The Impact of Information Technology on Auditing
The report should have the first section should be an introduction and the last section should be
conclusions, but the main body of the report can be structured in any way that suits your arguments. You
must find at least three other academic journal articles or conference papers published in conference
proceedings. These three publications should directly relate to the chosen topic or be useful in supporting
the arguments you make in the report.
Introduction
Auditing refers to the process of going through the financial statements of an organization. This
process is usually carried out for the purpose of establishing the state of affairs in an
organization. According to Cascarino (2012, p. 78) it is evident that technology has emerged as
one aspect that cannot be left out in auditing. Being stakeholders in the audited reports,
consumers of the products of an organization strive to know the opinion expressed by auditors.
This is because they are aimed at establishing whether the services they receive from a business
will continue to flow. This is because the benefits associated with the use of information
technology in the audit process have been found to be many. This essay will focus on the impact
of information technology on auditing. The essay will be aimed at highlighting the benefits that
have been gained as a result of increased use of information technology in auditing. The change
in perspective in auditing brought about by increased use of information technology will be
highlighted and a fitting conclusion of the same done at the last part.
Efficient audit process
The aim of subjecting the financial reports of an organization is to form an opinion regarding the
state of affairs. Previously, the true state of affairs has not been reported as expected. This is
because the use of manual resources to audit financial reports had many challenges.
Additionally, many organizations had crossed to information technology supported systems
while auditors were still manual in their work and approach. With the emergency of information
technology in auditing, it has been easy to catch up with accountants whose financial reports had
discrepancies hidden within the settings of the system. This has made the auditors unearth all
shady transactions carried out in an organization thus giving better results. On the other hand, it
has been easy to track the progress of audit work. This is because with information technology,
accessibility of the working papers of auditors is easy. This means that rogue auditors have no
place in the auditing environment.
Al-udah et al. (2013, p.428), in their journal titled The Impact of Information Technology on the
Auditing Profession,
Fawaerah explain how information technology has been able to increase chances of increased
audit efficiency. However, the authors of this journal highlight the need to have proper utilization
of information technology for efficiency to be a reality. The journal insists that there should be a
deep use of information technology since a shallow use is not adequate.
Additionally, information technology has been able to empower auditing to be able to make
fraudsters shy away. Previously, cases of fraud have been rampant because people thought that
auditing was shallow and incapable of finding out some malpractices. According to Moorthy et
al. (2011, p 3531) in the journal titled “The impact of information technology on internal
auditing”,
information technology has made identification of fraudulent actions easy. Currently,
information technology has been phenomenal in making people belief that audit exercises are
able to unearth all fraud related transactions. It is worth noting that information technology has
been very useful in auditing through identifying instances of system violations. Whenever any
individual attempts to go against the requirements of a system, the auditors are able to know as
soon as possible and advise accordingly.
Impact on internal controls
Internal controls are a major requirement in auditing. An internal control refers to the procedure
put in place to ensure that there are checks and balances. The internal controls are meant to
ensure that processes within an organization are handled in a manner that is accepted by the
organization and international financial reporting standards. With the introduction of information
technology to auditing, the creation and management of internal controls has become something
easy. In the journal titled “The impact of information technology on internal auditing”,
Moorthy et al. (2011, p.3527) states that upon the entry of information technology into auditing,
there has been higher need to have strong internal controls. These authors explain how the
auditor is supposed to ensure that the data generated by the computerized system is tested keenly.
This shows that in a way, information technology has brought some little fear regarding the
evidence presented to the auditors, thus the need to ensure that the internal controls are working.
Al-udah et al. (2013, p.428), in their journal titled The Impact of Information Technology on the
Auditing Profession,
Fawaerah State that there is need to have a control function within the computerized computer
system. In this journal, the authors show that all technological tools used should have control
capabilities. This journal brings out a negative perspective regarding the role of information
technology in auditing. The authors show how extra burden is brought about by the technological
advancements. Al-udah et al. (2013, p.428) say that there has to be a close monitoring of the
computerized system to avoid weaknesses. Additionally, the extra work of transforming data
from paperless to digital is a total burden to auditors.
