Design And Implementation Of A Computer Based Financial Audit System For A Manufacturing Organization

Project and Seminar Material for Accountancy / Accounting

Design And Implementation Of A Computer Based Financial Audit System For A Manufacturing Organization


Abstract


We are in a dynamic world where nothing remains the same for too long. Information storage and retrieval was done manually decades ago. Today, it has been phased out gradually in all areas of our day-by-day activities. Everything is undergoing computerization, so there is need for auditing firm to undergo this process.

The documentation management system in most audit firms no doubt, has a difficult task in today’s competitive auditing industry hence there is the need for a fast, more efficient and effective processing system.

Taking Anammco Ltd Enugu as a case study, client’s files cannot be assessed quickly, and many difficulties are experienced in the updating, verifying and other auditing jobs.

The work is geared towards the computerization of the existing system of processing data as well as identifying the various problems which are encountered in the manual and mechanical methods of data processing in the auditing of a clients financial statement of account and to recommend a first class solution to these problems which is to computerize the auditing/processes in an organization.

Finally, the thesis was concluded with the implementation, programming, text run and changeover process of the new system.


Table Of Contents


Preliminary Page(s)

  • Title Page
  • Declaration
  • Approval
  • Dedication
  • Acknowledgement
  • Abstract
  • Table of Content

Chapter One

1.0 Introduction

  • 1.1 Statement of the problem
  • 1.2 Purpose of the Study
  • 1.3 Aims and Objectives of the study
  • 1.4 Scope of the study and Limitations
  • 1.5 Assumption
  • 1.6 Definition of terms

Chapter Two

2.0 Literature Review

  • 2.1 Introduction
  • 2.2 The Audit Process
  • 2.3 Audit Operations

Chapter Three

3.0 Analysis of the existing system

  • 3.1 Fact finding methods used
  • 3.2 Procedure for data collection
  • 3.3 Organizational Structure
  • 3.4 Objectives of the existing system
  • 3.2 Input, process, and output analyses
  • 3.3 Information flow diagram
  • 3.4 Problems of the existing system
  • 3.5 Justification of the new system

Chapter Four

4.0 Design of the new system

  • 4.1 Output specification and Design
  • 4.2 Input specification and design
  • 4.2 File Design
  • 4.3 Procedure chart
  • 4.5 System flowchart
  • 4.4 System requirements

Chapter Five

5.0 Implementation

  • 5.1 Program design
  • 5.2 Program flowchart
  • 5.3 Pseudocodes
  • 5.4 Source Program
  • 5.5 Test Data
  • 5.6 Sample Reports

Chapter Six

6.0 System Documentation

  • 6.1 Program Documentation
  • 6.2 User Documentation

Chapter Seven

7.0 Conclusion and Recommendation

  • 7.1 Conclusion
  • 7.2 Recommendation
  • Bibliography
  • Appendices

Chapter One


Introduction

1.1 Statement of the Problem

Auditing is an activity or exercise that implies an indept examination of a set of financial statements and their underlying records and documents, so as to form an objective opinion which is expressed in the form of an audit report on the truth and fairness of view expressed in the financial statement about the transaction of a business organization.

Prior to the introduction of computers, auditing was done manually. And due to the increasing activity of expansion in business and organization, it become increasingly difficult and cumbersome to accelerate auditing processing files and documents containing information about the business or organization being audited increased in a number and also was hard to keep as they occupy space. Auditors suffered tremendously because of this.

This came with the intervention of computers, widely used today in all areas of human and be it in production, manufacturing, finance, purchasing, auditing, resources among others. The incessant increase in the use of computer in the police and private sectors of the world economics is a clear manifestation of the efficiency of the operations in achieving results.

However, the ways of auditing manually in recent has been confronted with the problems of error traceable to human mistakes and shortcomings.

This overcoming these problems with computer is what the researcher is going to consider in this research work.


1.2 Purpose of Study

I am not claiming that this work is enough to make me a philosopher’s stone, but suffice it to state here that this work or study is vital in various ways to be number of people including the businessmen, firms, organizations, companies, both private and government owned companies in the field of auditing. This will be of immeasurable benefit to auditors from time to time.

But on the other hand, organizations will know the measure to take in order to alleviate the problems, which are associated with manual auditing and if when confronted with these problems they would be in a position to find a suitable solution as the case may be.

With the use of computer in auditing, most firms may be secured against dubious minded managers as well as faulty and unreliable information.


1.3 Aims and Objectives

In order to keep auditing abreast of unreliable record, then there should be the thirst for reliability and credibility of information and records that facilitate capital business operations, firms and organizations proceed to establish and implement computerized measures and alternative to the present auditing. The aims and objectives that are involved in investigating on the alternative to manual auditing operations as well faulty and unreliable records.
This work will also reduce human error in auditing it will also make an auditing to be more reliable, acceptable and understandable to compare with the manual auditing.


