NCJ Number
69948
Journal
Journal of Accountancy Volume: 129 Dated: (February 1970) Pages: 31-38
Date Published
1970
Length
8 pages
Annotation
Examples of fund misappropriations dramatize the need for adequate internal controls and continual monitoring of Electronic Data Processing (EDP) Systems.
Abstract
Whether the audit is of a computer system or of a manual system, internal control is evaluated in terms of the same criteria; i.e., the controls must provide reasonable assurance that information is correctly processed and complete. To assure proper EDP function, the auditor should evaluate three major areas of internal control: organizational, administrative, and procedural. Auditors need expertise to prepare meaningful tests of the controls in the system; such expertise requires technical knowledge of equipment, programs, operations, and necessary controls for each. Audit tests of internal control and EDP audit trails are discussed. They include auditing around and through the computer, test-deck audits, 'packaged' programs, and unique programs for each client. Complex audit challenges in on-line, real-time, and integrated computer systems are detailed. The author recommends EDP audit specialists as necessary staff for public accounting firms. Thirteen footnotes are provided.