In auditing the financial statements of companies which use computerized accounting systems, the auditors may find that this traditional (audit) trail is often obscured. Various techniques can be used in order to give the auditors greater assurance when the audit trail is lost. Required; Explain why there is a possible loss of audit trail when companies utilize computerized accounting systems and why auditing through the computer assists the auditors in overcoming this loss of audit trail

The original concept of an audit trail was to print out data at all stages of processing. Computer auditing methods have now cut out much of this (a bonus, time consuming,) working and make use of:

i) a more limited audit trail
ii) efficient control total
iii) use of enquiry facilities
iv) audit packages
v) file dumps

This can however mean that auditors have difficulty tracing individual transactions within the system.
Auditing through the computer

This involves an examination of the detailed processing routines of the computer to determine whether the controls in the system are adequate to ensure complete and correct processing of all data.

Audit test data consists of data submitted by the auditors for processing by the enterprises computer based accounting system either during a normal production run or during a special run at a point in time outside the normal cycle.

Audit software comprises computer programs used by the auditors to examine an enterprise computer files. Types of audit software include:

i) Package programs consist of prepared generalized programs for which the auditors will specify their detailed requirements by means of parameter or supplementary program code.

ii) Purpose written programs involve the auditors satisfying their detailed requirements by means of program code specifically written for the purpose.

iii) Utility programs consist of programs available for performing simple functions, such as sorting and printing data files.

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