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
(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

Qualities for Final Accounts The qualities needed of the final accounts: the final accounts must possess specified qualities and these are: a) Utilize of acceptable account

IAS 12 Income Taxes 1AS 12 needs a deferred tax liability should be well known for all taxable temporary difference with minor exceptions as goodwill that is not allowable for

Examination of Deeds Make Sure that the mortgage is in the name shown in the advance records; That there is a document of title to the property within mortgage and that

Plant and Machinery - Valuation and Authorization Valuation Valuation is at depreciated historic costs.  Auditor's duty is to make sure that the accounting policy for dep

What techniques used during an audit? Ans)  ? Be professional at all times. Avoid being judgmental. ? Follow safety procedures, clean room procedures, and all other needed pr

Forms of Evidence Observation , is mostly witnessing internal book-keeping procedures and system control. It involves attendance at wages pay out. Observation of stock-ta


Questionable Payments In some countries, business is often gained by bribing ministers or public officials or officers of companies or firms with whom one wishes to do business

Benefits of Internal Audit are following: It is in-expensive. No charted accounted is needed to audit internally. Faults will be removed before preparing financial stateme