E-Auditing

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Financial Control
Auditing in an Electronic Environment (e-Auditing)

Presented to Dr. Marwa Tarek

Presented By:
Pierre Guirguis 9104428
Rimon Abd El-Meseih 9104386
Mahmoud Mohamed Refaat

Auditing in an Electronic Environment (e-Auditing)

* What is e-Auditing?

Electronic auditing, or e-Auditing, is computer-assisted auditing that uses electronic records to complete all or part of the audit. If you use a computer to record your business activity and maintain this data electronically, you are a candidate for an electronic audit.

* When are you a candidate for e-Auditing?

If you use a computer to record your business activity and maintain this data electronically, you are a candidate for an electronic audit.

* What are the Benefits of e-Auditing?

•It saves time – Electronic audits are completed much faster than traditional, manual audits. Company personnel and tax auditors spend less time working on the audit. •It saves paper – Electronic tax auditing reduces the amount of paper normally needed during the audit. •It is less disruptive to business – Electronic audits permit tax auditors to work at the tax office most of the time. Computer-assisted tax audit techniques reduce on-site audit time. In this way, there is minimal interference with the normal business of your company. •It is more efficient – More efficient techniques for reviewing taxpayer information are used in electronic audits. * The process of e-Auditing?

To corporate taxpayers:
1- The preparatory stage begins when a tax auditor contacts the company. 2- He then familiarizes himself with the accounting system of the company, and negotiates with company managers responsible for accounting and finance. 3- They make agreements on when and how the electronic material should be delivered to the tax authority, and what copies of files should be created for the purpose. 4- The tax auditor receives the files and converts them into a special database format used by the Finnish Tax Administration. 5- Later, the chief auditor and the company management will discuss the time schedule of the on-site tax audit, i.e. the part of the tax examination that takes place on company premises.

* What are the Auditor’s Responsibilities towards e-Auditing?

Our tax auditors have received special training on information technology; they are aware of information security considerations and work under strict rules of confidentiality. Their PC and laptop workstations are protected and secure. They store the original material in a locked cabinet, and they make sure that the work files created from the company-supplied electronic materials are removed from the computers immediately after the audit. Depending on what has been agreed, physical data media (CDs etc.) will either be returned to the company or destroyed. After the tax authority has issued the assessment decision or tax debiting decision, any files saved in Tax Administration systems will be deleted. The company will receive a message confirming the deletion.

* The use of expert systems in e-Auditing

As computer power is enhanced and auditors are faced with making decisions in more complex environments, some accounting firms have begun to develop expert systems to assist their personnel in the audit process, An expert system is a complex system of computer progams that models the decision process of a human experts. The psychological methods used to gain an understanding of the human experts decision process and conversion of this decision process into mathematical equations and computer programs are fair beyond the scope of this text.

* Legal Authority

The right of the Finnish Tax Administration to receive computer files for the purposes of audit is based on the following tax laws: § 14, Act on Assessment Procedure (1558/1995), § 3, Ordinance on Assessment Procedure, § 169, Value Added Tax Act (1501/1993), § 10, VAT Ordinance, and §...
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