The impact of computerized auditing in reducing audit risks in Jordan

ABSTRACT
Objectives:
Main objective of the research study is to identify the impact that computerized
auditing have on reduction of audit risks in the Jordan. Through research study
effectiveness of the internal control and audit risk will be analyzed deeply to find out
impact of using computerized auditing programs in reducing audit risks.
Method
s/Statistical analysis: In the present research study sample of 50 individuals is taken
that are in the accounting profession. Questionnaires were distributed among them
and results are analyzed through application of descriptive statistical tools on the
dataset
Finding:
There is a statistically significant relationship between the types of programs that are
used in the computerized audit and financial performance in the financial institutions
and companies in Jordan. Thus, it can be said that through audit accurate information
is obtained about flaws in the entire system and by working on it performance can be
improved to the maximum possible extent. There is a statistically significant
relationship between the types of training programs for staff in the computerized audit
and financial performance in the financial institutions and companies in Jordan. Thus,
if employees will be well trained then in that case they will be able to prepare
management and accounting reports accurately which are further used by the
managers to make business decisions. There is a statistically significant relationship
between accounting information systems in the computerized audit and financial
performance in the financial institutions and companies in Jordan. If accounting
information system will be accurate then in that case firm will be able to make
accurate decision on time.
Appliation:
On basis of finding of the research study it can be said that firm must try to train its
employees as much as possible on accounting system and right type of programs must be used
in the computerized audit so that financial performance of the firm can be improved.
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The impact of computerized auditing in reducing audit risks in Jordan
Abstract
This study focusses on finding out the significance of the variety of training programs
for employees, as well as finding out significance of the role of accounting
information systems in the computerized audit programs in reducing audit risks that
associated with IT audit in Jordanian audit firms. A random sample of sector audit
firms was selected and the sample consisted of (50), an accountant, had been
randomly recruited to fill the questionnaire.
The results indicated that the software used in the computerized audit ensure good
financial performance, and the staff were well trained and fully qualified for working
in the accounting and IT system that is related to the audit it found that the accounting
information systems used in top ten Jordanian audit firms reduce risks relevant for
accounting and ensure good performance.
The study recommends the necessity of working to provide extensive protection
programs for computerized audit firms, in addition to work on supporting staff
training courses that increase the expertise of auditors to deal with the risks occurring.
Keywords: Audit Risks, Computerized Auditing, Audit Programs, IT Auditing.
1. Introduction
The rapid development of information technology and accessibility to this information
has led to the increasing number of users of this technology, either from individuals or
companies. The cravings of the Companies to acquire and apply the computerized
systems and programs contributed effectively in the effective deployment of
information systems. The most important field that has been affected by this change is
the accounting, where the second half of the last century witnessed a rapid transition
towards the use of computerized accounting information systems which lead to robust
development in the performance of the clerical and accounting related task especially
in the process of computerized auditing.
But the use of this advanced technology exposure to different kinds of risks related to
ensuring the safety and security of computerized accounting information systems. In
addition, the large-scale evolution in IT not accompanied by a similar development in
the capacities and competencies of the human users of this technology. That creates a
kind of risks which limit the effectiveness and efficiency of the use of these
techniques.
These risks require from the companies to be more aware of the possible security risks
that threaten the security of their systems, the efficiency and effectiveness of the
software used in the process of computerized auditing, In order to avoid these risks
and reduce from its negative effects as much as possible [1].
The IT infrastructure that is developed by any company play a vital role in assisting in
transforming accounting operations. IT has a critical role in collecting, processing and
storing data that is summarized and reported in financial statements. Many
organizations are becoming increasingly dependent on IT with such elements as fully
integrated (IS) and electronic document management becoming more prevalent It is
commonly observed that during processing of accounting information employees
make a lot of mistakes. In order to avoid such kind of mistakes steps can be taken like
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IT infra can be evolved which will assist managers in improving accuracy in
accounting operations. Transaction processing speed also increase which save time
and energy. Overall, it can be said that IT system help firm in multiple ways. On the
other hand, there are many types of risk associated with IT, this includes loss of
computer assets, erroneous record keeping, increased risk of fraud, competitive
disadvantages if the wrong IT is selected, loss or theft of data, privacy violations and
business disruption [2].
