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Kudler Fine Foods Recommendations

Essay by   •  May 14, 2011  •  Case Study  •  1,225 Words (5 Pages)  •  3,050 Views

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The processes of Kudler Fine Foods include inventory, payroll, accounts payable and accounts receivable. Using accounting information systems, Kudler Fine Foods has the potential to improve these processes. Kudler Fine Foods has hired an accounting firm to recommend systems to assist with automating their current processes. The accounting firm has recommended that Kudler Fine Foods purchase industry-specific software. The firm will provide flow charts to capture the flow of data from each of their accounting processes and offer recommendations.

Kudler Recommendation

Kudler Fine Foods recently implemented new accounting software to handle the daily sales, inventory, accounts payable, accounts receivable, payroll, and general ledger functions. In conjunction with the new software, Kudler must consider the proper course of action for auditing the transactions to ensure data the accuracy and reliability of the data and for the preparation of the organizations financial statements. The use of audit software will assist management and provide the means to test 100% of the organizations transactions, rather than relying on manual auditing techniques alone. CAAT software provides the auditors for Kudler Fine Foods the ability to examine application controls, identify data inconsistencies, and the compliance testing of general controls. The implementation of embedded audit modules provides "real-time" auditing techniques, thereby ensuring the reliability and timeliness of Kudler's financial information. The modules are designed to run in the background detecting abnormal data as it occurs rather than several months after the transaction occurs in the system. With the use of CAATs, Kudler can detect errors or miscalculations in the system providing for timely corrections and preventing fraudulent transactions from occurring.

Kudler Fine Foods System Integrity and Validation

With the recent implementation of automated software at Kudler Fine Foods, there is the need to address system integrity and the use of computer assisted auditing techniques (CAATs). This brief examines the following topics (1) how CAATs will be used to validate data and system integrity, (2) explain the functions of audit productivity software, and (3) provide details on how audit productivity software may be used in the system.

CAATs used to Validate Data and System Integrity

Auditors prefer to use computer...

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System Integrity and Validation

With the recent implementation of automated software at Kudler Fine Foods, there is the need to address system integrity and the use of computer assisted auditing techniques (CAATs). This brief will examine the following: how CAAT is used to validate data and system integrity within the system, explain the functions of audit productivity software, and explanation of how audit productivity software might be used in the system designed.

How CAAT is used to validate data and system integrity

Auditors prefer to use computer assisted auditing techniques (CAATs) for many reasons. They enable auditors to use software applications, extract data for analyzing, look for trends within the data, and identify any potential areas for fraud detect fraudulent data. CAATs are valuable tools for auditors to test and validate computer applications and they can determine whether or not the source code has been compromised. The implementation of CAATs will increase efficiency and the effectiveness of both internal and external audits allowing auditors to analyze all of the financial data, a feat which would not be possible if the audit were conducted manually.

SAS 94, The Effect of Information Technology on the Auditor's Consideration of Internal Control in a Financial Statement Audit, provides guidance to auditors regarding the need for the auditor to address internal controls activities during the course of an IT (Cerullo, 2003). Auditors must have a working knowledge of the client's software program and an understanding of the relationship with the company's financial statements. Auditors must also comprehend the processing of transactions into the general ledger, the recording of both regular

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