The Role of Auditors in Computerized Accounting Systems


Auditing has become a way specialized area of the professional accountant work.  Equally computer auditing is a further specialization in itself.  Indeed, many auditors today, will find computer technology not only relevant but almost indispensable if they are to catch up with modern innovation in the profession.

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In order to discharge his duties with integrity the ability of the studies to give a true and fair opinion on the financial statement is the hallmark of the profession.

Therefore, the key is the role of auditor in computerized accounting system or electronic data processing system (EDP).  First let us consider the word auditor.

An auditor is a person who conducts an independent investigation of formation in a financial sector account with a view to discover as incurrence or omissions that may be contained there in.  as such, the role of an auditor in a conventional business environment is the same as that of an electronic data processing computerized accounting system, although to approach and procedures differs slightly.

According to Pratt (1989 – 356); it is true that purpose of the audit by auditors in computerized accounting system is in no way altered.  But the ways in which the auditor will arrive at his opinion can (though not necessary will) be considerable different.

As a result the audit in an EDP environment, involve an enormous tasks in his hands to handle because of the complexities of the procedures controls as well as manual or administrative control.


Auditing in it’s primitive form, have been with us since the

16th century when the division first stated to flow between those who provided capital and those who engage in business activities.  As commercial enterprises become more sophistical, two problems manifested themselves.

False product we set up in order to decide and funds as much as possible for entrepreneurs of even genuine projects to cheat financial with the advert of “limited liability company’ in the 18th century, lack of format accounting requirements gave rise to increasing problems “joint stock” or “limited liability” companies provider of capital are mainly.

It was not until the turn of the 20th century that a mandatory requirement for the audit report to members was finally embodied in the company acts.

And it was not until the 1948 company act that anything like incorporated into the law.  Pratt (193 – 208).

Therefore, company law require all limited companies to appoint an auditor whose duty is to express an independent opinion on the reasonableness truth and fairness of accounts produced by the directors for stewardship purpose.  Computer have revolutionize the business world as the cost of computer technology has decreased ore and more business have join computerized.

Computer are not longer limited to factories, banks and big corporation, small companies, retails, stores, law firms, employment agencies super market and even many farms now use computers.  In fact, according to a resent study, by 1990 forum out of every five (5) wormers will be using a computer as part of their jobs (Hur Shanetall: 1986).

Business application of computers dates back to the middle of 1990s a decade of vigorous recovery form war 11 which lead to a rapid economic expansion.

In the world of stair (1986) “the first business computers was installed in 1954 at the general electronic appliance part Kenturky”.


Today, most medium and large scale business depends on

computer for their fast and easy access to information which enhances fast decision making.  Auditing has become a very specialized are by the professional accounting work.  And computer auditing is a further specialization itself.  (Praff: 1993:208).

Therefore, many large firms have a computer auditing specialist for different types of computer and these specialist will be  called to assist the normal audit team, whenever the latter feels that the complexity of the computer system is more than his levels of competence so no audit firms, no matter it’s size, can afford to ignore the existence of computers any longer.

In the word Okezie 91995:237); the emergence of computers did not in anyway change the auditor duties and responsibilities.  What has changed is the form and techniques of keeping accounting records.  The auditors is still expected to express an opinion on whether the financial statement give true and fair view of the affairs of the organization and it’s result, irrespective of the change in the form of keeping financial information.

At this juncture, we will now consider what computer is all about in business.  In Nigeria, recently computer is becoming a house name in management information system (1915), especially in keeping financial records.  It becomes imperative, therefore, that auditor should acquired themselves with the computer facilities in use and improve on their audit techniques, to enable them ascertain facts and express opinion whether the financial statement give a true and fair view of the affairs of the organization stair (1998:1020.


In modern days audit the current approach is to carry out a

system based during the course of the accounting year in his approach, the auditor examines and test the client accounting and other control system (internal control) to see whether or not they constitute a reliable base for the preparation of the accounts. (1983:330).

In order words, the auditor need to satisfy himself that the system provided for internal control by management, be it in manual and conventional accounting or computer accounting environment is as specified by accounting standard as contained in section 310 of the NSSAP as IAS and legislation (5360 of CAMD).


For the auditor to achieve his audit objective the auditor

may concern himself with the controls exercise in the computer departments to ensure that data is completely and accurately processed.  He must be able “audit through the computer” Ifeshukwu (194:34).

By auditing round the computer, it means the auditor assumes that he computer is always right and that the processing of data can only be affected by human errors.  While auditing through the computer implied, the auditor to carry out detailed tests on the various aspects of the application and associated controls.

One important fact management must take seriously is consulting their auditor whenever a new system is to be installed for accounting transaction.  The following points illustrate the usefulness:

  1. At the initials planning stage. The auditor will inform his client of the internal controls and information requirements.
  1. At the stage where the system specification are computer, but before detailed programming has been under taken so as to enable the auditor review the system and ensures it is designed to meet requirements.
  • When the system is to be apply for operational use this is for the auditor to ensure it is functioning as intended.

Ascertaining recording, testing and evaluation.  The system

of internal control is now move important because the computer nature of computer based accounting system.  This can be said to better bed lock of any organization.  If the system of internal control in any organization or firm is not standard, it will have an advert effect on the organization assets, for the purpose of our study, we will discuss the important control which are:

  1. General Controls: This involve the over the computer department
  1. Administrative control
  2. System development control
  1. Procedural or Application Control: This are those control which are designed to ensure that an acceptable standard of discipline and efficiency is maintained over the day to day running of computer department.  They are more important in computer based system than in other accounting system.  The auditor around ensure amongst others.
  2. that prescribed division of duties in the department are being followed in practice. True and false logs and console printing are received by an official of appropriate ministry.


  • Tap library is properly operated, master for programs are properly stored and secured. Just like in manual audits administrative or organizational control can be advised by segregation of duties, control over computer operators, five precautions and stand by arrangement and file control Izubuke (1998:27).

The computer file require a particular control by the use of a special storage library and a system of identity number for each file and the user, furthermore, computer files have “header labels” which are actual heading on the file tape, which the computer will red and verify as being in accordance with the program before it will process the file.  Some heading would be printed for the user for read.


  1. System Development Control: These are control designed to ensure a satisfactory standard of designing and testing system, programes and of implementing and documenting them. Computer system is very complex and to appreciate the benefits, high standard procedures should be set such that no system is operate  unless it has been thoroughly listed and its operational use confirmed satisfactory.

As a computer system develops the auditor should acquire the organizational chart and data flow chart of the computer installation at an early stage of the audit.  He should ensure that there is adequate segregation of duties to deter fraud and that duties are shifted around time to time.  He also examine the rules for access to the computer installation and tape library.  The control procedure on input and output data, the record and programme alteration, procedures, the error, correction and alteration procedures and the methods of protecting computer log.


REC: Computer and Accounting (1993:108)


This are control related to the actual processing of information within the system to ensure that he correct file if processed with substantial accuracy, based upon the might information and that the output is correctly used.  This companies the following:


Such as the serialization and batching of documents before being sent to the computer section, recording (logging) of documents received in the computer section, verification of transaction of basic information into computer language.


For example investigation into exception reports, references back to published totals test check (e.g. by the internal audit department) in depth on random transactions.


This includes set-up checks whereby the computer reads of header labels to ensure it is correctly set-up.  Editing of information before is used e.g. agreement of batches with totals and checking numerical sequence etc.

Print out of sub totals in such as manner that can be verify by the user department.  Computer verification of said sequence of amendments to program.

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