- 30 Marks
AA – May 2022 – L2 – SA – Q1 – Auditing in a Computerized Environment
Discuss computer audit packages, CAATs, and threats to IT systems in a computerized auditing environment.
Question
Quality Plastic Manufacturing Company Limited has been operating for about a decade. The company is into the production of plastic chairs, bowls, tables, and other related products. It was awarded a contract to produce chairs for a Pentecostal church that has branches across 36 states of the country, including Abuja. The church has its convention ground that occupies large hectares of land along Lagos-Abeokuta expressway. The number of chairs, which are in millions, would be produced and delivered to the headquarters of the church from where they would be distributed to all the branches and the convention ground.
Given the fact that this contract would increase the fortune of the company, Ogbuefi Okafor, the Chairman of the company, saw the need for the company to grow bigger in the future and would require more funding to finance the expansion. He discussed this with his bank manager who advised him to approach a consultant that would prepare a feasibility study for him on the expansion.
Though he agreed with the bank manager, he however now feels that there is a need to convert the accounting system of the company from manual to computer-based as a result of the level of expansion envisaged. As a first step before conversion to a computer-based system, the company set up an internal control system, including an internal audit department. The internal audit department is headed by a partly qualified accountant who has passed the skills level of ICAN Professional Examinations but has a very wide experience in internal audit. Your firm has been the auditors of the company for the past five years.
a. Explain the computer audit packages that can be used in the audit documentation process and the advantages of these audit packages.
b. State the commonly used computer-assisted audit techniques (CAATs) and explain why they are essential in the audit process of a computer-based accounting system.
c. Explain ten threats to Information Technology (IT) systems, which the auditor should be aware of.
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