|Type of paper:||Literature review|
|Categories:||Management Information technologies Cyber security|
Enterprise Resources Planning Systems in Information System Auditing
In Information system auditing, Enterprise Resource Planning (ERP) refers to the management systems in business that are made up of a set of complete programs or software that can be used to control, integrate the business activities, facilitate data flow, and manage all business processes in the organization (Kallunki, Laitinen, & Silvola, 2011). It also plans how the resources of the business, customers, and workers are acquired and changed from one state to the other.
An ERP supports business programs that are contained in a single database. The data maintained in this database is used for various purposes such as production, management of supply chain, customer relationship management and human resource management (Kallunki, Laitinen, & Silvola, 2011). The software in ERP is designed to select the modules that the business requires to improve the performance of the organization.
My reaction to the ERP system is that it makes most businesses experience a transformation that integrates them, makes them look more intelligent and web-based. However, this system has resulted in a significant change in function of internal audit. In this view, an incorporated environment eliminates various points of failure through avoidance of manual work and flow of documents. In an ERP organization, it is required of the auditors to spend less time while managing crisis and addressing problems to ensure that Internal controls are working effectively.
CAATs in Information System Auditing
Computer Assisted Audit Techniques refer to the tools that auditors use in the information system auditing. This technique helps them to identify certain irregularities in the data by conducting forensic accounting (Vasile-Daniel, 2010). With the assistance of this tool, it will be possible for the Internal auditing department of any organization to give analytical results. As such, it is an important tool that creates a productive and effective working environment for the firm auditor. The most significant CAATs are test data, on-line audit monitor, integrated test facility and parallel simulation.
The reflection of this subject is that the CAAT is used by the auditors to carry out forensic accounting for the purpose of detecting and preventing fraud. This technique simplifies data in its automated form. This tool is advantageous to the accountants because it is user-friendly, and the upcoming tools are accompanied by guidebooks (Vasile-Daniel, 2010). To work efficiently with CAATs in the information system technology, the accountants, and the auditors must select the correct data. After the selection process, the auditors must import the data to the CAAT after which the tool will involuntarily produce the logical data.
It is worth noting the CAATs can exercise numerous tools provided that it uses an advanced technology with the assistance of computers. Taking the advantage of the new technology, it is possible for the auditors and accountants to verify the organizational internal controls, access the company's records and generate productive information.
CAATTs for Data Extraction and Analysis in Information System Auditing
As stated, CAATT refers to any technology use that helps in an audit. Today, the use of CAATTs is allowed in the data analysis and extraction because it is used in large amounts of data. They also enhance the efficacy of the conclusions regarding the analysis of data (Ngai, Hu, Wong, Chen, & Sun, 2011). As such auditors make use CAATTs in collecting the data involving accounting for the purpose of testing application control and in carrying out extensive tests
To ensure effective analysis of data, it is imperative for the auditors to carry out extraction process. Extraction involves obtaining the set of data from the data server. Data extraction process is carried out with the help of data extraction software that performs substantive tests (Ngai, Hu, Wong, Chen, & Sun, 2011). Research indicates that various audit testing takes place in the stage of substantive-testing of the audit. The procedures are known as substantive because they validate dollar amounts.
CAATTs can be used for data extraction and analysis. They represent an example of software needed to assist auditors to analyze data since they can manipulate data in bulk with no additional cost. For that reason, the extraction and analysis of data using the tools and techniques are the most important Information Technologies that are associated with audit work.
Auditing the Revenue Cycle in Information System Auditing
Various technologies are used to audit the revenues cycle activities. The first technology is the sales order system that involves batch processing and utilizes sequential files for saving the records of accounting (Kanellou & Spathis, 2011). Sales order system is an example of a legacy system that designed files for the benefit of a single user. However, in this setting, it is almost impossible to share data because it experiences some aspects of data redundancy and obsolescence.
Secondly, auditing the revenue cycle requires the auditors to review the operational elements of cash receipts that make use of batch processing and direct access files. It is found in both modern and traditional legacy systems (Kanellou & Spathis, 2011). The method of direct access file has performance benefits over processing of the sequential files because it allows data sharing in a small amount. The last example portrays a current cash receipt and sale order system that employs database technology. It replaces some traditional procedures with the modern ones.
Auditing the revenue cycle employs various controls namely; input controls, output controls, and process controls.
The reaction is that limitation of space does not allow a review of all probable configurations of advancing technologies, file structures, and techniques. Instead, the objective is to show examples of different techniques that are practical and to evaluate audit implications and its control systems.
Auditing the Expenditure Cycle in Information System Auditing
There are numerous technology systems that support auditing of the expenditure cycles. One of them is a purchase and cash disbursement system. This program uses batch processing and sequential files for storage of accounting information (Hall, 2010; Kanellou & Spathis, 2011). It resembles the period of data ownership where the auditors designed files for single users. Also, it is hard to share data using this system. As such, it leads to data redundancy and obsolescence.
One thing to consider while auditing the expenditure cycle is the functional characteristics of the system that uses real-time processing and databases. The other thing to consider is whether or not the software portrays a modern payroll system that employs database technology and a real-time processing.
Even though there are advanced technology programs that support auditing of the expenditure cycles, space limitations forbid an examination of probable configurations of technology processing and file structures.
Introduction to Business Ethics and Fraud in Information System Auditing
The emergence of information system auditing has attracted new chances for ethical fraud and misconduct in business (Rossouw, Prozesky, du Plessis, & Prinsloo, 2010). A foundation of business ethics and fraud, in this case, depends on the understanding of how one's behaviors and actions affect other people.
The accounting information systems are important components of business technology. As such, it is important to control or bar unauthorized access to vital data by advocating for ethical behaviors. Therefore, business ethics helps the auditors to avoid some prohibited behaviors such as using data or information of other individuals for personal gain.
Ethical guidelines in business and accounting direct people on the moral behaviors required in the work environment. Therefore, the ethics can prevent people from harming their colleagues. These ethics may be designed by the government or the company to eliminate unethical behaviors.
Fraud Schemes and Fraud Detection in Information System Auditing
Improvement in technology such as the use of information system auditing in businesses and organizations have helped to detect and prevent fraud. This technology allows the firms to adopt automated controls that opt to detect fraud (Moorthy, Mohamed, Gopalan, & San, 2011). One system that has been implemented for this purpose is the forensic technology and computer programs designed to detect fraud.
Fraud is a business hazard that chief auditors must address. The use of information system auditing has played a major role in detecting the fraud in organizations. This process has been supported by the development of forensic packages and computer programs meant for this purpose.
Implementation of information system auditing has been helpful in businesses because it has promoted various mechanisms such forensic accounting technology for detecting and preventing fraud. In future, frauds that often occur in organizations will be controlled through this system. The probability of this approach ending fraud is high.
Hall, J. A. (2010). Information technology auditing. Boston: Cengage Learning.
Kallunki, J. P., Laitinen, E. K., & Silvola, H. (2011). Impact of enterprise resource planning systems on management control systems and firm performance. International Journal of Accounting Information Systems, 12 (1), 20-39.
Kanellou, A., & Spathis, C. (2011). Auditing in enterprise system environment: a synthesis. Journal of Enterprise Information Management, 24 (9), 494-519.
Moorthy, M. K., Mohamed, A. S., Gopalan, M., & San, L. H. (2011). The impact of information technology on internal auditing. Journal of Business Management, 5 (9), 3523.
Ngai, E. W., Hu, Y., Wong, Y. H., Chen, Y., & Sun, X. (2011). The application of data mining techniques in financial fraud detection. A classification framewo...
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