takes waiting for the audit report for decision making has gone down considerably. For example, the process of coming up with sample for checking by auditors has become very easy. This is because the computerized audit system has been able to make the process a simple task.
Additionally, with information technology, large amount of data handled with ease. Information technology has been useful in handling huge volumes of the information of an organization. It is worth noting without information technology, auditors handle small bits of information one a time. This has been able to get the much needed assistance from the emergency of information technology aided audit systems. This means that the burden of going through numerous pieces of information for auditing purposes manually is long gone.
Ease in Calculations for Efficient Auditing Process for Company Financial Status
For auditing process to be complete, the auditor has to carry out some calculations in the process. Sometimes, the calculations involved in the audit process tend to be more than expected. Quite often, the high level of calculations in auditing tends to discourage the officers handling various tasks. Therefore, the introduction of information technology in auditing has enabled the auditors find the process of getting calculations right easy. More interesting, with information technology, errors are eliminated unlike in cases where information technology is not involved. Additionally, with information technology in auditing, the process of measuring the level of assumptions becomes easy. It is worth noting that the process of preparing financial reports for auditing involves coming up assumptions. With information technology, auditors are able to measure the suitability of such assumptions based on sensitivity analysis which is best supported by information technology.
Improved communication in Efficient Auditing Process for Company Financial Status
Communication is one aspect of business that should be handled with care. According to Moorthy et al. (2011, p.3538), information technology has made auditors follow communications in emails and other media between an organization and partners. This has made the communication assist in the audit of online businesses. With this in mind, auditors have always tried to make communication efficient so that auditing activities can flow smoothly. According to Pathak (2014, p.17) communication in auditing may be between the auditors and clients or among the auditors. With the introduction o information technology, communication has ended up getting to efficient levels. This has made it easy to handle the challenges that emerge in the process of carrying out an audit. As a result of information technology in communication, auditors have been able to learn more in line of their duty. This is because consultation has also been able to improve within the auditors circles. It is worth noting that learning is a continuous process, and through improved communication due to the use of information technology, auditors have been able to learn a lot.
Under improved communication as a result of the increased use of information technology in auditing, the users of the audited reports have been able to share and make a difference. It is interesting to note that these users have been able to share their thoughts regarding the opinion that is formed by auditors on the financial reports of organizations. This has given auditing a great picture in terms of interfacing with stakeholders without compromising independence.
Efficient Auditing Process for Company Financial Status Presentation of reports and data storage
After the auditors have completed doing their work as per the defined scope, they have to present the report to the management. This means that the auditors have to explain some aspects f the report to the management for better understanding. Previously, paper generated reports were being availed to the management. With this, some of the management members were not able to go through the tedious audit reports. However, with the introduction of information technology, the understanding of the reports has been boosted.
Al-udah et al. (2013, p.428), in their journal titled ‘The Impact of Information Technology on the Auditing Profession’, an explanation is given on how information technology has enabled auditors deal with live data updates
Additionally, the generated reports are able to be stored properly. Auditors have been able to have proper databases for their work and materials as a result of increased use of information technology. The access of the stored information can be remote or at an interface station. This has made handling of audit related information much easier. Additionally, the fact that auditors can work virtually is interesting. However, according to Moorthy et al. (2011, p.3535), in the journal titled “The impact of information technology on internal auditing”, there is need to ensure that there are no insecurity cases during the use of information technology aided offices.
So far, information technology has emerged to be one of the greatest revelations in audit. From the time that auditing has being utilizing information technology, great strides have been taken towards achieving 100 percent digital audit platform. This means that the progress towards doing away with manual inputs in audit is positive. According to Moorthy et al. (2011, p.3527), information technology has been able to encourage discarding of paper based audit records. This has been encouraging since across the globe, many transactions have shifted from paper based form to information based platforms.
ACCA (2005) in the journal titled “Auditing in a computer-based environment, it becomes clear that handling data records in the computerized system should be done with a lot of care. The journal explains that there is need to regulate the number of people who can interact with the files. This brings out an aspect of risk of loss or tampering with the files in the computerized system.
Efficient Auditing Process for Company Financial Status Conclusion
It is evident that the impact of information technology is quite huge in auditing. Auditors have ended up enjoying their work as a result of the benefits brought about by technology into audit processes. This explains why each organization should be in the forefront when it comes to embracing new technological advancements. With information technology bringing about improved communication, auditors are meant to find their job more interesting (Aalst & Wil 2011, P.34). This is likely to translate into work efficiency something which is always desired for. The fact that an auditor can work remotely due to the impact of information technology is something to be happy about. This means that it is not a must for an auditor to be present in the geographical location do that auditing may take place.
The future of digital auditing platform looks bright with the introduction of information technology. This means that it is important for auditors to ensure that they keep pace with the emerging technology. Doing away with paper based audit work will spell big strides for auditors.
The organizations which are not using information technology in supporting their audit processes should shift to the same as soon as possible. This should be done through upgrading of the financial reporting systems to support the same. Continuous training on information technology based audit systems should also be done for the purpose of fostering continuous improvement in the use of the same.
Efficient Auditing Process for Company Financial Status References
Aalst, V& Wil MP 2011, Process Mining: Discovery, Conformance and Enhancement of Business Processes, Springer
ACCA 2015, Auditing in a Computer-based Environment, retrieved from http://www.accaglobal.com/ca/en/student/exam-support-resources/professional-exams-study-resources/p7/technical-articles/auditing-computer-environment.html
Al-udah, A, Baniahmad, AY_and_Al-Fawaerah, N 2013, The Impact of Information Technology on the Auditing Profession, Retrieved from http://www.academia.edu/4722293/The_Impact_of_Information_Technology_on_the_Auditing_Profession_By_Dr._Anas_Ali_Al-udah_Dr._Ahmad_Yahiya_Baniahmad_and_Dr._Nawwaf_Al-Fawaerah
Cascarino , R 2012, Auditor’s Guide to Information Systems Auditing, Wiley Publishers
Moorthy et al. 2011, The impact of information technology on internal auditing, retrieved from http://www.academicjournals.org/article/article1380899273_Moorthy%2520et%2520al.pdf
Pathak, J 2014, Information Technology Auditing: An evolving agenda, Willey Publishers, Springer
