Financial Control Auditing Essay Example for Free

Financial Control Auditing endeavorIf you use a estimator to record your business activity and maintain this info electronically, you are a candidate for an electronic scrutinize. * What are the Benefits of e-Auditing? It saves time electronic audits are completed much faster than traditional, manual audits. Company personnel and tax auditors spend less time working on the audit. It saves paper Electronic tax auditing reduces the amount of paper normally needed during the audit. It is less disruptive to business Electronic audits get tax auditors to work at the tax office most of the time. Computer-assisted tax audit techniques reduce on-site audit time.In this way, there is minimal interference with the normal business of your family. It is more than efficient more than efficient techniques for reviewing taxpayer information are utilise in electronic audits. * The border of e-Auditing? To corporate taxpayers 1- The preparatory acquaint begins when a tax audito r contacts the company. 2- He then familiarizes himself with the explanation corpse of the company, and negotiates with company managers responsible for covering and finance. 3- They pack agreements on when and how the electronic material should be delivered to the tax authority, and what copies of files should be created for the purpose. The tax auditor receives the files and converts them into a special database format used by the Finnish Tax disposition. 5- Later, the chief auditor and the company focus will discuss the time schedule of the on-site tax audit, i. e. the part of the tax examination that takes blank space on company premises. * What are the Auditors Responsibilities towards e-Auditing? Our tax auditors have received special facts of life on information engineering science they are aware of information security considerations and work under strict rules of confidentiality.Their PC and laptop workstations are protected and secure. They store the original mat erial in a locked cabinet, and they make sure that the work files created from the company-supplied electronic materials are removed from the electronic computers immediately after the audit. Depending on what has been agreed, physical data media (CDs etc. ) will either be returned to the company or destroyed. After the tax authority has issued the judgment decision or tax debiting decision, any files saved in Tax Administration systems will be deleted. The company will receive a message confirming the deletion. The use of expert systems in e-Auditing As computer power is enhanced and auditors are faced with making decisions in more complex environments, both(prenominal) accounting firms have begun to develop expert systems to assist their personnel in the audit process, An expert system is a complex system of computer progams that models the decision process of a human experts. The psychological methods used to gain an understanding of the human experts decision process and con version of this decision process into mathematical equations and computer programs are fair beyond the scope of this text. Legal Authority The right of the Finnish Tax Administration to receive computer files for the purposes of audit is based on the finding tax laws 14, Act on judging Procedure (1558/1995), 3, Ordinance on Assessment Procedure, 169, Value Added Tax Act (1501/1993), 10, VAT Ordinance, and 37, Prepayment Act (1118/1996). The ending of 26 Jan 1998 (no 47/1998) of the Ministry of Trade and Industry concerns bookkeeping methods. The offset printing section of this Decision concerns the use of computer automation in accounting.The be Board has issued an official instruction on 22 May 2000 on the implementation of the provisions of the Decision. These instructions include more specific rules on the use of information technology in accounting. In the interest of expediency during tax audits, the Finnish Tax Administration urges corporate taxpayers to follow the r ecordkeeping rule of six years. In other(a) words, full documentation exhibit each transaction one after a nonher including its entries in accounting records should be kept for six years after the closing of the accounting period.These records excessively include auxiliary documentation, and they are to be kept in a legible format. * Rules on recordkeeping and likeness of data Companies are requested to keep the avocation files and expound in a machine-sensible, software-independent format. They should cover the built-in time periods to be audited 1. Journal-type file of the accounting system listing each transaction separately , including the following detailed facts if applicable for the company Company number, business unit number Document type attendant number of the accounting voucher/document, which should be the same number as that of the original receipt, voucher or other document found in the books. Date of accounting document / Date of transaction / Accounting peri od Account number Cost center number Amount in euros (marks), amount in foreign currency, code of currency Descriptions of accounting entries several descriptions are accepted Project no, investment no, process no, product no etc. Customer no, supplier no VAT code Any other data palm that help identify the transaction. .Additional files in case the names (of accounts or of constitute centers) are not included in the accounting transactions files Chart of accounts showing every account used during the period, including account name and account number. Lists of cost centers (and their rime and names) used during various years. Lists showing details of project number, investment numbers, process numbers, product numbers etc. used during various years Lists showing VAT codes (with explanations) used during various years Lists of accounting voucher types used Lists showing the sequences of sequential numbers used by the accounting system (can be delivered on paper instead of a compu ter file) Registers of suppliers and registers of customers, as a computer file, including at least the following facts ? Business IDs and European VAT numbers ?Customer no, supplier no ?Name ?Address ?Postal code ?Country code 3. other details Specifications of records, describing each delivered file. Detailed versions of balance sheet (showing each account separately) for the accounting periods to be audited. computer simulation list printed on paper, to show the eginning of the accounting transaction list file, in case numerical fields have been zipped / compressed. * What are the Permissible file types? The files should consist of fixed-length consecutive strings and be free of software-specific characters (and they should not be backup files). Accounting transactions and additional files such as charts of accounts and lists of cost centers should be delivered to us on a physical data medium, which is usually a CD or DVD. The following good information is mandatory * Encodin g (ascii / ebcdic) Existence of zipped/compressed data elements (please unzip/uncompress) * Number of records * Length of records. If the company cannot deliver the accounting system files where transactions are primarily recorded, tax auditors can alternatively expend reporting files or list files. Accounting systems create reporting files and transaction lists associated with the general ledger and journal, accounts out-of-pocket and accounts payable What are the Pros and Cons of both manual and E-audit? (Conclusion) There are pros and cons to both the manual and electronic audits.The manual chart review is more time consuming and is subject to both the benefits and liabilities of requiring human judgment during the audit process. The electronic audit is much quicker, although it requires time and attention to careful set up before the first audit can be brave. E-audits are independent of human judgment since determinations are made by internally programmed computer logic and are therefore more consistent than manual audits. Their accuracy is more subject to proper PCC documentation, coding and data entry issues.More and more facilities are opting to perform e-audits due to the time savings and ease of performing regular periodic audits once the initial setup has been completed. We sanction the use of electronic audits whenever feasible. For facilities wishing to transition from a manual to an electronic audit, it is imperative that they initially run simultaneous manual and e-audits to compare the results. In theory, the results from the manual and e-audit should be quite similar. If the results of one or more of the audit elements are significantly different, an investigation into the reason(s) for the difference needs to be undertaken.