The Importance of IT Auditing in the Modern World of Business

This course is the first in a two-part series that deals with auditing a company 's financial reports, internal controls, and

The following provides high-level information about auditing a fictional entity, called Sofitec Computers, created for this case study. This case does not include a complete description of the entity or the industry, nor does it provide comprehensive information on auditing; it is only intended to provide the information that will be necessary and helpful in completing this case study and answering discussion questions.

Kudler Fine Food has expanded business and updated their computer systems to meet demands. As IT information is adopted within the organization, automation control processes has become more virtualized. To ensure that Kudler’s computerize systems function properly an audit must be performed on an annual basis. Management at Kudler Fine Foods wants to see the proposed audit schedules for all systems. Management wants to know the types of audit and how they will be conducted. In addition, management would like to know about events that might prevent reliance on auditing through the computer.

The world as we know it has changed drastically in the past three decades, we are slowly but surely morphing into a worldwide community dependent upon computer technology. More specifically we rely on the Internet heavily for everything in our day to day lives. The benefits of expediency and the convenience afforded to those who utilize information systems their business dynamics is undeniable.

Information technology (IT) has become increasingly sophisticated and complex, escalating the ongoing change within Kudler Fine Foods. As IT information is adopted within the organization, automation controls many processes within the Kudler’s environment. As Kudler has become more virtualized, a need for increased trust and assurance in the relationships with consumers, partners and suppliers. The swell of e-commerce business has created new ways of conducting an audit. Statement on Auditing Standard 94 (SAS 94) requires that the auditor understands the technological aspect of the organization in order to grasp the internal controls and the assessment of control risks for a proper audit

An important decision for any shareholder is deciding whether or not to do business with that company. When a business is audited, the operations are reviewed to make sure that nothing is being hidden. An auditor will review the company’s financial statement and practices to confirm that each are direct and correct. The financial statements are the business’s way of representing them and showing that they are following the Generally Accepted Accounting Principles. The audit process is an important one because it provides a platform for the auditor’s opinion concerning the financial statements of the company. As part of the audit process the auditor will conduct an audit plan that outlines a number of actions that he or she will be perform while also detailing the reason for those actions. With every audit, the business’s management is in charge of handing over the financial statements that the auditor will review; while the auditor will review the statements for any material or immaterial misstatements.

Since the Sarbanes Oxley Act of 2002 was passed, it is required for all public companies to have an audit of financial statements as well as reporting internal controls over its financial reporting. This applies to all public companies across every industry, including the retail industry. Retail companies are especially susceptible to fraud and misstatement due to the continuing efforts to incorporate technology with its business processes. With the growing use of technology, it is easier for managers or employees to alter digital data with or without intent. In order to conduct a sufficient audit,

Due to increasing economic and financial growth, many types of audit have been incorporated throughout the development process of internal activities. Audits can be performed manually or they can incorporate technology. According to Hunton and

Each of them is significant for public accounting companies to develop effective control environment, provide reliable financial information, and set policies complying with applicable laws and regulations.

The “IT Doesn’t Matter” article by Nicholas Carr, states an unrealistic view of the importance of IT in today corporate world. Carr tries to explain that due to the vast amount of advances in the technology field, IT has been rendered mundane. He states that IT has become as common place as a telephone or a typewriter before the beginning of the PC age. The article attempts to explains that due to the ability of most people to obtain computer systems that have capabilities that normal users will never need or use makes high end computers unable to provide the advantage that bigger companies once held over smaller ones.

Maintaining compliance with applicable regulations avoids legal liabilities and potential fines. This is especially true in highly regulated industries, such as investment and health care organizations.

Information Technology (IT) is a foundation for conducting business today. It plays a critical role in increasing productivity of firms and entire nation. It is proven that firms who invested in IT have experienced continued growth in productivity and efficiency. Many companies' survival and even existence without use of IT is unimaginable. IT has become the largest component of capital investment for companies in the United States and many other countries.

For example, FFC relies on bar code scanners and credit/debit card readers. To maintain its competitive edge in its market area, FFC recently implemented a fingerprint bio-coding payment system in all of its stores. This new systems implementation required that FFC change several of its general-ledger application programs; in particular, those related to its cash receipts processing. FFC does not use any outside service organizations to provide its IT services. Sophie Ewing, the audit senior who heads up your team, decided that because of FFC’s complex and sophisticated IT processing, an IT General Control (ITGC) review is mandatory to meet SAS 109’s risk assessment procedures and SOX Section 404 Management Assessment of Internal Controls requirements. You know that an ITGC review is very important because ITGCs provide the foundation for reliance on any financial information FCC’s systems produce. Your evaluation will affect the financial auditor in assessing the risk of material misstatement in FFC’s financials, and consequently, the audit plan. At your first team meeting, Sophie announced that your firm’s network security specialists would review the technical issues related to FFC’s internal controls. They will evaluate FFC’s operating systems, its telecommunications software, and its network configuration and firewalls. In preparation for the meeting, Sophie encouraged you to review the key provisions included in SAS 109, SOX Section 404,

Information Technology (IT): The hardware and software technologies a firm needs to achieve its business objectives (Kenneth C Laudon and Jane P Laudon., 2010).

This paper can help in understanding how the board, management, and internal audit each have a significant role in ensuring information security is effective. We can learn that internal auditing can also help prepare the organization for an external regulatory audit (SOX or HIPAA, for example) by evaluating management 's efforts and providing recommendations for improvement prior to the external audit. This can help in understanding that IT security audits contribute to an organization 's regulatory compliance efforts by confirming to senior management and