IT Governance and Management - RISKS AND CONTROLS IN COMP BASED ACCOUNTING Flashcards
Risks in comp-based systems
Organizational risk depend on management’s rick appetite and organization’s activities and environment.
Risks heightened with computerized accounting systems:
1) Reliance on faulty systems or programs
2) Unauthorized access to Fata leading to detrition or wrongful changes, inaccurate recording of transactions, or recording of false transactions
3) Unauthorized changes in mater files, systems, or programs
4) Failure to make necessary changes in systems r programs
5) Inappropriate manual intervention
6) Loss of data
Risk in manual vs computer 1
Segregation of duties - in a computerized environment, transaction processing often results in the combination functions usually separated vs manual.
–in these instances well-designed computer system provides COMPENSATING CONTROL; SOD software can help identify resolve segregation of duty conflicts
Risk in manual vs computer 2
Disappearing audit trail - Manual systems heavily depend on paper trail.
–electronic audit trails - audit trails are built into better accounting information systems software. Created by maintaining a file of all of the transactions processed
Risk in manual vs computer 3
Uniform transaction processing - Processing consistency increases in computerized environment. However, increased risk of “systemic” errors, such as errors in programming logic.
Risk in manual vs computer 3
Computer-initated transactions - Many gain efficiency by auto generating transactions when specified conditions occur (reordering). Automated functions should be regularly reported and reviewed
Risk in manual vs computer 4
Potential for increased errors and irregularities - 1) remote access to data increases likelihood of unauthorized access
2) concentration of information means a breach leads to more damage
3) decreased human involvement means decreased opportunities for observation
4) errors or fraud can occur in design or maintenance of app programs
