THE ROLE OF AUDITOR IN COMPUTERIZED ACCOUNTING SYSTEMS

By

NNAMONU ROSELINE

Presented To

Department of Accountancy

TABLE OF CONTENT

Cover Page I

Title Page II

Approval page III

Dedication IV

Acknowledgement V

Table of content VI

CHAPTER ONE

1.1 INTORDUCTION 1

1.2 STATEMENT OF PROBLEM 3

1.3 STATEMENT OF HYPOTHESIS 6

1.4 SIGIFICANCE OF THE PROBLEM 7

1.5 LIMITATION OF THE STUDY 8

CHAPTER TWO

2.1 REVIEW OF LITEARTURE 9

2.2 HISTORICAL REVIEW 11

2.3 NEEDS FOR COMPUTER IN AUDIT TODAY 14

2.4 ROLE OF AUDITOR IN EDP SYSTEM 15

2.5 EXAMINATION /ASCERTAINMENT

OF INTERNAL CONTROL IN EDP. 17

2.6 INTERNAL CONTROL INCOMPUTERISED

ACCOUNTING SYSTEM. 19

CHAPTER THREE

3.1 RESEARCH METHODOLOGY 25

3.2 POPULATION AND SAMPLE SIZE 26

3.3 DATA COLLECTION 28

3.4 CONCLUSION 30

3.5 RECOMMENDATION 31

BIBLIOGRAPHY 32

CHAPTER ONE

INTRODUCTION

Computer is an electric device, which accept and process data by following a set of instruction (programmers) to produce an accurate and efficient result (information). It is very systemic and complex and operates within a system theory. It has input, control processing units, output and the backing storage. A computer may be analog; digit and hybrid computers. It can also be mainframe, mini, or micro computer.

Computer has passed many generation. We are now in the fifth generation of computer known as the micro age. Computer of this generation uses artificial intelligent. It is important that the auditor, auditing in computer environment, like companies to the aware of the nature of computer accounting system uses in such companies.

A computerized accounting system is a system which the electronic data processing (EDP) is used in recording, processing, retrieving and up dating the accounting records. The use of EDP in accounting system keeps a very wide range accounting information. Such as pay roll, purchases and creditor ledger , sales and debtors ledger, and cash books, inventories, fixed assets as well as financial analysis of profit projection or forecasting cash flow and statement budgeting, capital investment and many others.

The use of computer in the accounting system ensure more efficient and reliability in processing of information, since computer hardly make mistakes. Unless mistake resulting from faulty data input.

In auditing organization with computerized system, the auditor responsibilities and duties do not change rather it is the means and form of processing financial that changes.

The auditor still owns the duty of skill and care in carrying out his assignment or engagement. It becomes indispensable that the auditor should, acquaint himself with the particular management information system, especially the computer installation concerned.

It is also advisable that the auditors should acquire the organization chart and data flow chart of the computer installation at an early stage of the audit. This will help him to have the overall picture of the system in operation or to be operated. He should concentrate on the system of internal control and internal check, and also, ensure adequate and efficient operation of the internal control system.

The use of computer does not in any way change the duty, of an auditor. What has change is the form and method of keeping accounting records in the company.

He is still expected to express an opinion as to the true and fair view of the state of affair of the company irrespective of the change in the form of keeping financial records. It is important therefore, that the auditor should improve his methods, techniques and procedure in order to achieve his audit objective.

1.2 OBJECTIVES OF PROBLEM

The auditor face a lot of problem in the cause of caring out his duty in a computerized accounting system of an organization, such problem are as follows.

The programmes or information are strictly written in the computer systematic order that one reading it must follow the system approach) which require strict adherent from the non-computer literate auditor to operate.

The problem of power fluctuation, unavailability of trained and experienced man trained and experienced man power for computing services, irregular supply of spare parts and inherent presence of dust and moisture in Nigeria atmosphere.

The computer having its own language, one needs to write the interrogatory tool (computer software) in the programming language under which the data were created.

As a result of the above problem, the auditor has difficulty in auditing the system because it will limit his speed and ability.

1.3 STATEMENT OF HYPOTHESIS

In every research work the researcher wishes to arrive at a particular result, these result are stated in a testable form and predicts a particular relationship between two variable HO. There is no significant effect on the introduction of computer in accounting system of companies in financial sector on the auditors functions. H1 there is a significant effect on the companies in financial sector on the auditors functions.

Ho2 the auditor encounter any difficulties when auditing and a computerized accounting system of companies in the financial sector.

1.4 SIGNIFICANCE OF THE PROBLEM

The objective of any organization with computerized accounting system is to audit through the computer accounting system in the financial sector, and timing of the audit work in a computer accounting system by the auditor.

Auditing in an EDP system is very peculiar activity which require a stream of logic from the practitioners deep dedication from the auditor and provision of specialized atmospheric condition for clear service, but because of the presence of dust and moisture in the atmosphere of most financial sector wit EDP system power failure and other logic reasons the auditor in the cause of his audit finds out that some of the information stored in the backing storage cannot be retrieved because of dust, this in effect has effect on the auditors opinion.

The auditors finds it difficult at times to audit in a computerized system in some financial sector because not all the origin documents are presented to the auditor during the cause of his audit, so as to apply sound accounting systems and internal checks and control in his audit work.

1.5 LIMITATION OF THIS STUDY

This research work on the role of auditor in a computerized accounting system is limited to financial sector in Aba only.