Auditing in CIS Environment

The Computer Environment

Data processing - is simply the collecting, processing, and distributing of information to achieve a desired result. Data processing system  – consists of equipment and procedures through which the result is achieved.

When a machine performs most of  the procedures, -the system is described  as an electronic data processing system -the system is known as an automatic data processing system

Every computer system is designed to perform specific types of operations that are  performed  by hardware  – the physical components of the system, and are controlled  by software  – the computer programs.

Computer Hardware CPU  – is the principal hardware component of a computer. It consists of the main storage unit , the arithmetic and logic unit , and the control unit .

Main storage unit (memory)  – is used to temporarily store programs and data for processing.  Arithmetic and logic unit   – accomplishes arithmetic tasks such as addition, subtraction, multiplication, division, comparisons, and other types of data transformations. Control unit   – regulates the activities of the other units and devices by retrieving machine language instructions from the main storage units and then interpreting the instructions.

Computer Software Software  – is a series of programs or routines that provide instructions for operating the computer.

Categories: 1. Application programs (problem programs)  – are designed to accomplish specific objectives for users, such as processing payroll or pricing the inventory. 2. Systems software  – these are programs usually provided by computer manufacturers which operate the computer system and perform routine tasks for users.

Elements of a systems software: 1. Operating system  – is a highly complex set of  programs designed to:

a. Serve as means of communication between the computer hardware and the human operator. b. Schedule, load, initiate, and supervise the execution of programs. c. Initiate and control input and output operations. d. Manage and control compilers and utility programs. 2. Utilities  – are a program or group of programs designed to perform commonly encountered data handling functions, such as sorting files, merging files, and copying data from one file to another.

Computer Installations –  are the facilities where the computer hardware and personnel are located.

Categories: 1. In-house or captive computer  – the organization owns or leases the equipment and hires the necessary trained personnel to program, operate, and control the various applications processed with the equipment. 2. Service bureau computer  – the computer is used by an independent agency which rents computer time and provides programming, key-punching, and other services.

3. Time-sharing  – a system where in the organization acquires a keyboard device capable of transmitting and receiving data and, by agreement, the right to use a central computer facility. This facility will furnish service to several users at the same time. 4. Facilities management  – under this system, the organization needing computer services may lease or purchase the necessary hardware and installs it on its own premises. Then by negotiation, an outside contractor with the necessary staff of programmers and operators agrees to manage the facility.

Impact of Computers on Accounting Systems

1. Documents are not maintained in readable form. For example, instead of preparing a sales order by hand, a clerk enters the transaction directly into the system. 2. Processing of transactions is more consistent A computerized data processing system that has been properly tested before being placed into use and that has appropriate safeguards generally runs consistently so long as hardware failures do not occur.

Impact of Computers on Accounting Systems

3. Duties are consolidated. 4. Reports can be generated easily. Computerized systems provide for, or allow users to generate, necessary reports about the status of  transactions or accounts in a minimal amount of  time.

Major Types of Computer Fraud 1. Salami Technique

Computer programs are modified to inappropriately round off calculations to the benefit of the fraud perpetrator. The amount available for rounding are then placed in an account controlled by the perpetrator. 2. Trojan Horse

It is an unauthorized program placed within an authorize one. It can be used to destroy important data and then destroy itself.

Major Types of Computer Fraud 3. Virus Programs

These are programs with unauthorized information or instructions. 4. Trapdoors

These are unauthorized entry points into programs or database..