THE IMPACT OF AUDITING ELECTRONIC ACCOUNTING SYSTEM ON CORPORATE PERFORMANCE A STUDY OF CONSOLIDATED INVESTMENT LIMITED

CHAPTER ONE

Introduction

1.1 Background of the study

Audit could be defined as an independent examination of the accounting books, records and financial statement of an organization by an appointed auditor to enable him express an independent opinion as to whether the financial statement are in agreement in all materials respects with the applicable financial reporting frame work and consequently shows a true and fair view. (Inyiama, 2010:5). An audit is an evaluation of a person, organization, system, process, enterprise, project or product (Onyike, 2003:34). The term most commonly refers to audit in accounting, but similar concepts also exist in project management, quality management and energy conservation. Audit are performed to ascertain the validity and reliability of information, also to provide an assessment of a system’s internal control. The goal of an audit is to express an opinion on the person /organization system etc in question, under evaluation base on work done on a test basis. Due to practical constraints, an audit seeks to provide only reasonable assurance that the statement are free from material error. Hence, statistical sampling is often adopted in audits. In the case of financial audits, a set of finance statements are said to be true and fair when they are free of material misstatements a concept influence by both quantitative (numerical) and qualitative factors. But recently, argument that auditing should go beyond just true and fair is gaining information about financial systems and the financial records of a company or a business. However, recent auditing has begun to include non-financial system area ,such as safety ,mental concerns non-profit organization and government agencies, there has been an increasing need for performance audits, examining their success in satisfying mission objectives. As a result, there are now audit professionals who specialize in security audits, information systems audits and environmental audits.

Today’s increased use of computer and the correspond trend to eliminate excess paper work by storing files electronically has brought both benefits and challenges to the audit process rather than relying exclusively on dwindling paper trial, many firms and internal, auditors are incorporating electronic auditing techniques into their standard audit procedures for an enhanced corporate performance. One option for auditing electronic files is to use standard data base programs such as As Assess. By importing information into the software or by linking to electronic transaction files, an auditor can efficiently analyze vast amount of data. Many common test procedures such as aging, counting and totaling of transaction can be automated with these programs. In addition, the software allows the user to perform analytical procedures quickly and easily, such as sorting, stratifying or making comparisms with in the data set. Electronic auditing, or e-auditing is therefore a computer assisted auditing that uses electronic records to complete all or part of the audit.