Accounting Information Systems: The Processes and Controls, 2nd Edition

USE OF COMPUTERS IN AUDITS (STUDY OBJECTIVE 7)

Many companies design their IT systems so that important information such as purchase and sales orders, shipping and receiving reports, and invoices can be retrieved from the system in readable form. This kind of supporting documentation, as well as journals and ledgers, can be printed from the computer system to serve as evidence for auditors. Under these conditions, auditors can compare documents used to input data into the system with reports generated from the system, without gaining extensive knowledge of the computer system logic. In such cases, the use of IT systems does not have a great impact on the conduct of the audit, since the auditor can perform audit testing in the same manner as would be done for a manual system. This practice is known as auditing around the computer because it does not require evaluation of computer controls. Sometimes it is also referred to as “the black box approach,” because it does not involve detailed knowledge of the computer programs. Auditing around the computer merely uses and tests output of the computer system in the same manner as the audit would be conducted if the information had been generated manually. Because this approach does not consider the effectiveness of computer controls, auditing around the computer has limited usefulness.

Auditing through the computer involves directly testing the internal controls within the IT system, whereas auditing around the computer does not. Auditing ...