Security, Controls & Audit in Computerized Accounting

6.1 Internal Controls

Common internal controls in computerized accounting include:

• Password and user access control: Role-based access ensures that data entry staff cannot approve payments and managers cannot alter restricted records without authorization.
• Audit trail: Every entry records who entered it, when it was entered, and what was changed, creating a traceable log.
• Data backup and recovery: Automated daily or weekly backups, including off-site or cloud copies, reduce the risk of data loss.
• Encryption and firewall protection: SSL/TLS protects data in transit, while firewalls block unauthorized network access.
• Antivirus and malware protection: Security tools reduce the risk of ransomware and other malicious attacks on accounting data.

6.2 Computer-Assisted Audit Techniques (CAATs)

Auditors use CAATs when auditing computerized accounting systems:

CAAT Technique	Description
Audit Software (ACL, IDEA)	Extract, analyse, and test large data sets — identify duplicates, unusual patterns
Test Data Method	Auditor inputs dummy transactions to verify the system processes them correctly
Parallel Simulation	Auditor re-processes actual transactions using own program — compare with entity's output
Integrated Test Facility (ITF)	Dummy entity created within live system — test transactions mixed with real data
Embedded Audit Modules	Audit routines built into accounting software to flag suspicious transactions in real-time

---