LECTURE 1:
1.0 Basic concepts of IT Auditing/IS Auditing.
➢ An Information System (IS) audit or Information Technology(IT) audit is an
examination of the controls within an entity's Information technology
infrastructure.
➢ An information technology audit, or information systems (IS) audit, is an
examination of the management controls for IT infrastructure and a
complete review of the security of computer systems.
• It determines whether information systems are safeguarding assets,
maintaining data integrity and operating effectively to achieve an
organization’s goals.
➢ An Information Technology audit is the examination and evaluation of an
organization's information technology infrastructure, applications, data use
and management, policies, procedures and operational processes against
recognized standards or established policies.
• Audits evaluate if the controls to protect information technology
assets ensure integrity and are aligned with organizational goals and
objectives.
Objectives of an Information System Audit
➢ Safeguarding corporate assets,
➢ Maintaining the integrity of stored and communicated data,
➢ Supporting corporate objectives effectively..
Information Systems (IS) / Computer-based Information Systems (CIS)
➢ Information System- Is an integrated set of components for collecting, storing, and
processing data and for providing information, knowledge, and digital products.
Components of an Information System
A computer-based information system consists of the following components:
✓ Hardware: The physical equipment that make up an information system such as the
Central Processing Unit, Input devices, Output devices, storage devices as well as
communication devices.
✓ Software: Are step-by-step instructions that guide the computer hardware.
✓ Data: Are facts that are used by the programs to provide useful information.
✓ Procedures: Are policies that govern people and their operations in an information
system.
✓ People: The personnel that uses and operates the information system.
Types of Information Systems
✓ Transaction Processing Systems (TPS): They handle day-to-day transactions of an
organization such as record keeping, inventory control & payroll tracking.
✓ Management Information Systems (MIS): They help managers make structured
decisions such as reports & data summaries.
✓ Decision Support Systems (DSS): They help managers make unstructured decisions
whose outcome is uncertain such as data modeling, comparing datasets & predicting
outcomes of scenarios based on available information.
✓ Office Automation Systems (OAS): They allow many office activities to be performed in
an electronic mode.
✓ Executive Information Systems (EIS): They help senior managers make informed
strategic and tactical decisions.
✓ Expert Systems (ES): They help in providing specialized decisions by mimicking the
decision-making abilities of a human expert.
Benefits of Computer-based Information Systems
➢ Supply of information for decision making
➢ Cost reductions.
➢ Better customer service
➢ Enhances communications.
➢ Custom data- to help with specific task/decision.
➢ Real-time data- useful for urgent actions.
Trends and developments in Information Technology
1. Cloud Computing
One of the most talked about concept in information technology is the cloud computing.
Clouding computing is defined as utilization of computing services, i.e. software as well as
hardware as a service over a network.
Typically, this network is the internet.
Cloud computing offers 3 types of broad services mainly Infrastructure as a Service (IaaS),
Platform as a Service (PaaS) and Software as a Service (SaaS).
Some of the benefit of cloud computing is as follows:
▪ Cloud computing reduces IT infrastructure cost of the company.
▪ Cloud computing promotes the concept of virtualization, which enables server
and storage device to be utilized across organization.
▪ Cloud computing makes maintenance of software and hardware easier as
installation is not required on each end user’s computer.
2. Mobile Apps
Mobile applications have only grown in popularity over the past few years, and this year, they
are surfacing in bigger and better ways. Brands and industries all over the world are trying to
find ways in which one can improve their work through the use of mobile apps and through the
implementation of new resources that can make working on the go more efficient.
3. Big Data Analytics
Big data analytics is a trend that has grown over the past few years, and this is something that is
now being implemented in almost every kind of industry that makes use of large-scale
production processes and manufacturing and supply. Big data analytics allows brands to
process their information in a better manner and enables them to reach a much better
understanding of the areas they need to develop.
4. Automation
Automation is one trend that has largely hit the manufacturing and production units and is
something that is estimated to only grow more in the coming years. Automation has also
enabled processes to work at a faster pace and enables companies to reach their goals in a
much more efficient manner.
5. Artificial Intelligence
While automation is growing, artificial intelligence is now starting to see the light of day. The
past year saw the introduction of several new mediums of artificial intelligence. This year,
industries are looking at ways in which they can grow these resources and implement the work
they do. Artificial intelligence is now starting to see implementation on a larger scale which is
only set to grow more over the coming years.
6. Smart Technology
Smart machines that use artificial intelligence or automation are on the rise, even in small-scale
units and smaller implementations. Homes are now becoming smarter as a result of smart
technology being used and opted for in homes. Simple tools such as Alexa have become an
essential part of homes, and these are only estimated to increase over the next year.
