APPLICATION OF COMPUTER IN AUDITING FIRMS: AN EFFECTIVE TOOL FOR AUDIT EFFICIENCY

APPLICATION OF COMPUTER IN AUDITING FIRMS: AN EFFECTIVE TOOL FOR AUDIT EFFICIENCY (A CASE STUDY OF SELECTED AUDITINGFIRMS IN ABA)

ABSTRACT

This study is aimed at assessing the application of computer in auditing firms as an effective tool for audit efficiency. A general overview of computer and auditing firms were highlighted and the significance of the study was also discussed. The study also dealt with the review of related literature. It also highlighted the different factors militating against the effective of computer in the insight on the topic under discussion were made. The various sources of data collection and the procedure for data analysis were presented. The sampling technique used is simple random sampling. The data collected were presented and analyzed in tabular form with the use of sample percentage. The findings were presented and discussed which includes; 1. The application of computer in auditing firms helps in serving their client better. 2. The application of computer in auditing firms has helped to lessen the job of the above. Conclusion were drawn such that before the introduction of computer in auditing firms, their end result were cumbersome, time wasting, unreliable and inaccurate. Based on the findings, recommendations were made, such recommendation includes that the federal government should on its attempt to encourages and promote science and technology, creates ways through which auditing firms could acquire computers at subsidized rate. The management of the auditing firms should encourage the use of on-the-job and off-the-job training to stimulate and educate their staffs on the use of computer devices.

CHAPTER ONE

  INTRODUCTION

1.1 BACKGROUND OF STUDY

According to Meigs et al (1973:164), the computer is more than a new tool for performing familiar book-keeping tasks with unprecedented speed and accuracy. It makes possible the development of information which could not have been gathered on the past because of time and cost militating when a client maintains his records within a complex and sophisticated (EDP system) Electronic Data Processing, the auditors will find it helpful and even performing many auditing task.

According to ATT (1993:282), the use of computer for accounting purposes in particular has dramatically increased. This expansion will certainly continue and the auditor must hence be able to cope with the special problems that arise when auditing in a computer environment and abreast the technical innovation. The application of computer in auditing firms cannot be over emphasized as they play crucial important role in the auditing process. Its major role is to ensure accuracy in the end result of the audit; its functional activities also include elimination of waste, ability to cope with future growth storage and retrieval of data etc.

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According to Mill champ (1993:409), audit should be executed in accordance with the auditors operational standard and with the guidance of the auditing guidelines. This is true of all audits including those of clients who have computerized accounting records. The basis approach to an audit is the same for all audits.

According to Woolf (1994:1), auditing is a process carried out by suitable available accountants or auditors, whereby the account of business entities including charities trust and professional firms are subjected to scrutiny in such detail as to their accuracy, truth and fairness.

Computer on its part, according to Moursund (1978:4), computer is defined as a machine designed for input, storage, manipulation and output of alphabetical and numerical information. There are some certain factors that militate against the application of computer in auditing firms, such factors as high cost of computer installation, ignorant of the advantages of computer in auditing firms.

1.2   STATEMENT OF THE PROBLEM.

Despite the fact that many authors or scholars have subjectively written much to invalidate their views on the effective use of computer in an organization, it is still not obvious that the impact or effect of this computer application will make in the auditing firms which can be either positive or negative. Some auditing firms have ignored the need for computer due to the high cost of computer installation, delay which might be caused by machine break down have made some auditing firms not to install computer in their firms.

Another problem is the ignorant of the advantages of computer in auditing on the part of the auditing firm or auditor and fear of loss of audit trail.

Limited access: Auditors may experience access issues when attempting to connect to their client’s accounting system. This may result from a lack of connections to the company’s internet, ignorance of user name for the accounting system, or restrictions on certain files or other documents which are stored electronically.

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Security issues: computer security is a common issue when conducting an audit with computers. Computers can run files or have incompatibility problems; the loss of a laptop can result in a client’s information being available for compromise.

Manual system: not all business have computerized accounting systems in place for their financial operations. This can result in computers being somewhat worthless during the audit process. Auditors may need to conduct manual calculations and then enter the data into the computer, increasing time spent on the audit.

1.3   PURPOSE OF THE STUDY

This research is objectively carried out to expose some of the advantages of computer installation in auditing firms which is much more than the cost of installing it. It is aimed at finding solution to the delay which might arise as a result of machine breakdown on the auditing firms. It will also bring to the awareness of the auditing firms that one of the advantages of computer installation in auditing firm is audit efficiency and accuracy. It also stresses on overcoming the fear of loss of audit trail.

1.4   SIGNIFICANCEN OF THE STUDY

This research work is significantly carried out because it will bring to light how effective use of computer will help an auditing firm in the attainment of his organizational goals and objectives. This research work will also unfold and inform the auditing firms not only the auditing firms but other organization, other researcher and the public especially students on the usefulness of computers in auditing firms.

1.5   RESEARCH QUESTIONS

The following are the research questions design for this research work;

  • What is the effect of computer in auditing firms?
  • How does computer help in serving your client better?
  • How does computerization help to lessen the job of the staff in the auditing firms?
  • In what ways does computerization help the auditing firms in storing, retrieval of accounts, records and other management information?
  • How has computerization affected the efficiency of the auditing firms?

1.6   SCOPE OF THE STUDY

The scope of this research will be based on two auditing firms in Aba because they are within the researcher’s and they also audit in computerized environment as such most of the information needed for this research can be obtainable in the firm. Other information which is not obtainable in those firms will be obtained from universities and polytechnic libraries.

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1.7   DEFINITIONS OF TERMS

The conditions that people offer demand or accept when they make agreement, an arrangement or a contract.

E.D.P: Electronic Data Processing.

SCRUTINY: A close careful and thorough examination or inspection.

TRUST: a group of business firms working together to control the market in a particular commodity.

MILITATE: To make it difficult to happen or exist.

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