What is the basis of systems-based auditing?
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What is the basis of systems-based auditing?
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Systemsbased auditing is an approach to auditing that focuses on the evaluation of an organizations internal control systems and processes The basis of systemsbased auditing is to assess the effectiveness and reliability of an organizations controls and procedures in place to achieve its objectives and manage risks Here are some key principles and components of systemsbased auditing Control Environment Systemsbased auditing begins with an assessment of the control environment within an organization This includes evaluating the overall tone set by management the organizations commitment to internal controls and the ethical and operational values that guide the business Risk Assessment Auditors identify and assess the risks that an organization faces This includes financial risks operational risks compliance risks and strategic risks Understanding these risks is crucial for designing appropriate audit procedures Control Activities Auditors examine the control activities and processes that management has put in place to mitigate the identified risks This may involve reviewing policies procedures and protocols for financial reporting asset protection and compliance with laws and regulations Information and Communication Auditors assess how information is captured processed and communicated within the organization This includes evaluating the quality and accuracy of financial and nonfinancial data as well as the effectiveness of communication channels Monitoring and Continuous Improvement Systemsbased auditing emphasizes the importance of ongoing monitoring and continuous improvement of internal controls Auditors look at how an organization tracks the performance of its controls identifies weaknesses and takes corrective actions Testing and Evaluation Auditors perform testing to determine whether the controls and processes in place are effective ...View the full answer
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