Wednesday, February 25, 2009

IT Auditing in Difficult Economic Times
by Gerald Trites, FCA

It is well known that difficult economic times presents additional challenges for auditors. As a result, in December, the PCASB issued a guidance document called "Audit Considerations in the Current Economic Environment" which identifies a number of issues that auditors need to be particularly aware of. Many of these items relate to accounting issues, such as the adequacy of allowances for losses and valuation issues. They also cover controls over disclosures. In addition to these financial accounting issues, however, the document makes a point of possible breakdowns in internal controls, either directly relating to lay-offs and firings and the resultant discontent among the employees, and also less directly as a result of staff cutbacks and the resultant possible loss of division of duties - always a key element of good internal controls. This means that IT auditors, not just generalist auditors, need to be particularly aware of these control issues. For more on this matter, see this article in the CFO site.

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