1
Research Paper: Final Report Assignment
ACCT332: Accounting and Control
October 10, 2023
Leanna Bowden
2
Final Report Assignment – Monitoring and Auditing AIS
Introduction
In the business world today, many firms, corporations, and businesses rely on computerized
technology; therefore, the use of Monitoring and Auditing AIS is vital. For a business or
corporation to be financially sufficient, it must use the concept of Monitoring and Auditing AIS.
This includes Computer Hardware and Software such as The Operating System, Database
Systems, LANs and WANS, Wireless Networks, Computer-Assisted Audit Techniques, and
Continuous Monitoring and Continuous Auditing (Richardson, 2021). This paper will indicate
specific internal controls for each business or corporation process. This includes sales, purchases,
cash collections/disbursements, and conversion/manufacturing. Monitoring and Auditing
controls validates firm(s) accuracy and financials. Over the years, technology has advanced and
changed the way accounting works. Everything such as P&L statements, Balance Sheets,
Ledgers, or Checkbooks were all kept and calculated by hand. Now, there are systems such as
Peachtree or QuickBooks, and calculators that do the simple tasks in the computer system. It is
known that individuals who understand the use of the Internet will gear towards using it for e-
business. E-business, or Electronic business, is the use of a businesses management with the
clients involved to create a technology network. This includes the communication system that we
are all familiar with called an E-mail. E-mail is an electronic way of communication personal or
business messages with another individual(s) (Al-Dmour, 2019). E-mails allows clients to
communicate faster and be more efficient to get a project done. With a mouse click, an
accountant might access information. The nature of an accountant's work was altered as a result.
Through the usage of information technology, more avenues were opening. This broadened the
range of prospects available in accounting. New fields of expertise had emerged. For technical
3
assistance, business owners started turning to licensed accountants. Accountants gained better
expertise on the most effective financial systems. Accountants were evolving into trusted
advisors and IT staff. The accountant's job was to boost productivity for these companies. Not
only does the customer need to have effective financial procedures, but the accountants
themselves also require software that makes it easier for them to keep track of their clients'
financial data. To create a digital system that will manage all of their clients' records and
historical information, accountants collaborate with systems programmers. The processing cycle
provides the computer with instructions on how to process the clients' data when their
information is entered into the computer program. As a result, it can transform the data into
information that is helpful. In order to improve the success of the client, he or she might evaluate
the data and comprehend the financial accounts. The computer system of an accountant can store
and arrange all of the client records. The documents can be stored on an encrypted portable
storage device or carried on an encrypted laptop rather than being brought to a client's place of
business in a suitcase full of file folders for perusal. The accountant is prepared to do statistical,
accounting, or forecasting analyses while still having access to the client's sensitive information.
Further, cloud computing is currently gaining popularity. Cloud computing got its name from the
flow chart symbol for the Internet, the cloud, which appears in the term. It is a service that is
offered over the internet to use business applications and permanently save data on a remote
server. SaaS, or software as a service, is a web-based service. Large data centers that are shared
by numerous other users permanently store the data. The accountant wouldn't need to make any
purchases. Accounting professionals in the twenty-first century have strategic software programs
like enterprise resource planning (ERP) systems in place to get ready for the future. This
software tool unifies many organizational departments onto a single platform. This allows
4
interactions between the many departments and makes data available in a variety of ways. For a
competent CPA who is knowledgeable about these technologies, several avenues have opened.
The IT department needs to be managed because information technology plays a significant role
in running a successful firm. This manager is responsible for making sure that information
technology supports the goals and strategies of the organization. The IT systems of the
organization must be more advanced than the competitors, financially accountable to the
corporation, secure with a failsafe, and compliant with efficient controls. In addition to
supporting organizational goals, IT infrastructure must also ensure that the firm is in compliance
with legal requirements. Professional groups like the IT Governance Institute (ITGI), which was
founded in 1998 and initially released the IT Governance framework in that year, promote the IT
Governance concept. IT Control Objectives for Sarbanes-Oxley, released by the ITGI in 2004,
helped to mainstream awareness of IT Governance and develop controls. Control Objectives for
Information and Related Technology (CoBIT) provided this advice (Shin, 2023).
