In today's fast changing world, computer audit is very important. Hereunder are the benefits of computer audit:
Business efficiency – companies are required by company law to safeguard assets by instituting effective internal controls. Computer audit would not only meet this requirement but would give you the facts you need to make important decisions.
Security – computer audit would reinforce your company’s attitude to risk. Thousand of pounds are invested in computers (PCs, workstations, laptops, scanners, etc) it pays to be prudent by mitigating loss, whether by theft, fire or otherwise.
The fact that your company has a computer audit policy and that it is taken seriously acts as a deterrent. This is further reinforced when security measures, such as “electronic tagging”, bar coding, permanent fixing or similar measures are employed.
Having documented records of your computer assets aid your claim for loss under your company’s insurance policy. The existence of reliable records aids the process.
Standardisation – a computer audit promotes a standardised purchasing policy. What could be more practical than applying a purchasing policy that not only saves money but also reinforces values, such as brand, efficiency and time?
Don’t assume that all computer equipment comes with quality parts and that they are subject to the same quality control standards. Likewise, not all retailers give the same guarantee! This is where a computer audit could provide valuable information.
Asset tracking – at the point where computer equipment arrives in the company they should be tagged to aid tracking, accounting and ultimately, control against loss. If these assets are not tracked or traceable, they could easily disappear from the company. A computer audit would capture all computing equipment, whether they are included on the asset register or not.
Asset replacement policy – computer audit assists your replacement policy by identifying ageing assets that present potential operational risk to your business. Your accounting policy may provide for non-capitalisation or write off over two to four years, however computers will be used until they are incapable of being sustained.
Such a policy does not help your company in maximising efficiency and productivity. This plays into your competitor’s hands, surrendering to them your competitive advantage. If your business relies on latest technology, it’s imperative that obsolete computers are systematically identified and replaced.
Accounting – computer audit will ensure the completeness of your fixed asset register and the accounting transactions that are processed in your ledgers.
Cost control – computer audit aids the budgeting and timely replacement of computer equipment. It reduces substantially the guesswork in constructing the relevant capital expenditure budget.
Competitive advantage – whether being the quickest to market, having the latest technology or efficient processes is what sets you apart from your competitors it is essential that you make computer audit an essential company tool. Factors that contribute to maintaining competitive advantage cannot be ignored and a Finance Director or IT Manager would be grossly negligent in failing to have answers on this important matter.
source
Showing posts with label auditing techniques. Show all posts
Showing posts with label auditing techniques. Show all posts
Thursday, July 23, 2009
Wednesday, June 24, 2009
Pre-audit compared with post-audit
Hereunder is the definition of pre-audit as against post-audit of government transactions:
Pre-audit is an examination of vouchers, contracts, etc., in order to substantiate a transaction or a series of transactions before they are paid for and recorded.
Post-audit is an audit of accounting records, conducted at some interval of time after a transaction or a series of transactions has already occurred.
Source:
An expounded definition of pre-audit vs post-audit, particularly by COA, is given by MARCELO L. TECSON as shown below:
COA audit of government expenditures—whether on post audit or pre-audit basis—involves determination of compliance to governmental laws and regulations, like required APPROPRIATION or budget, LEGALITY of transaction, proper APPROVAL, and SUPPORTING documents (code-named “ALAS”).
PARTIAL COA PRE-AUDIT
Partial COA pre-audit involves doing the same kind of work under the present 100% COA post audit, including looking at exactly the same disbursement vouchers and supporting documents being used in post audit, except that pre-audit is done earlier--or BEFORE payment and consummation of government transactions--on selected key government transactions, therefore:
(1) It does not entail increase in volume of COA audit work; it just advances the audit work to dates before payment of transactions and, in the process, compels COA to do its work promptly and without delay--because the audited government agencies/corporations are waiting for COA's pre-audit verdict on the disbursement vouchers before effecting payments.
In effect, the PRICE of preventing multi-billion-peso corruption under COA pre-audit is timely and expeditious work on the part of COA auditors. They have to act within prescribed time limits on disbursement vouchers submitted for pre-audit by audited agencies/entities. This greater demand from COA is tolerable because, to begin with, its crucial fraud-prevention pre-audit work will cover only a few high-amount and high-risk transactions.
(2) It can detect and prevent corruption because it is done BEFORE payments are made, or when acts of corruption are not yet consummated and it is not yet too late to stop them, thus it is useful in the PREVENTION of corruption.
(3) Consequently, it has the great ADVANTAGE of avoiding or minimizing the disgraceful and debilitating LOSSES of BILLIONS upon BILLIONS of PESOS in government funds from rampant corruption.
100% COA POST AUDIT
COA post audit involves doing the same kind of work under pre-audit and looking at exactly the same disbursement vouchers and supporting documents already available even prior to payment, except that it is intentionally done later, or AFTER execution and payment of government transactions, consequently:
(1) It does not contribute to reduction in volume of COA audit work, just postponement of it to later dates after government transactions or disbursements are already consummated.
(2) It cannot detect and prevent corruption because it is done AFTER payment of transactions, or when acts of corruption are already consummated and it is too late to stop them, hence it is USELESS in the PREVENTION of corruption and cannot do away with the need for selective COA pre-audit as potent fraud-prevention measure.
(3) Consequently, under 100% COA post audit, there is a great DISADVANTAGE or cost penalty to the government—LOSSES of BILLIONS upon BILLIONS of PESOS in public funds from unhampered and hence unabated CORRUPTION.
