1. Information Systems Auditing Instructor: Chris Westland, PhD, CPA Certified Public Accountant (Texas License 17277) ISMT300T Information Systems Auditing Time: Wed & Fri 10:30am-12noon Venue: Rm. 3219 Duration: 1 Sep - Dec 6

2. Today’s Topics What is IS Auditing? oCourse Organization oWhat is IS Auditing? oWhy is it Important? oWhat is the Industry Structure? oAttestation and Assurance oAccounting Irregularities and Financial Fraud (Video)

3. Schedule WeekTopicReadingsPracticum CompetencyCase Study 1-Sep-05 5-Sep-05 What is Information Systems (IS) Auditing? Industry Profile: The Job of the IS Auditor 12-Sep- 05 Identifying Computer SystemsChapter 1Evaluating IT Benefits and RisksJacksonville Jaguars 19-Sep- 05 IS Audit ProgramsChapter 2The Job of the Staff AuditorA Day in the Life of Brent Dorsey 26-Sep- 05 IS SecurityChapter 3Recognizing FraudThe Anonymous Caller 3-Oct-05Utility Computing and IS Service Organizations Chapter 4Evaluating a Prospective Audit ClientOcean Manufacturing 10-Oct-05Physical SecurityChapters7Inherent Risk and Control RiskComptronix Corporation 17-Oct-05Logical SecurityChapter 8Evaluating the Internal Control EnvironmentEasy Clean 24-Oct-05IS OperationsChapter 9Fraud Risk and the Internal Control Environment Cendant Corporation 31-Oct-05Controls AssessmentChapter 10IT-based vs. Manual Accounting SystemsSt James Clothiers 7-Nov-05Encryption and CryptographyChapter 11Materiality / Tolerable MisstatementDell Computer 14-Nov- 05 Computer ForensicsChapter 12Analytical Procedures as Substantive TestsBurlington Bees 21-Nov- 05 New Challenges from the Internet: Privacy, Piracy, Viruses and so forth Chapter 13Information Systems and Audit EvidenceHenrico Retail 28-Nov- 05 Auditing and Future Technologies Course Wrap-up Chapter 16Flowcharting Transaction CyclesSoutheast Shoe Distributor

4. Logical Structure of the Course With Readings from the Text

5. Prac·ti·cum (prăk-tĭ-kəm) noun Lessons in a specialized field of study designed to give students supervised practical application of previously studied theory Student CompetenceCase Study 1Evaluating IT Benefits and RisksJacksonville Jaguars 2The Job of the Staff AuditorA Day in the Life of Brent Dorsey 3Recognizing FraudThe Anonymous Caller 4Evaluating a Prospective Audit ClientOcean Manufacturing 5Inherent Risk and Control RiskComptronix Corporation 6Evaluating the Internal Control EnvironmentEasy Clean 7Fraud Risk and the Internal Control EnvironmentCendant Corporation 8IT-based vs. Manual Accounting SystemsSt James Clothiers 9Materiality / Tolerable MisstatementDell Computer 10Analytical Procedures as Substantive TestsBurlington Bees 11Information Systems and Audit EvidenceHenrico Retail 12Flowcharting Transaction CyclesSoutheast Shoe Distributor

6. Preliminaries: Evaluation http://teaching.ust.hk/~ismt300t Chapter Spot Tests 50% Midterm Examination 20% Final Examination 20% Class Participation 10%

7. What is Auditing?

8. What is Auditing? Nature of work Accountants prepare, analyze, and verify financial reports and taxes, and furnish this information to individuals and managers in business, industry, and government The three major fields in accounting are: Auditing Public Consulting Corporate / Internal

9. Public Accounting Auditor: An auditor examines an organization's financial statements, verifies the accuracy of the financial records, examines management procedures and internal controls to ensure accuracy, and checks for mismanagement, waste, or fraud. The auditor may review company operations compliance with corporate policies, laws, and government regulations. The auditor, or reports to investors and authorities such as the federal government that financial statements have been prepared and reported correctly. Other Public: Public accountants perform accounting, auditing, tax, and consulting activities for public accounting firms, their own businesses, governments, nonprofit organizations, or individuals. Typically, accountants specialize in one aspect of accounting, concentrating on taxes or bankruptcies, for example. Some become consultants who offer advice on compensation, employee benefits, the design of accounting processing systems, or how to safeguard assets.

10. Corporate / Internal Often called management, industrial, or corporate accountants, private accountants record and analyze financial information for the employer and prepare financial reports for stockholders, creditors, regulatory agencies, and tax authorities. Duties may include budgeting, performance evaluation, cost management, and asset management. An accountant also may work as part of an executive team in strategic planning or new product development. Entry-level private accountants often start as cost accountants, junior internal auditors, or as trainees for other accounting positions.

11. Qualifications Auditors must have: ability to analyze, compare, and interpret facts and figures quickly; and be able sound judgments based on this information. should have good oral and written communication skills, well- developed interpersonal skills, and ability to work in cross-functional teams. Business systems and computer skills are required. Some employers prefer hiring individuals with a master's degree in accounting or a master's degree in business administration. Most want to hire someone who is familiar with computers and accounting and internal auditing software applications. Changing legislation regarding taxes, financial reporting standards, international competition, business investments, mergers, and other financial matters require accountants and auditors to continuously update their knowledge.

12. CPAs Most accounting positions require at least a bachelor's degree in accounting or a related field. Based on recommendations made by the American Institute of Certified Public Accountants (AICPA), certified public accountant (CPA) candidates must complete 150 semester hours of college coursework – an additional 30 hours beyond the usual four-year bachelor's degree to become licensed. CPA certificate applicants to have some accounting experience. Almost all states require a CPA and other public accountants to complete a minimum number of hours of continuing education before a license can be renewed.

13. Employment Outlook Job opportunities for accountants are expected to grow 10 to 40 percent per year through 2006 due to the increasing number of new businesses spurred by China’s growing economy. Jobs with major accounting and business firms remain the most sought after by new graduates. More jobs will be available replacing thousands of accountants and auditors who retire or transfer to other occupations each year. Accountants and auditors who have earned certification or licensure or who have advanced degrees will have the best job prospects.

14. (Where Do Information Systems Fit in?) Compare an Accounting Department in the early 1900s

15. (Where Do Information Systems Fit in?) With an Accounting Department in the 1970s

16. (Where Do Information Systems Fit in?) With an Accounting Department Today (well … not everywhere, but you see the potential….)

17. (Where Do Information Systems Fit in?) With an Accounting Department of 2020 (… at least my prediction….)