In auditing the financial statements of companies which use computerized
accounting systems, the auditors may find that this traditional (audit) trail is
often obscured. Various techniques can be used in order to give the
auditors greater assurance when the audit trail is lost.
Required
a) Explain why there is a possible loss of audit trail when companies
utilize computerized accounting systems and why auditing through
the computer assists the auditors in overcoming this loss of audit
trail. (6 marks)
b) Explain how the auditors can use analytical procedures in order to
give them greater assurance when there is a loss of audit trail.
(4 marks)
c) Outline how audit software can be used by the auditors in order to
assist them in carrying out their analytical procedures.
(6 marks)
d) Explain the possible reasons and implications (audit) of significant
changes in the following ratios when compared to the prior years
ratios:
i. The debtors turnover ratio has decreased over the year. (2
marks)
ii. The stock turnover ratio has decreased from the previous year‟s
rate.
(2 marks)