Economic sting
Commission on Audit under COA Circular No. 2009-002 dated May 18, 2009 defines pre-audit and post-audit as follows:
Pre-audit is the examination of documents supporting a transaction or series of transactions before these are paid for and recorded. Pre-audit operates to determine that the proposed expenditure is for a purpose in compliance with the appropriation law, other specific statutory authority and regulations. It assures that sufficient funds are available to enable payment of the claim. It also initially determines that the proposed expenditure is not illegal, irregular, extravagant, excessive, unconscionable or unnecessary. Moreover, pre-audit determines that the transaction is approved by proper authority and duly supported by authentic underlying evidences.
Post-audit covers the same areas and supplemented by tracing the transaction under audit to the books of accounts. It also includes a final determination that the transaction is not illegal, irregular, extravagant, excessive, unconscionable or unnecessary. In general and wherever practical, the scope of post-audit work covers all areas identified in the risk assessment and embraces financial, compliance and value for money audits. Transactions subjected to pre-audit shall be post-audited without reperforming the audit procedures previously undertaken in pre-audit, unless there is compelling reason to reperform the same.
coa circular no. 2009-002
There is really a need nowadays to reinstitute selective pre-audit on government transactions to prevent occurence of irregularities/anomalies in the government.
Pre-audit is an examination of vouchers, contracts, etc., in order to substantiate a transaction or a series of transactions before they are paid for and recorded.
Post-audit is an audit of accounting records, conducted at some interval of time after a transaction or a series of transactions has already occurred.
Source:
An expounded definition of pre-audit vs post-audit, particularly by COA, is given by MARCELO L. TECSON as shown below:
COA audit of government expenditures—whether on post audit or pre-audit basis—involves determination of compliance to governmental laws and regulations, like required APPROPRIATION or budget, LEGALITY of transaction, proper APPROVAL, and SUPPORTING documents (code-named “ALAS”).
PARTIAL COA PRE-AUDIT
Partial COA pre-audit involves doing the same kind of work under the present 100% COA post audit, including looking at exactly the same disbursement vouchers and supporting documents being used in post audit, except that pre-audit is done earlier--or BEFORE payment and consummation of government transactions--on selected key government transactions, therefore:
(1) It does not entail increase in volume of COA audit work; it just advances the audit work to dates before payment of transactions and, in the process, compels COA to do its work promptly and without delay--because the audited government agencies/corporations are waiting for COA's pre-audit verdict on the disbursement vouchers before effecting payments.
In effect, the PRICE of preventing multi-billion-peso corruption under COA pre-audit is timely and expeditious work on the part of COA auditors. They have to act within prescribed time limits on disbursement vouchers submitted for pre-audit by audited agencies/entities. This greater demand from COA is tolerable because, to begin with, its crucial fraud-prevention pre-audit work will cover only a few high-amount and high-risk transactions.
(2) It can detect and prevent corruption because it is done BEFORE payments are made, or when acts of corruption are not yet consummated and it is not yet too late to stop them, thus it is useful in the PREVENTION of corruption.
(3) Consequently, it has the great ADVANTAGE of avoiding or minimizing the disgraceful and debilitating LOSSES of BILLIONS upon BILLIONS of PESOS in government funds from rampant corruption.
100% COA POST AUDIT
COA post audit involves doing the same kind of work under pre-audit and looking at exactly the same disbursement vouchers and supporting documents already available even prior to payment, except that it is intentionally done later, or AFTER execution and payment of government transactions, consequently:
(1) It does not contribute to reduction in volume of COA audit work, just postponement of it to later dates after government transactions or disbursements are already consummated.
(2) It cannot detect and prevent corruption because it is done AFTER payment of transactions, or when acts of corruption are already consummated and it is too late to stop them, hence it is USELESS in the PREVENTION of corruption and cannot do away with the need for selective COA pre-audit as potent fraud-prevention measure.
(3) Consequently, under 100% COA post audit, there is a great DISADVANTAGE or cost penalty to the government—LOSSES of BILLIONS upon BILLIONS of PESOS in public funds from unhampered and hence unabated CORRUPTION.
Economic sting
Commission on Audit under COA Circular No. 2009-002 dated May 18, 2009 defines pre-audit and post-audit as follows:
Pre-audit is the examination of documents supporting a transaction or series of transactions before these are paid for and recorded. Pre-audit operates to determine that the proposed expenditure is for a purpose in compliance with the appropriation law, other specific statutory authority and regulations. It assures that sufficient funds are available to enable payment of the claim. It also initially determines that the proposed expenditure is not illegal, irregular, extravagant, excessive, unconscionable or unnecessary. Moreover, pre-audit determines that the transaction is approved by proper authority and duly supported by authentic underlying evidences.
Post-audit covers the same areas and supplemented by tracing the transaction under audit to the books of accounts. It also includes a final determination that the transaction is not illegal, irregular, extravagant, excessive, unconscionable or unnecessary. In general and wherever practical, the scope of post-audit work covers all areas identified in the risk assessment and embraces financial, compliance and value for money audits. Transactions subjected to pre-audit shall be post-audited without reperforming the audit procedures previously undertaken in pre-audit, unless there is compelling reason to reperform the same.
coa circular no. 2009-002
There is really a need nowadays to reinstitute selective pre-audit on government transactions to prevent occurence of irregularities/anomalies in the government.
Subscribe to:
Posts (Atom)