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What are the factors that need to be by auditors

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Question - Jamiaton & Partners, a chartered accounting firm has been appointed auditor of James Ltd (James), a new listed company specializing in information technology. James is a leading distributor of several semi-conductor components and spare parts imported from Taiwan and Japan for the domestic and international markets. Starting this year, James is involved in the manufacture and supply of its own semi-conductor components and parts through its new subsidiary in Asia Silicon Valley, Taiwan. In addition, there have been some major changes to its business operating system. The newly introduced Computer Operating System (COS), replaces the old system known as the Manual Operating System (MOS). COS is an integrated system that includes operating functions, administrative activities, and accounting functions. Interestingly, the new system is fully electronic (paperless).

a) Discuss how changes in the computerized system in James Ltd will affect the audit work?

b) Based on the above situation, what are the factors that need to be considered by the auditors in determining the appropriate audit approach?

c) Discuss in detail the audit test or audit procedure that can be used by the auditors to confirm the following:

(i) the effectiveness of internal controls in computerized information systems.

(ii) the accuracy of accounting behavior for each transaction in a computerized information system.

Reference no: EM132589394

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