7. Blockchain Technology
Cryptocurrency might have been at an all-time high in 2017 and 2018, but the fact remains that
this is something that is yet to see a significant amount of development. Blockchain technology
is only now starting to grow in popularity and is being implemented by industries across the
world for all that it offers.
8. Cyber Security
With the growth of digital mediums and technology, the potential threats that people can face
are only rising. Because of this, cybersecurity has had to grow extensively over the past few
years, simply to stay in touch with the growth that is being experienced. Industries all over the
world also realize the importance of investing in cybersecurity, which is why the field is
experiencing growth at such a rapid pace.
[Link] Internet of Things( IoT)
The Internet Of Things is a concept that all digital devices are connected by a single medium
through which one would be able to control everything within their homes. More and more
brands realize that this is indeed the way of the future and is something that is within
technological reach. More brands are beginning to incorporate this concept, and the statistics
that showcase this are prevalent enough to attest to positive growth in this regard.
10. Virtual Reality
The gaming industry has always been one that has experienced growth alongside the field of
information technology, and virtual reality has taken this one step further, giving customers the
very epitome of digital experience. Virtual reality gaming has already started to become
popular due to new technology, which improves the manner in which the industry can grow.
11. Augmented Reality
Augmented reality is another approach to ‘artificial experiences’ that individuals are now being
given access to. This has improved the manner in which the field has been able to develop.
Augmented reality is seeing a lot more applicability outside the gaming industry as well and is
something that is seeing more implementation as compared to virtual reality.
12. Predictive Analytics Implementations
Predictive Analytics is the process of analyzing large volumes of data to be able to come to a
conclusion regarding the possible outcomes that a situation might have. Market analysts see
this as an incredibly valuable tool for brands to note whether they should be moving in a
particular direction or not. This has proven to be an incredibly efficient method of analysis and
saves the industry an incredible amount of money in the process.
13. Cloud Migration
Cloud migration has proven to be incredibly beneficial for businesses that want to move in a
digital direction and who want to maintain better records of their digital data. Cloud migration
is something that has grown over the past few years, and the statistics of this showcase positive
results in this regard. More than 74% of CFOs state that cloud migration was one of the most
beneficial things for the growth of their businesses.
14. Rise Of Data Officers
With the growing importance of information technology and data analytics, data officers have
become even more important in institutions and industries all over the world. The number of
positions open within this is plenty and is growing as more and more businesses are in need of
someone proficient in this.
15. Quantum Computing Applications
Quantum Computing is a process of conducting complex equations and processes to perform
several complex tasks or process large volumes of information with absolute ease. This has
proven to be incredibly beneficial for a variety of different industries, which is why it is seeing a
massive amount of growth.
16. Smart Technology
Homes are now becoming smarter thanks to the numerous integrated devices that work to
make our lives easier. Things like Alexa and other supplementary resources have proven to be
incredibly beneficial in this regard and make homes significantly more efficient and safer in the
process.
17. Open Source Solutions
Open Source programs give users access to some of the main files and frameworks in a
particular program, enabling them to modify it with absolute ease. As more and more users
become technologically proficient, giving them the option to work with applications themselves
is proving to be incredibly beneficial.
18. Edge Computing
Edge computing is one phenomenon that has grown over the past few years and is seeing a
wide scale of implementation currently. Edge computing is when large volumes of data are
processed near the edge of the network rather than where the data is mainly being generated.
This is meant to make this processing more efficient and optimized. More development
mediums are choosing to go in for this form of computing over traditional types because of its
efficiency. This also attests to the fact that more methods of computing and program
generation are on the rise.
19. Rise Of Chatbots
While most tech advancements help us move towards the greater good, some aren’t as
beneficial as we might think. In 2019, the number of chatbots that were being used was far
more than what we expected. Chatbots aren’t, however, always bad because, in some
situations, they have improved the customer service that we have access to. Chatbots are a
program to respond to certain queries in certain ways and are designed to help customers with
some of the more basic functions that they would need. These are, of course, still not in a
position wherein they are a complete substitute for real live customer service, which is what
has helped them still stay in development.
Impact of Information Technology on the Audit Process
➢ Reduced audit trail
Use of IT reduces source documents and records that allow tracing of information
➢ Reduced human involvement
Users only see the end result from an IT system
➢ Reduced separation of duties
Computers do many duties that were traditionally segregated
➢ Need for IT experience
Personnel with knowledge and experience
➢ Reduction of audit risk
Through electronic data processing and electronic auditing- thus reducing errors.
