IT Environment and ERP Overview

IT Environment

• Garbage in, garbage out
• Auditing cannot be replaced by AI, it requires human judgment
• Makes processes faster
• Used by national and international organizations
• Improved data storage ability, requiring better control
• Control processes affected, but objectives remain constant
• Technology altered audit methods; auditors need specialized IT skills

Enterprise Resource Planning (ERP)

• Software providing standard business functions in an integrated IT environment
• Allows multiple functions to access a common database
• Reduces costs
• Increases data consistency and accuracy
• Includes procurement, inventory, accounting, HR, finance, asset management
• Management of fixed assets in multi-branch companies
• Data analyzing and more
• ERP examples include SAP, Oracle, Kyubi, Xero, Quickbooks, FIS Global
• Standard methods for automating processes
• Uses real-time information, generating faster financial statements and analysis

Cloud Computing

• Using the internet instead of local drives for data and programs
• Enables ubiquitous, convenient, on-demand access to computing resources
• Increasingly impacts the IT environment
• Used for business processes globally
• Considered key for business strategy
• Migration to shared infrastructure has risks
• Mobile device management applies to personal and work devices

Internet of Things (IoT) and Big Data

• Systems allowing remote assets (devices/sensors) to interact and communicate
• Big Data: large, high-velocity, complex variable data requiring advanced processing
• Meaningful information is pivotal for decision-making

Organization Strategy

• Information is the lifeblood of businesses
• IT is now integral for profitability and service
• IT governance is critical for self-review and assurance
• Includes security and privacy considerations.
• Aligning IT with business strategies.

Acts and Organizations Related to IT Audit

• Sarbanes-Oxley Act of 2002 (SOX)
• Securities and Exchange Commission (SEC) Act of 1934
• Public Company Accounting Oversight Board

Financial Auditing

• Auditing activities related to the fairness of financial statements
• Audits cover equipment, procedures, and data processing

Generally Accepted Accounting Principles (GAAP)

• Establishes consistent financial reporting guidelines for corporations

Generally Accepted Auditing Standards (GAAS)

• Sets standards for auditing procedures

Categories of Audit Standards

• General standards (professional competence, independence)
• Standards of fieldwork (planning, IC evaluation)
• Standards of reporting (consistency, disclosure)

Internal Auditing

• Provides independent assurance to enhance risk management, control, and governance
• Headed by the Chief Audit Executive, reporting to CEO, BOD, and Audit Committee
• Benefits management through insight

External Auditing

• Conducted by external organizations serving the public interest
• Evaluates the reliability of client IT systems
• Familiar with attest function encompassing all activities relating to financial statements

IT Auditing

• Provides assurance about the accuracy of information generated by applications
• Can include advisory services
• Covers people, processes, and IT structure

General Computer Controls (GCC) Audit

• Examines IT general controls (e.g., policies, procedures) related to applications
• Including administration and policies across multiple applications
• Includes custody, authorization, and recording

Information System (IS) and Application Controls

• IT general controls (ITGCs) protect against errors and misstatements
• Need for IT control is noted by different organizations.
• Computer-assisted audit tools (CAATs) are used
• Standards like ISO apply
• Business roles, compliance, and legal issues are parts of audits
• Complicated programming is addressed.
• Auditing complex system development life cycle and assessing data completeness, accuracy, and application controls

IT Governance

• Linking IT principles with enterprise objectives
• Managing IT investments, maximizing returns, and mitigating risks.
• IT ensures support of business goals
• Information dependence, vulnerabilities, and costs.

Roles of IT Auditor

• Advising organizations, setting best practices, and overseeing standards
• Support for senior management daily tasks
• Management effect on business through investigations and documentation
• Delving into computer forensics