Thesis Statement
“Accounting Information System with its advantages and disadvantages is revolutionizing the
field of accounting.”
AIS & Accounting
Accounting information system?(AIS) as a sub system of the overall business systems has some
components that make it what it is. I have seen some articles on the web where the following;
computer,?accounting software, scanners and printers are given as the only components of AIS.
There are many components of good accounting information systems and those are people, way
of doing things, data, data management and enhancement software, governance and internal
5
control, and IT infrastructure. Any system's most important element is its people. Even the most
automated systems cannot run themselves. Many individuals believe that AIS is entirely
computer-based. No, the system can be automated or manual. It is crucial to have competent
individuals in charge of various accounting system components. In order to recruit and keep the
finest of the best in a firm, the human resources team exercises their power. The only asset a firm
possesses that cannot be listed in the asset registry or the statement of financial status is its
human capital. A significant portion of AIS is made up of procedures, policies, guidelines, and
rules. If there are no instructions or processes to follow, those who use the accounting system
will be perplexed. For instance, if there is no protocol to adhere to when implementing the
budgeting functions, the budgetary management system within the AIS will not function
properly. The type of information asset is data. The lack of data that flows through the system
will prevent an accounting information system from being complete. Without the data to make
sense of it, what use are additional features and infrastructures? Without one type of data or
another, an accounting information system cannot be complete. Accounting software and other
resources that are used as data management and improvement tools operate on the system's soft
side. It is impossible to overstate the significance of accounting software, for instance, when it
comes to creating and structuring a company's overall financial accounting systems. If there is no
software to handle the dull and routine parts of the system that don't require a lot of input from
humans, you will find that the entire system is inefficient and prone to mistakes. To make an
accounting clerk execute the tedious calculations necessary for ratio analysis manually would be
suicide. Internal controls and good governance are essential operational components of any well-
run firm. A system must become ingrained in the organization's entire culture for it to be
effective. The control and management of a business fully reflects these. An accounting
6
information system cannot function without corporate governance, which is the framework that
outlines how resources are handled and regulated (Tajul, 2020). The hardware platform that
serves as a conduit for the operation of other accounting information system components is
known as IT infrastructure. This kind of component includes items like computers, servers,
networking equipment (hubs, bridges, routers, and switches), printers, scanners, copier, etc. A
system known as an accounting information system (AIS) gathers and stores data before
processing it into information that investors, creditors, and managers can utilize (Vasarhelyi,
2012). For internal management needs, an accounting information system offers precise and
timely financial information. Decision-makers may be able to manage businesses more
effectively with the information an AIS generates. The term AIS is most frequently referred to as
a complicated computer-based system combining the resources and power of information
technology with traditional accounting procedures and controls. Additionally, it can combine and
achieve departmental and corporate goals. Organizations occasionally make the error of not
considering each of these six components and treating them equally when implementing an AIS.
Because the initial system was not created to meet the needs of the company, the organization
tried to make the system work before starting over, following the proper steps in order to benefit
from AIS and then make significant profits. As a result, a system is "built three times" rather
than just once. Implementing an accounting information system can frequently help an
organization's departments perform more efficiently. For a variety of factors, departments
outside of accounting must comprehend how crucial information is handled by the company's
internal financial information system. Source documents such as invoices, purchase orders,
employee expense reports, time cards for payroll entry and asset acquisition forms-must all find
their way from the originator to the accounting department. Depending on the program, the AIS
7
needs data manually entered into the system for various stages of the procedure. This frequently
influences how other departments will proceed with processing financial data. The automation of
reporting by accounting information systems is a significant benefit. When businesses need
quick, precise information that is summarized accurately for financial reporting, reporting is a
key tool. Business analysts, managers, and other decision makers can now easily use and analyze
the data that the accounting information system extracts from the centralized database after
processing and transforming it. An evaluation of the applicability of new professional
pronouncements to the firm's practice, CPE and other professional development activities, client
and engagement acceptance continuation decisions, confirmations of independence, staff
interviews, pre- and post-issuance reviews of engagements, and inspections should all be
included in the monitoring procedures that a firm must carry out (Ruggeri, 2017).
