IT Auditing and Application Controls for Small and Mid–Sized Enterprises: Revenue, Expenditure, Inventory, Payroll, and More

Get IT auditing up and running in your SME's financial auditing process Historically, IT auditing has not been given the attention it deserves within a financial audit. With an increase in governmental regulations and corporate boards realizing its importance, IT auditing has risen to a level where every company, private or public or nonprofit, regardless of size, needs to understand the risks and controls surrounding its financial applications. Mining the myriad purposes of IT, IT Auditing and Application Controls for Small and Mid-Sized Enterprises provides you with the practices and guidance needed to implement IT auditing in your SME. Drawing on their decades of experience in academia and in the trenches, the veteran author team walks you through various financial statement cycles to help you better understand cycle risks, controls, and illustrative application-level controls. IT Auditing and Application Controls for Small and Mid-Sized Enterprises provides executive-level insights into IT auditing and application-level controls for SMEs as well as concrete hands-on tips and techniques that you can implement today. Organized by level of complexity, IT Auditing and Application Controls for Small and Mid-Sized Enterprises features: QuickBooks and Microsoft Dynamics examples Cross references to material published by the ISACA and AICPA on the topic A framework for evaluating risks, controls, and reporting deficiencies Spreadsheet auditing tools Insights on the importance of understanding IT risks Cases of IT audit failures Research confirming the risks associated with SMEs Practical guidance to help you analyze and validate reports Whether you're an auditor just entering the business or looking to develop better quality and efficiency in your software controls, IT Auditing and Application Controls for Small and Mid-Sized Enterprises is your go-to guide to getting started in IT financial auditing.

Preface Acknowledgments Chapter 1 Why Is IT Auditing Important to the Financial Auditor and the Financial Statement Audit? Management’s Assertions and the IT Audit Objectives of Data Processing for Small– and Medium–Sized Enterprises (SMEs) Special Challenges Facing SMEs Research Confirming the Risks Associated with SMEs A Framework for Evaluating Risks and Controls, Compensatory Controls, and Reporting Deficiencies In Summary: The Road Ahead Chapter 2 General Controls for the SME General Controls: Scope and Outcomes The “COSO Process” – Putting It All Together: Financial Statements, Assertions, Risks, Control Objectives, and Controls The Vasa: Governance and General Control Failures In Summary Chapter 3 Application–Level Security Key Considerations Initial Security Setup Security Role Design Password Configuration Segregation of Duties Personnel, Roles and Tasks Access Reviews Human Error In Summary Chapter 4 General Ledger and the IT Audit The General Ledger: A Clearinghouse of Financial Information Chart of Accounts for QuickBooks SME Risks Specific to the General Ledger and the Chart of Accounts Assertions Underlying the Financial Statements and General Ledger Controls IT Controls, the Transaction Level, and the General Ledger Analytical Reviews Using the General and Subsidiary Ledger Data In Summary Chapter 5 The Revenue Cycle General Process Description Risk Exposures and Sub Processes Application Controls, Revenue Cycle Risks and Related Audit Procedures In Summary Chapter 6 The Expenditure Cycle General Process Description Risk Exposures and Sub Processes Application Controls, Expenditure Cycle Risks and Related Audit Procedures In Summary  Chapter 7 The Inventory Cycle General Process Description Risk Exposures and Sub Processes Application Controls, Inventory Cycle Risks and Related Audit Procedures In Summary Chapter 8 The Payroll Cycle General Process Description Risk Exposures and Sub Processes Application Controls, Payroll Cycle Risks and Related Audit Procedures In Summary Chapter 9 Risk, Controls, Financial Reporting, and an Overlay of COSO on COBIT PCAOB Warnings: Insufficient Evidence to Support Opinions How We Got Here: A Historical Perspective Risk Risk and Fraud Controls Financial Reporting PCAOB Guidance on IT Controls Integrating COSO, COBIT, and the PCAOB In Summary Chapter 10 Integrating the IT Audit into the Financial Audit Risks, Maturity, and Assessments Cross Referencing COBIT to the PCAOB and COSO Plan and Organize Program Development and Change Computer Operations and Access to Programs and Data Monitor and Evaluate In Summary Chapter 11 Spreadsheet and Desktop Tool Risk Exposures Specific Types of Risks and Exposures Research on Errors in Spreadsheets Compliance Dimensions of Spreadsheet Risk Exposures Spreadsheet Auditing Tools Governance of Spreadsheets and Desktop Tools Control Considerations Auditing Controls and Creating a Baseline Life After the Baseline:  Maintaining Spreadsheets and Desktop Tools In Summary Chapter 12 Key Reports and Report Writers Risk Exposures How Reports Are Used Original Reports within the Application C Modified or Customized Reports Within the Application Reports Using Third–Party Packages Analyzing and Validating Reports In Summary Chapter 13 IT Audit Deficiencies Defining and Evaluating IT Audit Deficiencies A Framework for Audit Deficiencies Types of IT Audit Failures and Illustrative Cases Use of Compensatory Controls Ideas for Addressing Segregation of Duties Issues In Summary References About the Authors Index

Jason Wood, CPA, CITP, CIS, CIA, CFF, MBA, is President of WoodCPA–Plus, a certified public accounting firm that focuses on IT auditing, consulting, and training. Mr. Wood has over seventeen years of international business experience in IT auditing, helping middle market and global Fortune 500 companies. He is an alumnus of the Big Four accounting firms—Deloitte, E&Y, and PwC. William Brown, PhD, CPA, CISA, CITP, is Chair of Accounting at Minnesota State University, Mankato, where he has taught accounting and management information systems. He has over twenty years of business experience including roles as vice president, controller, and CFO of several publicly traded companies and the CIO of an IT intensive high-growth SME. Harry Howe, PhD, is Professor of Accounting and Director of the MS in Accounting Program at SUNY-Geneseo. Howe has coauthored two volumes in the BNA Policy and Practice series and published numerous articles in scholarly and practitioner journals.