1.1 Study Problem
The fast evolution of in IT which use computers has its impact on administrative and
accounting systems of companies. This was followed by a fundamental change in the
methodology, methods, systems auditing, internal and external oversight, this has also
affected the personal configuration and training of people compared with what the
matter was under the traditional way of manual data entry [3]. In Jordan there is a gap
in research bodies that investigate the impact of computerized auditing in reducing
audit risks among audit firms.
In this research we will try to answer the following questions.
1. What are the types of computerized auditing programs that are used in Jordanian
audit firms?
2. What is the importance of employees training on computerized auditing programs
in Jordanian audit firms?
3. What is the impact of using computerized auditing programs in reducing audit
risks?
1.2 Study Objectives
Computerized audit that is being prepared according to certain accounting policies “as
defined by the ICAS” aims to help the auditor to express his opinion about it.
The research aims to:
1. Identify types of computerized auditing programs that are used in Jordanian audit
firms.
2. Identify the importance of employees training on computerized auditing program
in Jordanian audit firms.
3. Identify the impact of using computerized audit programs in reducing audit risks
in Jordanian audit firms.
1.3 Study Hypotheses
In light of the problem and objectives of research, the following hypotheses were
formulated:
H01: There is no statistically significant relationship between using computerized
auditing program types and reducing audit risks.
H02: There is no statistically significant relationship between employees training on
the computerized audit programs and reducing audit risks.
H03: There is no statistically significant relationship between using computerized
audit programs and reducing audit risks.
2. Theoretical framework and previous studies
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The ICT is very important in modern business organizations for the purpose of
achieving short and long-term objectives. [4] stated that the technology has been a
significant tool in almost all human activity. The influence of IT in business has
grown exponentially in recent years, changing the audit process and resulting in both
opportunities and challenging for auditors.
A study was conducted by [5] investigated the effect of computerized accounting
systems on audit risk management in public enterprises within Kisumu County.
The evolution in IT has had a dramatic influence on accounting information system.
As computers become smaller, faster, easier to use and less expensive, the
computerization of accounting function grows across the entire financial service
industry. The effect is significant, as indicated by the coefficient of audit risk
management is significantly linked to assessment and determination of risk,
monitoring and evaluation control awareness, technology, attitude and perception.
The examined system risk factors identified important areas of information
system risks to be the risk of breaches in system security and the risk that the
information provided by the system is inadequate and the nature of systems
risk factors identified related to those risk, to address systems risk factors,
auditors need to review their ERP procedures.
Information systems auditing
The information technology (IT) function is responsible for designing,
Implementing and maintaining many of controls over an organization’s business
processes.
IT has a critical role in collecting, processing and storing data that is summarized and
reported in financial statements [17].
2.1. IT Auditing
IT audit is the process of gathering and evaluating evidence based on which one can evaluate
the performance of IT systems, i.e., to determine whether the operation of information
systems in the function of preserving the property and maintain data integrity.
[6]. Although there is no common universal definition of IS audit[16] has defined IS audit is
referred as the process under which evidence are collected and evaluated to great extent to
identify whether computer system (IS) protect data and rightly make use of available
resources”.
[7] has defined IS audit as “it is the procedure whereby controls of the entire system are
evaluated in proper manner. In this process reporting of efficiency level system effectiveness
and practices is done to communicate about data integrity. In the audit reporting is also done
about policy and rules in respect to use of system.” [8]. As a result, business risk increases. IT
auditing is mainly needed in the company to ensure that IT system is secure and there are
sufficient internal controls and ensure that assets controlled by those systems are adequately
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