Monitoring AIS
The purpose of monitoring processes is to give a company a fair level of assurance that its
quality control system is working well and that the set rules and procedures are appropriate and
being used correctly. The new standards' main change, monitoring, which takes the place of the
old inspection part, contains the old inspection element but has a broader definition. Previously,
annual inspections of the quality control system were considered to be what was meant by
inspection. The new monitoring component requires continuing to think about and assess that
system. CPAs are given detailed instructions on monitoring techniques in SQCS No. 3. The
accounting system needs a robust management and monitoring system to guarantee the accuracy
of the data and to keep track of any issues that might arise. The world we live in today is entirely
dominated by technology, which is transforming and having an impact on every academic
discipline. Today, accountants who lack digital expertise and understanding are not seen as lean
8
and efficient accountants because their skills, knowledge, and expertise are slowly outmoded.
Training is the largest obstacle or drawback of the accounting information system. This system is
not included in the academic training for accountants. Sometimes it might be challenging and
time-consuming to learn an accounting information system. Companies may suffer from a
manpower and time shortage as a result of the need to train employees on a system. Monitoring
AIS results in better transparency and accountability, helps organizations catch problems early,
helps ensure resources are used efficiently, helps organizations learn from their mistakes,
improves decision-making, helps organizations stay organized, helps organizations replicate the
best projects/programs, encourages innovation, and encourages diversity of thought and
opinions. Any project or program must have monitoring and assessment (Rikhardsson, 2019).
Organizations use this procedure to gather data, analyze it, and decide whether a project or
program has achieved its objectives. The project is monitored from the very beginning to the
very finish. Following implementation, evaluation determines how well the program worked.
Every organization needs to implement an M&E system.
Auditing AIS
An AIS audit is a specialized audit designed to lend credibility to the AIS's final deliverables. A
complete set of financial statements, a report on profitability, a periodic inventory report, etc. are
among the final deliverables of an AIS. The needs of accounting information system users are
taken into consideration when conducting an audit of those systems. Accounting and auditing are
interconnected and complementary disciplines. While auditing seeks to ascertain whether the
financial data provided by accounting is accurate, accounting gives information on the financial
health, profitability, and performance of an organization. In essence, an auditor certifies the work
that was done by an accountant. A company's financial accounts are the subject of an audit in
9
order to gain an impartial view. This opinion sheds light on the accuracy and dependability of the
company's reports and financial statements. The operating, investing, and financing operations of
a firm are documented in financial statements (such as income statements, balance sheets, and
cash flow statements) through a variety of transactions. Due to the fact that these statements are
created internally, a dependable third party is required to confirm that the statement's preparers
did not engage in any fraudulent activity. A company's financial status is represented correctly,
accurately, and in compliance with accounting standards thanks to auditing. The three primary
types of audits in accounting are internal, external, and Internal Revenue Service (IRS) audits.
Employees of the company that specialize in internal audits look into matters pertaining to the
financial and operational procedures of the organization. The results of an internal audit are used
to guarantee adherence to laws and regulations, enhance internal controls, and assist management
in detecting process weaknesses before an external audit is conducted. External auditors carry
out their duties outside the organization and impartially review financial documents. Following a
thorough evaluation, they offer an unbiased judgment that either affirms the company's financials
are complete and correct or provides advice to assist the organization in making more educated
financial decisions. Additionally, the IRS conducts audits to confirm the validity of a taxpayer's
tax return and certain transactions. A random statistical method that examines a taxpayer's return
and compares it to other returns often determines whether the IRS will conduct an audit. A
taxpayer might also be chosen for an IRS audit if they engaged in transactions with another
individual or business that turned out to have tax errors (Desai, 2010). Auditing-specific
accountants check the accuracy of financial documents. To make sure that a company's income
statement, balance sheet, and cash flow statements are compliant with tax laws, regulations, and
other applicable accounting standards, they may concentrate on internal or external audits.
10
Internal and external auditors may look for hints as to why some numbers don't quite match up as
they check the correctness of financial statements and tax filings. Auditors can aid in preventing
fraud, enhancing operational effectiveness, and reducing risk by spotting irregularities and
offering advice. An audit accountant supports an individual taxpayer through an IRS audit by
advocating for them in front of the IRS and liaising with the IRS on their behalf. This includes
drafting, submitting, and filing paperwork as well as giving tax guidance on a federal level.
