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Technology to Improve Internal Audit - Research Paper Example

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Technology to Improve Internal Audit

Conclusion 7 Name of the Student: Name of the Professor: Course Number: Date of the Paper: Technology to Improve Internal Audit 1. Introduction The internal audit is defined as the process of an autonomous appraisal function that is established within the organization to evaluate and examine the activities as a service. The main objective of the internal audit is to assist the members of the organization to effectively perform their responsibilities. The end result of the internal audit is to provide the analysis, assessment, suggestion, direction, and information regarding the reviewed activities. The end objective is promoting control over the reasonable cost (Kagermann 4; Trenerry 266; Pickett 325). The primary role of the internal audit has undergone radical changes. After the introduction of Sarbanes Oxley (SOX) Act in the USA in 2002 the internal audit has started to redeploy the financial control auditing (Leung, Cooper and Perera 785). This paper focuses on how technology has improved the internal audit. 2. Literature Review 2.1 New methodologies in use The recent development in the technology has led to the use of more sophisticated methods for internal auditing in the organization. The methodologies that are currently in use are (Dittenhofer 462): Computer assisted audit techniques (CAAT) Expert System Analytical Auditing 2.1.1 Computer assisted audit techniques The most dynamic way of processing audit is the use of computer assisted audit techniques (CAAT). This technology is not a new one, but requires a continuous up-gradation to increase the efficiency of auditing account inventories, receivables, fixed assets accumulation, and accounts payable. This method consists of the process of downloading the subject files and testing these files irrespective of the computer system of the auditee. The CAAT process eliminates the hand processed and time consuming substantive testing. It produces the automatic computer generated working paper, which is displayed on the basis of “by difference”. There are several other computer applications that enhance the audit operation, reduce the time consumed, and also increase the accuracy of the work (Dittenhofer 462-463). 2.1.2 Analytical Auditing The use of the analytical auditing procedure is the recent development in the process of internal auditing. This process leads to the development of the relationship between the operational or physical aspects and financial aspects. The procedures claim that there must exist some relationship and unless they exist, some mitigating circumstances must be there, or if not some investigation should be done to determine the reason of inexistence. The technique tends to find the areas that require more in-depth investigation process and also identifies the areas that require a very little in-depth investigation. This method can be used as the potential area of interest. Without the indication of the problem absence and further examination, this process cannot be used in a positive way (Dittenhofer 463). 2.1.3 Expert System The procedure of the expert system is another development that enhances the operation of internal auditing. This procedure includes computer programs that are identical to human reasoning and can be used to alert the auditor to investigate certain situations or the audit activities that should be considered as the response to the situation that appears to be unusual. Hence, two capacities are displayed by the functioning of the expert system. Firstly, the system is built on the computer program that records information automatically and compares it to the standard information that is already present to find the situation that ...Show more


Table of Contents

1. Introduction 3
2. Literature Review 3
2.1 New methodologies in use 3
2.1.1 Computer assisted audit techniques 4
Author : lpurdy
Technology to Improve Internal Audit essay example
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