Question

Consider how auditing has changed by comparing auditing techniques prior to the 1980s when many firms prepared manual accounting records and there were manual audits, versus audits today that use computerized techniques to analyze data.

Answer 1

The following changes in the present computer based audit makes it different from traditional manual audit:

1. Collection of evidence: In Information technology based audits, maintaining an audit trail are difficult. This is due to the following factors:
   • Input documents: Using EDI, some transactions are computed or approved by the computer's themselves.
   • Storage of data: Auditor must understand the capacity of storage of the client. He must also check if the client has resorted to storing data elsewhere.
   • Legal issues: Not all countries accept electronic evidence for legal matters. Hence auditor must also resort for physical evidences in addition to electronic in such a case.
   • Audit trails: Audit trails may exist for a shorter time. Thus auditor has to resort for other techniques such as auditing around the computer,etc.
2. Evaluation of evidences:
   • Some transactions are generate by the systems. They don't require approvals.
   • A tiny error in the logic in the system can create grave mistakes in the output.
   • In projects like agile and modern approaches where emphasis on documentation is minimum, auditor may often find the available documents to be incomplete or unsatisfactory.