Naturally, most accountants want to be proactive by showing their customers how to prevent IRS
tax audits in the first place. An accountant is often diligent and detail-oriented. Any error, no
matter how tiny, can be expensive for businesses of all sizes (Facci, 2021). The last thing an
accountant wants is for an auditor to arrive after them only to find inconsistencies or mistakes.
Auditors are extremely detail-oriented, but they also have good investigation abilities that allow
them to follow leads and find fraudulent activity. An auditor is skilled at digging deep to find
purposeful and intentional miscalculations in addition to catching honest faults. Practitioners are
increasingly turning to software to drive efficiencies in all tax areas, including audit, as the
accounting profession develops and grows. Accountants want a dynamic, end-to-end solution for
accurate, efficient audits in a complex tax landscape driven by technological advancements and
continually evolving accounting and auditing rules. Many accountants are investing in high-tech
solutions to improve their audit capabilities as cognitive computing, artificial intelligence (AI),
and data analytics gain prominence. Completing audits faster and with complete confidence is
now possible for accountants with the addition of cloud-based audit technologies and integrated
research tools. So how does this technology aid accountants who perform audits? Using machine
learning, data mining, pattern recognition, and natural language processing, cognitive computing
and artificial intelligence (AI) can imitate human thought processes in a computerized model.
11
With regard to audits, these technologies can assemble data to identify typical risk areas based on
characteristics, such as industry or firm size, and create an audit plan.
Conclusion
To conclude, Accounting Information Systems changes the way accounting works. The use of
technology has implemented many different ways that businesses use accounting. Monitoring
and Auditing AIS helps to ensure financial accuracy in a company or business. “Accounting
Information System with its advantages and disadvantages is revolutionizing the field of
accounting.” It is important that a business follows a set procedure to ensure a smoothly running
company. Technology helps a business to do so. New software’s and systems help introduce
evolving technology to businesses and accountants.
12
References
Al-Dmour, A. H., Abood, M., & Al-Dmour, H. H. (2019). The implementation of SYSTRUST
principles and criteria for assuring reliability of AIS: Empirical study. International Journal of
Accounting & Information Management, 27(3), 461–491. https://doi.org/10.1108/ijaim-05-
2017-0067
DESAI, V., ROBERTS, R. W., & SRIVASTAVA, R. (2010). An analytical model for external
auditor evaluation of the internal audit function using belief functions*. Contemporary
Accounting Research, 27(2), 537–575. https://doi.org/10.1111/j.1911-3846.2010.01016.x
Faccia, A., & Petratos, P. (2021). Blockchain, Enterprise Resource Planning (ERP) and
Accounting Information Systems (AIS): Research on E-procurement and system integration.
Applied Sciences, 11(15), 6792. https://doi.org/10.3390/app11156792
Richardson, V. J., Chang, C. J., & Smith, R. (2021). Accounting information systems. McGraw-
Hill Education
Rikhardsson, P., Singh, K., & Best, P. (2019). Exploring continuous auditing solutions and
internal auditing: A research note. Journal of Accounting and Management Information Systems,
18(4). https://doi.org/10.24818/jamis.2019.04006
Ruggeri, D., & Rizza, C. (2017). Accounting information system innovation in interfirm
relationships. Journal of Management Control, 28(2), 203–225. https://doi.org/10.1007/s00187-
017-0247
Shin, S., & Ennis, K. (2023, May 8). Data Analytics in Accounting: Visualizing corporate
income inequality. Allen Press.
13
https://meridian.allenpress.com/aisej/article/16/1/19/492964/Data-Analytics-in-Accounting
Visualizing.
Tajul Urus, S. (2020). Critical success factors of Accounting Information Systems (AIS):
Empirical evidence from Malaysian organizations. Management and Accounting Review, 19(1).
https://doi.org/10.24191/mar.v19i01
Vasarhelyi, M. A. (2012). AIS in a more rapidly evolving era. Journal of Information Systems,
26(1), 1–5. https://doi.org/10.2308/isys
