The Importance of Information Technology Auditing
The Importance of Information Technology Auditing
MGMT 550
Cassandra Rich
April 28, 2014
Information technology auditing is important to the financial auditor and to the financial statement audit because IT is the foundation of today’s accounting systems. IT audits are crucial for ensuring that a company’s financial statements are a representation of the company’s position and that the system used to compile the statements is operating properly and producing accurate statements. IT auditing allows the auditors to provide a more effective financial audit because it provides the auditor with the processes and information that the client used to prepare the statements. IT auditors have three objectives; to prove “the confidentiality, integrity, and availability of data”. Both the IT auditors and the financial auditors can decide what processes best ensure reliability of the financial statements. (Wood,
Brown, & Howe, 2013)
There are five management assertions that are considered during all types of audits; existence, completeness, rights and obligations, valuations, and auditing procedures. IT audits go beyond proving that the company’s financial statements pass all five management assertions, instead they delve beneath the top layer of information provided by the company and search within the software to find whether the system the company uses to document all of their financials fights against intentional and unintentional misstatements. For example, when an auditor is proving existence they will typically look at the sales journal to see what item was sold and then prove that the item was actually sold. An IT auditor will “break into the system” and read the code that proves that when a piece of inventory is bought the system registers it in the sales journal and in the inventory journal. He is responsible for ensuring that
“all necessary and required controls exist”. When proving completeness, an IT auditor is responsible for
MGMT 550
Cassandra Rich
April 28, 2014
Information technology auditing is important to the financial auditor and to the financial statement audit because IT is the foundation of today’s accounting systems. IT audits are crucial for ensuring that a company’s financial statements are a representation of the company’s position and that the system used to compile the statements is operating properly and producing accurate statements. IT auditing allows the auditors to provide a more effective financial audit because it provides the auditor with the processes and information that the client used to prepare the statements. IT auditors have three objectives; to prove “the confidentiality, integrity, and availability of data”. Both the IT auditors and the financial auditors can decide what processes best ensure reliability of the financial statements. (Wood,
Brown, & Howe, 2013)
There are five management assertions that are considered during all types of audits; existence, completeness, rights and obligations, valuations, and auditing procedures. IT audits go beyond proving that the company’s financial statements pass all five management assertions, instead they delve beneath the top layer of information provided by the company and search within the software to find whether the system the company uses to document all of their financials fights against intentional and unintentional misstatements. For example, when an auditor is proving existence they will typically look at the sales journal to see what item was sold and then prove that the item was actually sold. An IT auditor will “break into the system” and read the code that proves that when a piece of inventory is bought the system registers it in the sales journal and in the inventory journal. He is responsible for ensuring that
“all necessary and required controls exist”. When proving completeness, an IT auditor is responsible for
References: Internal Control - Integrated Framework. (1992). Retrieved April 24, 2014, from COSO: http://www.coso.org/documents/Internal%20Control-Integrated%20Framework.pdf Audit Objectives and Evidence. (1999, February 11). Retrieved April 24, 2014, from ATG: http://hilltop.bradley.edu/~simonp/atg457/obj.html Klamm, B. K., & Watson, M. W. (2009). SOC 404 Reported Internal Control Weaknesses: A Test of COSO Framework Components and Information Technology Wood, J., Brown, W., & Howe, H. (2013). IT Auditing and Application Controls for Small and Mid-Sized Enterprises