CHAPTER ONE

INTRODUCTION

1.1BACKGROUND OF STUDY

Auditors and accountants are now transitioning from traditional auditing to IT auditing, which involves auditing the IT used in business setups and integrating advanced technology in auditing, which includes the use of prominent auditing technologies, computer assisted auditing techniques and tools to make audits more effective and efficient, thereby increasing auditors' competitiveness (Wadesango et al. 2018;). The use of computer aided auditing techniques (CAATTs) allows audit work to be undertaken and conducted more efficiently and effectively, saving time and ensuring that the audit assignment is completed on time (IFAC, 2011). So that audit processes remain acceptable, modern audit tools and methodologies must be employed ( Wadesango & Wadesango, 2016).

Until recently, audits were carried out manually by teams of auditors and accountants scouring large amounts of financial data and transactions. However, as the data explosion in today's computerized world grows, it is critical that the audit profession develops its traditional processes and adopts advanced technology tools such as robotics, automation, and cognitive technologies, as well as audit software (Macaulay, 2016). As a result, auditors can uncover information that allows the audit process to remain relevant and successful in assisting diverse stakeholders, such as investors, in making critical financial choices.

Due to technological changes in the business environment and the use of advanced technologies by audit clients who are implementing digital and innovative technologies in order to drive efficiency and effectiveness in the business environments, the risk associated with manual or traditional auditing systems such as paper information may disappear. This new technology is upgrading the financial reporting and auditing processes, not merely replacing them. The audit goals and audit technique will remain essentially identical regardless of the computer systems used by audit clients and companies, whether the audit is done in a non-computer environment.

Computer Assisted Audit Techniques (CAATTs) are described by ISACA (2014) as "techniques and aids used by auditors to access and observe client's system data or software activity utilizing the computer itself." Tools for continuous monitoring are among them (ISACA, 2014). The usage of CAATTs improves the efficiency and efficacy of data analysis and interpretation results (Costa, 2012). Most auditing companies have already implemented CAATTs and auditing software, while others are in the midst of implementing emerging technologies like as artificial intelligence, cognitive technology, and audit data analytics to aid in the automation of their auditing procedures.

1.2STATEMENT OF PROBLEM

The use of computers to keep financial records has produced a slew of issues for auditors. The auditor's inability to adhere to the public accounting profession's technical training and proficiency standards, evaluation of a client's system of internal control, and procurement of sufficient evidential matter on which the auditor would base his opinion regarding his client's financial statements have tended to be the root of these issues. Auditors have had to consider public opinion in relation to their technical competence in addition to adhering to the profession's commonly accepted auditing standards. To retain and strengthen its professional standing in society, the profession as a whole wishes to be seen as both dynamic and highly competent in its capacity to audit financial records and offer an informed judgment on the fairness of financial statements created from these records. Despite the benefits of computerization, it still has significant drawbacks, such as delays in corporate operations due to a lack of fundamental computer understanding and expertise. Another issue is the high cost of procurement and training. Computer adaptation to all of these complexity may be impossible, and for a freshly founded financial institution, computerization may be perceived as a luxury rather than a need. If it became known and was permitted to continue, an apparent lack of capacity to audit in a computer environment would weaken public trust. Upon this premise that this study seeks to  examine the  effect  of computer  in auditing.

1.3 THE PURPOSE OF STUDY

The broad objective of this study is to examine the effect  of computer  in auditing. Other specific objectives includes 

i.          To explore the relevance of computerized accounting system.

ii.        To establish the extent at which computer technology enhances effective auditing.

iii.      To examine the problems encountered in the process of changing from manual accounting to electronic data processing system.

iv.      To investigate the constraint encountered in the process of using computer in the audit department.

1.4 RESEARCH QUESTION

The research is guided by the following

i.          What are  the relevance of computerized accounting system in auditing?

ii.        What is the extent at which computer technology enhances effective auditing?

iii.      What are the problems encountered in the process of changing from manual accounting to electronic data processing system?

iv.      What are the constraint encountered in the process of using computer in the audit department?

1.5 SIGNIFICANCE OF STUDY

The study is not only meant for the successful completion of the National Diploma in Accounting Programme but also to familiarize accountant with the uses and operation of computer in an auditing profession.The research is also important because it examines how accountants/ auditors are taking the challenges by the use of computers. It will as well examine the relevance of computer to accountants, the basis for determining whether to change from manual to computerized system. The efficiency of computer system as compared with manual system and the problems of the computerized accounting/ Auditing systems. The project will also help readers of this project to have a useful idea of computerized and auditing system and recommend the area for further research in the field of computer as related to auditing and accounting.

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