An Audit’s Journey Through Internal Control World
Greetings, fellow accounting aficionados! 🌟 Have you ever heard of a systems-based audit and thought, “Are they auditing computers or what?” Hold on to your calculators because we’re diving deep into the enlightening realm of systems-based audits. Bring your humor and curiosity along; it’s accounting time!
What is a Systems-Based Audit?
Imagine your office as an intricately webbed spider’s den (minus the spooky spiders!). Each web strand represents a part of your internal control system. The idea behind a systems-based audit is if the spider (auditor) can verify that all web strands are strong, they won’t fall into panic mode checking each bug (transaction) that lands.
In a nutshell, our valiant auditor studies and assesses the internal control system to get a grip on how trustworthy it is!
A Table, Because Tables Make Everything Official 📊:
classDiagram
class InternalControlSystem{
-policy #1
-procedure #A
-control#9
}
class Auditor{
+studyControl()
+formOpinion()
+determineTests()
}
class Opinions~level of substantive tests~{
-low
-medium
-high
}
Auditor --|> InternalControlSystem : studies
Auditor --|> forming opinion : determines
forming opinion --|> Opinions
Simple right? The dynamic duo: the Internal Control System and the Auditor are like Batman and Alfred - each playing their pivotal role to clean Gotham’s financial underworld (or just your company’s financial statement).
Substantive Tests: Sniffing Out Financial Porkies!
Auditing isn’t always a desk job. Sometimes auditors take out their forensic magnifying glasses and do substantive tests, ensuring that managers aren’t sneaking into the expense accounts for “unhappy hour” tabs.
If our internal controls are strong - less sniffing is required. If they resemble Swiss cheese - more sniffing than a customs beagle!
Changing Trends: Systems-Based Audit and Risk-Based Audit Go Head-to-Head 🥊
So, why’s everyone all chummy with risk-based audits now? Systems-based audits sound fantastic right?
Fasten your seatbelts, this rollercoaster is heading to Risk World! 🌍 Unlike the systems-based audit focus on internal controls, risk-based audits hone in on what could go disastrously wrong and trips on those with gusto.
pie title Preferable Audit Style