On the other hand, ACCA (2005) in the journal auditing in a Computer-based Environment,
states that there is need to have proper planning when it comes to putting controls in a
computerized environment. This journal shows the need to have proper design of the control
support function in the computerized system. The journal raises the fact that the design should be
watertight covering the important aspects of control measures. On a negative perspective, the
journal shows how the process of setting up a properly designed control function of a
computerized audit system becomes expensive and tiring to auditors.
CAAT’s and the audit software
Computer Audited Audit Techniques has emerged as a good additive to the audit profession.
CAAT’s refers to the transition of audit system into computerized system. This is through the use
of the capabilities of computers to ensure that efficiency is created in the audit processes. The
emergence of Computer Assisted Audit Techniques has been able to bring several benefits to
auditors. One of the major benefits brought about by the use of the CAAT’s is that sampling and
handling population in audit is made very easy. Specifically, it is easy to test the whole
population unlike before where only a small part of the population was used. Audit software
comes in handy when handling computerized systems in audit. The audit software is developed
to assist in putting the platform for giving instructions to the computer during audits.
According to Moorthy et al. (2011, p.3530), in the journal titled “The impact of information
technology on internal auditing’, CAAT’s have been able to bring about several benefits to
auditing. The authors of this journal show how compromise of auditors has been reduced.
Secondly, CAAT’s have been able to improve the involvement of all skills that auditors have.
Improvement of accounting systems
As a result of emergency of information technology in auditing, firms have been forced to be
more compliant when it comes to information technology related platforms. This means that
organizations have been able to switch from the old analogue accounting systems to the digital
systems. Under this factor, auditing has emerged as the driving force towards complete use of
digital systems in organizations. This is because organizations have been striving to make sure
that they can be audited through the use of the current information technology motivated
systems.
Risk management
Through the use of information technology, it has become easy to manage risks in organizations.
It is worth noting that information technology has been able to make the process of setting up
control procedures much easier. In the journal titled “The impact of information technology on
internal auditing Moorthy et al. (2011, p.3533) state that the auditor is able to handle risk related
matters better through the use of information technology supported aids. This is through breaking
down the risks involved by preparing computer generated schedules for that purpose. ACCA
(2015) advises that there is need to carry out proper trials on the procedures and controls.
Information update
Auditors are known to rely a lot on the information from the books of accounts of an
organization. Basically, the auditors are supposed to receive the financial reports from an
organization so that they start their audit work. The entrance of information technology has
changed this audit approach. With information technology, it has become easy for an auditor to
monitor the information as it is being keyed into the financial system of an organization. This
enables an auditor to follow as transactions get updated in the accounting system. Al-Qudah et
al. (2013, p. 427) explains how information technology enables an auditor to have control and
close following of accounting events, something which reduces risks. Moorthy et al. (2011, p.
3527) shows how information technology has been able to change the timelines of performing
audit work. According to Moorthy et al. (2011, p.3527), information technology has translated
auditing into an ongoing exercise unlike before where it was being carried out at a given time
within the financial year.
Simplifying audit process
The audit has been known to be quite complex. This is brought about by the fact that audit has
been handled through reliance of manual system. This has been phased out by the introduction of
information technology based audit system. It has been found that the availability of information
system has ended up making the process of carrying out audit very simple. This has been through
the ability of information technology to breakdown complex scenarios into simple units. With
this simplified form of audit input, auditors have been able to handle their work with ease. The
hours consumed in auditing the reports of an organization have also reduced to a great extend.
The reduction in the duration taken when auditing the books of account of a business has been
received with jubilation by the various users. This has been the case since the period that the
management of an organization takes waiting for the audit report for decision making has gone
down considerably. For example, the process of coming up with sample for checking by auditors
has become very easy. This is because the computerized audit system has been able to make the
process a simple task.
Additionally, with information technology, large amount of data handled with ease. Information
technology has been useful in handling huge volumes of the information of an organization. It is
worth noting without information technology, auditors handle small bits of information one a
time. This has been able to get the much needed assistance from the emergency of information
technology aided audit systems. This means that the burden of going through numerous pieces of
information for auditing purposes manually is long gone.
Ease in Calculations
For auditing process to be complete, the auditor has to carry out some calculations in the process.
