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a) During an audit. the auditor uses a combination of compliance tests or control, analytical procedures and detailed substantive procedures. When the information system is computer based,...

      

a) During an audit. the auditor uses a combination of compliance tests or control, analytical
procedures and detailed substantive procedures. When the information system is computer
based, the detailed tests involve the use of manual techniques and computer audit
programs.
Required:
Explain three manual techniques that an auditor could use in the audit of a computer based
information system.
(b) An audit trial can be described as a series of cross-references that enable the auditor to
Follow a transaction from cradle to grave and vice versa and to check the operations
performed at each stage of processing.
The transformation from manual accounting systems to fully computer based information
systems has led to the loss of audit trail such that audit trials are often now:
• Available in machine readable form only or
• Retained only as long as is necessary for the system to verify the transaction.
Required:
Explain the different ways auditors overcome these problems of loss of audit trail.

  

Answers


Kavungya
a) Manual technique that the auditor could use in the audit of a computer based accounting
system
- Review of exception reports. The auditor attempts to confirm these with other data e.g.
comparison of an outstanding dispatch note listing with the actual dispatch notes.
- Totaling. Relevant totals for example for debtors and creditors can be manually
verified.
- Re-performance. The auditor may re-perform a sample of computer generated
calculations e.g. for depreciation and interest expense.
- Reconciliations. These will include reconciliations for computer listings with creditor's
statements, bank statements, actual stock and personnel records.
- Comparison with other evidence such as results of debtoes circularization, attendance
at stock take and physical inspection of fixed asset.

b) Ways auditor's overcome problems of audit trail.
i) Auditors should have special print Outs for auditors, remember the need to be
consulted at the design stage.
ii) Inclusive audit facility: This means putting in the programs special audit instructions
that enable the computer to carry out some audit tests and produce print outs specially
for the auditor.
iii) Clerical recreation: Given unlimited time and man power, maintain the possibility to
recreate manually the audit trail. This would obviously be a very tedious exercise.
iv) Total testing and comparison: It is possible to- compare results with other data,.
budgets, previous periods and industry averages.
v) Alternative tests: We can perform stock takes, debtors' circularization and examination
of the condition of fixed assets.
vi) We can use test packs to verify program performance.

Kavungya answered the question on May 15, 2019 at 08:32


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