1.4 The Scope and Limitation of the Work

This research only considers how problems of auditing manually in areas of business be it private or government owned could be extremely reduced or alleviated.

The researcher will look at the existing nature of the problems and then suggest ways to enhance them.

I will equally look at the financial control of the said company (ANAMCO LTD EMENE ENUGU) but may not go furthers to expose some auditing problems because of certain circumstances.

Limitation

This project (study) was seriously faced with a number of factors, the most important of which were time, money and fact-findings.

Time

Time was by far the most important hindrance to this since the researcher was tired down to serious studies for his/her examinations, this research work was not given the appropriate attention through I made sure that the little I had was used to provide enough facts and figures that will stand as a starting point for other researchers in an auditing related problems.

Money

Limited fund also pose a problem to the realization and completion of this work. Going to libraries for days and the firm which I used as my case study (i.e ANAMMCO LTD ENUGU) to interview some staff in the firm, typesetting and binding the findings into booklet, all these demanded a lot of monetary terms.

Fact Findings

Owing to the unfavorable economic pressure on the state of organization, getting the facts was not so easy, as most of the m have not received their salaries for more than two months.


1.5 Assumptions

In the research work, I assume the facts and figures gathered are both accurate and reliable and at the end of the study, I would be able to report in this work, the various processes involved in a financial audit operations.


1.6 Definition of Terms

Computer System:

A device or system that is capable of accepting data using data to carry out sequence of operations in a distinctly and explicit defined manner.

Program Flow Chart

This is a diagrammatic representation of a computer program.

Expenses

It is the expenses made on a project transaction

Amount Generated

This is the amount of money due to the firm for an auditing job.

Amount Receivable

It is the amount which the firm receives when the expenses is deducted from the amount generated.

Amount Payable

This covers the money which the firm or organization spent on a transaction.


Chapter Seven


Conclusion and Recommendation

7.1 Conclusion

Having identified the numerous problems associated with the current system whereby the financial audit process is done manually is being:-

  1. Time consuming
  2. Exposes the organization to greater risk of being duped by some dubious minded managers.
  3. Inefficiency
  4. Unreliable
  5. So rigid, and makes no room for innovative changes
  6. Not profit oriented.

It is therefore the intention of this project work, to eliminate all these shortcomings as listed above. Its major objectives is to provide management with an automated financial information system with the minimum time lag, since financial condition is often considered the best single measure of an organization’s competitive position and overall attractiveness to investors.

An organization’s liquidity, leverage, work capital, profitability, asset utilization, cash flow and equity position can eliminate some of the strategies, as feasible alternatives.

Financial factors very often result in existing strategies being altered and implementation plans being changed. To provide the management with their financial standing in the appropriate policies to move the business forward more than the past years.

This new system also reduces complexities and is very simple to manipulate, very flexible and facilitates changes maintenance cost, is projected to the barest minimum. It is worth mentioning at this juncture, that the system when installed, is relative with the old system as it eliminates all the handicaps inherent in the old system with newer and better facilities introduced.


7.2 Recommendation

The basic importance of software testing and its implications with respect to software quality cannot be over-emphasized. To develop a software system, it involves a series of production activities where chances of injection of human fallibilities are enormous. If necessary precautions bearing in mind the necessary preventive techniques/ measures are put in place during and after design and implementation of the computerized alternative, then the problems, which are associated with financial auditing manually, would be alleviated.

Infact, this projects though very challenging, has been a very interesting medium of learning new things and programming techniques.

I am of the pinion that this topic should be given to as many candidates as are desirous to work upon it and come up with different ideas as it affects financial audit.

I would therefore be extremely happy to see this work being used or serving as a prototype to others who would like to improve on it.


Design And Implementation Of A Computer Based Financial Audit System For A Manufacturing Organization


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Design And Implementation Of A Computer Based Financial Audit System For A Manufacturing Organization


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Frequently Asked Questions


What is a system/process audit?

The system / process audit examines the process activities / steps for verifying whether the inputs, actions, and the outputs are in accordance with the defined requirements. A system / process audit is an evaluation of the sequential steps and techniques of the process within the system.

Do it based accounting systems satisfy the objectives of small firms?

Powell and Xiao with their IT based accounting systems. Nearly ninety percent claim that their objectives of IT applications have been fully or almost satisfied. The findings confirmed the ones found by Shahrum et al ., (1995). established small firms in the UK. Results revealed that eighty-six percent of the firms

What is the status of computer-based accounting systems adoption among SMEs?

This study investigates the status of computer-based accounting systems (CBAS) adoption among small and medium manufacturing firms (SMEs) in the northern region of Peninsular Malaysia. Results show that over ninety percent of the firms have adopted CBAS. The adoption of CBAS,

What is the root word of Audit?

The term audit is derived from the Latin term ‘audire,’ which means to hear. In early days an auditor used to listen to the accounts read over by an accountant in order to check them. Auditing of a system or system processes is carried out against agreed upon requirements. 

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