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Audit Risk, Complex Technology, & Auditing Processes

11 Pages Posted: 1 May 2003  

Jagdish Pathak

University of Windsor - Odette School of Business

Mary R. Lind

North Carolina Agricultural and Technical State University - School of Business & Economics

Date Written: March 2003

Abstract

The purpose of this paper is to discuss the new SAS 94 audit standards for organizations making extensive use of IT. The paper is divided into two major parts: (1) an examination of complex information technologies in terms of audit risk, and (3) the effect of SAS-94 on the audit processes. While growing organizations often embrace risk, these risks should not be taken blindly. These entities should have a clear understanding of the potential consequences of increased risk and how to insure positive outcomes. As firms are increasingly experiencing 'virtualization' in their relationships with suppliers, partners and consumers, there is an increasing need for trust and assurance in these relationships. There is greater pressure on independent auditors to attest to this trust and assurance. Ronen & Cherny (2002) indicated that independent auditors are expected to be trust providers to the level of being 'insurers'. Auditors have talked of 'reasonable assurance' and 'true and fair presentation' but now their stakeholders expect these auditors to be insurers of their investment! While bizarre, this is a reality for auditors (Barrier, 2002). In this outsourced scenario, the American Institute of Certified Public Accountants (AICPA) promulgated a new statement of auditing standards (SAS) No. 94, replacing the SAS-55; however, it keeps the definition of 'internal controls' unchanged.

Keywords: audit risk, complex technology, auditing processes

JEL Classification: M49, G22

Suggested Citation

Pathak, Jagdish and Lind, Mary R., Audit Risk, Complex Technology, & Auditing Processes (March 2003). Available at SSRN: https://ssrn.com/abstract=397321 or http://dx.doi.org/10.2139/ssrn.397321

Jagdish Pathak (Contact Author)

University of Windsor - Odette School of Business ( email )

401 Sunset
Windsor N9B 3P4, Ontario
Canada
519-253-3000 ext. 3131 (Phone)
519-973-7073 (Fax)

HOME PAGE: http://www.jagdishpathak.com

Mary R. Lind

North Carolina Agricultural and Technical State University - School of Business & Economics ( email )

Merrick Hall
Greensboro, NC 27411
United States
336-334-7189 ext. 40 (Phone)
336-334-7093 (Fax)

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