Sometimes, the calculations involved in the audit process tend to be more than expected. Quite
often, the high level of calculations in auditing tends to discourage the officers handling various
tasks. Therefore, the introduction of information technology in auditing has enabled the auditors
find the process of getting calculations right easy. More interesting, with information technology,
errors are eliminated unlike in cases where information technology is not involved. Additionally,
with information technology in auditing, the process of measuring the level of assumptions
becomes easy. It is worth noting that the process of preparing financial reports for auditing
involves coming up assumptions. With information technology, auditors are able to measure the
suitability of such assumptions based on sensitivity analysis which is best supported by
information technology.
Improved communication
Communication is one aspect of business that should be handled with care. According to
Moorthy et al. (2011, p.3538), information technology has made auditors follow communications
in emails and other media between an organization and partners. This has made the
communication assist in the audit of online businesses. With this in mind, auditors have always
tried to make communication efficient so that auditing activities can flow smoothly. According
to Pathak (2014, p.17) communication in auditing may be between the auditors and clients or
among the auditors. With the introduction o information technology, communication has ended
up getting to efficient levels. This has made it easy to handle the challenges that emerge in the
process of carrying out an audit. As a result of information technology in communication,
auditors have been able to learn more in line of their duty. This is because consultation has also
been able to improve within the auditors circles. It is worth noting that learning is a continuous
process, and through improved communication due to the use of information technology,
auditors have been able to learn a lot.
Under improved communication as a result of the increased use of information technology in
auditing, the users of the audited reports have been able to share and make a difference. It is
interesting to note that these users have been able to share their thoughts regarding the opinion
that is formed by auditors on the financial reports of organizations. This has given auditing a
great picture in terms of interfacing with stakeholders without compromising independence.
Presentation of reports and data storage
After the auditors have completed doing their work as per the defined scope, they have to present
the report to the management. This means that the auditors have to explain some aspects f the
report to the management for better understanding. Previously, paper generated reports were
being availed to the management. With this, some of the management members were not able to
go through the tedious audit reports. However, with the introduction of information technology,
the understanding of the reports has been boosted.
Al-udah et al. (2013, p.428), in their journal titled ‘The Impact of Information Technology on the
Auditing Profession’, an explanation is given on how information technology has enabled
auditors deal with live data updates
Additionally, the generated reports are able to be stored properly. Auditors have been able to
have proper databases for their work and materials as a result of increased use of information
technology. The access of the stored information can be remote or at an interface station. This
has made handling of audit related information much easier. Additionally, the fact that auditors
can work virtually is interesting. However, according to Moorthy et al. (2011, p.3535), in the
journal titled “The impact of information technology on internal auditing”, there is need to
ensure that there are no insecurity cases during the use of information technology aided offices.
So far, information technology has emerged to be one of the greatest revelations in audit. From
the time that auditing has being utilizing information technology, great strides have been taken
towards achieving 100 percent digital audit platform. This means that the progress towards doing
away with manual inputs in audit is positive. According to Moorthy et al. (2011, p.3527),
information technology has been able to encourage discarding of paper based audit records. This
has been encouraging since across the globe, many transactions have shifted from paper based
form to information based platforms.
ACCA (2005) in the journal titled “Auditing in a computer-based environment, it becomes clear
that handling data records in the computerized system should be done with a lot of care. The
journal explains that there is need to regulate the number of people who can interact with the
files. This brings out an aspect of risk of loss or tampering with the files in the computerized
system.
Conclusion
It is evident that the impact of information technology is quite huge in auditing. Auditors have
ended up enjoying their work as a result of the benefits brought about by technology into audit
processes. This explains why each organization should be in the forefront when it comes to
embracing new technological advancements. With information technology bringing about
improved communication, auditors are meant to find their job more interesting (Aalst & Wil
2011, P.34). This is likely to translate into work efficiency something which is always desired
for. The fact that an auditor can work remotely due to the impact of information technology is
something to be happy about. This means that it is not a must for an auditor to be present in the
geographical location do that auditing may take place.
The future of digital auditing platform looks bright with the introduction of information
technology. This means that it is important for auditors to ensure that they keep pace with the
emerging technology. Doing away with paper based audit work will spell big strides for auditors.
The organizations which are not using information technology in supporting their audit processes
should shift to the same as soon as possible. This should be done through upgrading of the
financial reporting systems to support the same. Continuous training on information technology
based audit systems should also be done for the purpose of fostering continuous improvement in
the use of the same.
References
Aalst, V& Wil MP 2011, Process Mining: Discovery, Conformance and Enhancement of
Business Processes, Springer
