Auditing and assurance revision question and answer

Auditing and Assurance Revision Questions and Answers

Briefly describe, “auditing through the computer”.
What do you understand carrying out audit through the computer?

Auditing through the computer requires that the auditor submit data to the computer for processing. The results are then analyzed for the processing reliability and accuracy of the computer programme. Technological and other developments that required this approach include the following:

1. On line Data entry- In some systems, customers‟ orders are received phone and entered directly into the system with cathode ray tube input devices. No source documents are created. The auditor cannot trace from source documents to output. The auditors are forced to enter the system to determine the reliability and accuracy of controls and processing.

2. Elimination or reduction of print outs- With on line direct enquiry and reports prepared only on an exception basis, print outs may not be available to trace transactions and auditors has to enter the system to determine the accuracy of processing and contents of files.

3. Real time file updating– With real time file updating; transactions are posted as soon as they occur. A print out supplied to the auditors showing the contents of such files may not be accurate even for an instant.

In addition to the above some auditors decided to audit through the system for the following reasons:

 An inability to locate the source documents

 An apprehension that the amounts shown on the computer print outs might not agree with the balance actually contained in the computer files.

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