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Wiley CPAexcel Exam Review 2014 Focus Notes: Business Environment and Concepts by Ray Whittington

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Focus on: Information Technology—Module 41

INFORMATION TECHNOLOGY

Attributes of Paper versus Electronic Systems

Difficulty of alteration—It is easier to change electronic data without detection
Prima facie credibility—The origin of paper documents is easier to determine
Completeness of documents—Paper documents typically include more information than electronic documents
Evidence of approvals—Paper documents show approvals more obviously
Ease of use—Electronic data requires specialized knowledge to be accessed by the auditor

Benefits of IT

Consistency—Computers process data the same way every time.
Timeliness—Electronic processing and updating is normally more efficient.
Analysis—Data can be accessed for analytical procedures more conveniently (with proper software).
Monitoring—Electronic controls can be monitored by the computer system itself.
Circumvention—Controls are difficult to circumvent when programmed properly, and exceptions are unlikely to be permitted.

Risks of IT

Overreliance—Without clear output, IT systems are often assumed to be working when they are not.
Access—Destruction and alteration of large amounts of data are possible if unauthorized access occurs.
Changes in programs—Severe consequences without detection are possible if unauthorized program changes occur.
Failure to change—Programs are sometimes not updated for new laws, rules, or activities.
Manual intervention—Knowledgeable individuals can sometimes alter files by bypassing the appropriate programs. ...

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