New Delhi, Nov. 3: In a move that is expected to plug the loopholes in a computerised environment, the Institute of Chartered Accountants of India (ICAI) will soon issue a new auditing standard to ensure that the omnipresent computer does not allow accountants to cook up books.
The exposure draft issued by the Auditing and Assurance Standard Board of the ICAI, enumerates the nature of risks inherent in the Computerised Information System (CIS) and the measures that need to be adopted to avoid them. Comments on the draft have been invited from ICAI members and the general public by December 10.
The draft makes it mandatory for the auditor to ensure that in the event of any interruption in the working of the CIS environment due to power, mechanical or processing failures, the system restarts without distorting the completion of the entries and records. The draft also points out that in a CIS environment, some of the audit evidence may be in electronic form. The auditor should satisfy himself that such evidence is adequately and safely stored and is retrievable in its entirety.
On the need to come up with this new auditing standard, ICAI president Ashok Chandak said: “Accounting and auditing in listed companies are now almost completely in a computerised environment and there is a need to pre-empt the possibilities of errors resulting from the CIS system”.
Audit professionals say errors such as those occurring due to loopholes inherent in the computerised environment often come to light and a move to ensure they are prevented will be in tune with today’s increasingly hi-tech world.
Apart from ensuring that correct and complete data is made available for processing, the draft says that the auditor has to ensure that the internal control systems provide for timely detection and correction of errors. Further, it has to be ensured that there is adequate data security against fire and other calamities, wrong processing and frauds.
The report makes it the auditor’s job to see the internal control system prevents unauthorised amendments to the program, ensures accuracy and completeness of output and provides for safe custody of software and data files.