Systems based audit approach, Auditing

Systems Based audit approach

The basis of IAS 400, Risk Assessment and Internal Control.

The term systems audit refers to the typical audit approach to medium and large companies and is based on the assumption that such companies have internal control systems which will hopefully constitute a reliable base for the preparation of the accounts. In other words, the characteristic of a systems audit is an examination of internal control.

We have already established that many small companies cannot achieve satisfactory internal control and it is hence clearly futile for the auditor to seek to rely on controls if they don't exist or are patently unreliable. For such enterprises the auditor has no alternative but to carry out a so called 'substantive audit' involving extensive verification of transactions followed by a detailed examination of the balance sheet (verification of assets and liabilities and review of the financial statements).

The contemporary audit approach to reasonably sophisticated companies is therefore to carry out a system-based audit during the course of the accounting year, followed by a balance sheet audit at the year end - if the systems audit work is successful, i.e. the controls prove reliable, the auditor can use his judgement to reduce the extent of the balance sheet work (in no circumstances will the balance sheet work be eliminated entirely!).

Posted Date: 12/3/2012 6:27:16 AM | Location : United States







Related Discussions:- Systems based audit approach, Assignment Help, Ask Question on Systems based audit approach, Get Answer, Expert's Help, Systems based audit approach Discussions

Write discussion on Systems based audit approach
Your posts are moderated
Related Questions
Auditor's Procedures - Going Concern In forming a thought on the going to relate position of a company, the auditors have to: a) Examine the company, its plans for the futu

Will I be able to download immediately once I purchase this assignment?

Audit Approach - Audit of Accounting Estimates The accounting and auditing matters are mainly concerned along with recognizing the point in time at that the initial disclosure

Auditors use various tools to document their understanding of an entity's internal control system, including narrative descriptions, internal control questionnaires, and flowcharts

Hi Dear, Could you please help me with online exam in Auditing Class !!

? Decide what areas of the company will be audited and the frequency of the audits. Prepare a yearly audit schedule and distribute. ? Make an audit plan. Decide what other audit r


(a) In order to draw reasonable conclusions, an auditor is required to identify and use audit procedures to gather audit evidence. You are required to identify and explain, five

only needs to be 2 - 3 pages and I need help with an audit plan is to look like

Simple Plans - An employer can adopt a simplified retirement plan known as a SIMPLE Plan (Savings incentive match plan for employees) if it has fewer than 100 employees that receiv