Chapter 7
Auditing Info Technology-Based Processes
Obj 1- Introduction to Auditing IT Processes
Assurance services
Obj 2- Types of Audits
External auditors / independent auditors
Financial statement audits
CPA
AICPA
Internal auditors
Compliance audits
Operational audits
Certified Public Accountants
American Institute of Certified Public Accountants
Obj 3- Info Risk and IT Enhanced Internal Control
Information Risk
Remoteness of information
Volume of data
Complexity of data
Motive of preparer
Obj 4- Authoritative Literature used in Auditing
PCAOB
GAAS
Public Company Accounting Oversight Board
Generally Accepted Auditing Standards
10 GAAS
IAPC
ISA
International Audit Practices Committee
International Standards of Auditing
Obj 5- Management Assertions and Audit Objectives
Management Assertions
Existence or Occurrence
Completeness
Valuation and Allocation
Accuracy
Classification
Cutoff
Rights and Obligations
Presentation and Disclosure
Obj 6- Phases of an IT Audit
Planning
Controls assessment
Controls testing
Substantive testing
Reporting
Definition of AIS: a system that captures, records, processes and reports accounting information.
Understanding how transactions are initiated, recorded and processed
Obj 7- Use of Computers in Audits
Auditing around the computer
Auditing through the computer
Requires auditors to understand and evaluate the IT controls and processes
Understand the computer system logic
test the controls within the IT system
determine whether the information generated by the system is reliable
CAAT computer assisted audit techniques
Obj 8- Tests of Controls
long and difficult. Don’t get bogged down.
Tests of controls determine whether the IT system processes financial information under a system
that promotes accuracy, whereas substantive tests verify whether financial information is accurate,
General Controls over
 Security
 Availability
 Processing Integrity
 Online Privacy
 Confidentiality
Application Controls
 Input
 Processing
 Output
Accuracy
Completeness
CAAT computer assisted audit techniques
Obj 8- Tests of Controls (continued)
Segregation of duties
Functions
System design
Programming
Operations
positions
systems analysts
programmers
operations personnel
Database administrator
Obj 9- Tests of Transactions and Tests of Balances
Substantive tests verify whether financial information is accurate, whereas tests of controls determine
whether the IT system processes financial information under a system that promotes accuracy.
Obj 10- Audit Completion / Reporting
Unqualified Opinion
Adverse Opinion
Disclaimer of Opinion
Qualified Opinion