It and the Audit

AUDITING

IT and the Audit

SAS no. 94 offers guidance on how technology use affects the independent audit.

BY GEORGE H. TUCKER SEPTEMBER 2001

EXECUTIVE SUMMARY TO HELP AUDITORS COPE WITH THE ISSUES surrounding the explosive growth in information technology use, the ASB issued SAS no. 94, The Effect of Information Technology on the Auditorʼs Consideration of Internal Control in a Financial Statement Audit. SAS NO. 94 PROVIDES AUDITORS WITH GUIDANCE on ITʼs effect on internal control and on the auditorʼs understanding of internal control and the assessment of control risk. It amends SAS no. 55, Consideration of Internal Control in a Financial Statement Audit. SAS NO. 94 ACKNOWLEDGES THAT IT USE presents benefits as well as risks to an entityʼs internal control. An auditorʼs clients use IT to achieve their objectives, such use affects internal control and the auditor should expect to encounter IT systems and electronic records rather than paper documents. AN ENTITYʼS IT USE MAY BE SO SIGNIFICANT that the quality of the audit evidence available to the auditor will depend on the controls the business maintains over its accuracy and completeness. IT HAS HAD A MAJOR INFLUENCE ON THE PROCESS companies use to prepare their financial statements. SAS no. 94 clarifies the nature of the understanding of the financial reporting process the auditor should obtain. Auditors should understand the automated and manual procedures an entity uses to prepare its financial statements and related disclosures and how misstatements might occur. GEORGE H. TUCKER, CPA, is a partner with Ernst & Young LLP in Cleveland. He was chairman of the AICPA task force that drafted SAS no. 94. His e-mail address is george.tucker@ey.com .

he explosive growth in information technology (IT) capabilities and the desire of businesses of all sizes to obtain competitive advantage have led to a dramatic increase in the use of IT systems to originate, process, store and communicate information. Today,...