Strategic Systems Audit

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Strategic Systems Audit


As the organizations’ business strategies are becoming more complex over time, the auditing practices have been evolving correspondingly over the last century (Bell et al. 1997, 10), from a transaction-based audit prior to 1900, to risk-based audit approach during the twentieth century to today’s “Strategic Systems Audit” (SSA) as promoted by Solomon and Peecher over the last several years to reinvent the financial statement audit. Strategic Systems Audit focuses on the auditing procedures that test the assertions at entity-level based on the holistic understanding of the client business environment and business dynamics (Bell et al. 1997, 10, 22). However, there have been many critics of this
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To facilitate the strategic analysis, the entity level business model for the client is constructed as a strategic-system decision framework that integrate the processes within the company and the relationship between the entity and the external environment, it helps auditor understand the effectiveness of the design of client business, the client’s strategy to achieve sustainable success, the significant business risk threatening such strategy and how the client manages the risk, in turn, most important, the strategic analysis ensures auditor assess the impact of the identified client business risk upon the audit risk (Bell et al. 1997, 22 - 24).

The entity level business model comprises of eight components, described below and illustrated in the figure on the right: (Bell et al. 1997, 24)
1) External Forces – outside forces that threaten the organization to achieve its business goal such as competition, political, economic, social and technological factors.
2) Markets – the domain in which the organization operations.
3) Strategic Management Process – the process where the business objective is defined and the risk hampering the achievement of goal is identified, it also includes management of business risk and monitoring of business goal achievement.
4) Core Business Process – the processes that develop and distribute the company’s products and services.
5) Resource Management Processes – the process by which resources are obtained and distributed.
6) Alliances
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