Auditing & Assurance Services (Auditing and Assurance Services)
Auditing & Assurance Services (Auditing and Assurance Services)
7th Edition
ISBN: 9781259573286
Author: Timothy J Louwers, Allen Blay, David Sinason Associate Professor, Jerry R Strawser, Jay C. Thibodeau Associate Professor
Publisher: McGraw-Hill Education
Question
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Chapter H, Problem 1RC
To determine

Indicate the five major considerations which were introduced when client uses information technology.

Expert Solution & Answer
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Explanation of Solution

The Information Technology (IT) has enabled lots of opportunities to the world of business. IT has enabled opportunities like business strategies, enhances the performance of business processes, and also facilitates business decision making.

The following are the five major consideration need to be considered by the audit team when client uses information technology:

  • The possibility of input errors – There is a possibility to make errors by the client personnel when entering the information to the electronic format. Moreover, they introduced various types of controls which are specifically designed to avoid input errors.
  • The existence of systematic rather than random processing errors – When involving manual processing system, there is a chance to make errors because humans are processing transactions and may make random mistakes. However, in automatic processing systems, handle all transactions in a same manner.
  • The lack of an audit trail – Generally, the process of entering data is done electronically. In many situations, hard copy only the final output of processing. Moreover, it affects the audit team in the position of not having the facility to view a paper trail of the processing of transactions.
  • The possibility of inappropriate access to computer files and programs – The growth of information technology allow the chances to access computer files and important programs. In preventing those behaviors, client needs to implement strong security or password for accessing the important files. In addition, they must monitor periodically who access the files and programs.
  • The reduced human involvement in the processing of transactions – The use of information technology reduces human participation in processing the transactions.

    For example: Activities performed by human can also be done through computer programs easily. Moreover, this will save time and cost.

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