HOW TO AUDIT COMPUTER DATABASE ACCOUNTING RECORDS

Auditing is the process of examining records and systems to ensure they are accurate, complete, and comply with laws and company policies. When accounting records are stored in a computer database, auditors must use special techniques and tools to check the accuracy and reliability of those records. In today’s digital world, auditing computer-based accounting records is essential for preventing errors, fraud, and financial misstatements.

This essay explains in simple terms how to audit accounting records stored in a computer database. It covers what the audit involves, why it is important, and the steps taken during the audit process.

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What Are Computer Database Accounting Records?

Accounting records include financial transactions such as sales, purchases, payments, payroll, and other money-related data. In modern businesses, these records are usually stored in a computerized database using accounting software such as QuickBooks, SAP, or Oracle.

Instead of using paper files or spreadsheets, companies now rely on database systems to record and manage their accounting information. These systems allow for faster processing, easy updates, and secure storage. However, they also require proper controls to prevent mistakes or fraud.

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Why Audit Computerized Accounting Records?

Auditing computerized accounting records is important for several reasons:

To ensure accuracy: Auditors check whether the data in the system is correct and reflects the real financial position of the company.

To detect fraud: Auditing can uncover unauthorized changes, hidden transactions, or manipulation of data.

To meet legal requirements: Companies must follow rules and standards like GAAP, IFRS, or tax laws, which require regular audits.

To build trust: Investors, customers, and regulators trust companies more when they are regularly audited.

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Steps in Auditing Computer Database Accounting Records

Here are the main steps auditors follow when auditing accounting records stored in a computer database:

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1. Planning the Audit

Before starting the audit, auditors need to:

Understand the accounting system and software used.

Identify what parts of the database contain important financial records.

Set the goals of the audit – what they are trying to check or verify.

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2. Understanding Internal Controls

Auditors study the internal controls – rules and procedures the company uses to protect its data. They check:

Who has access to the database?

Are there passwords or security settings?

Are changes to data tracked or logged?

Is there a backup system in case of failure?

Good controls help prevent mistakes or fraud. If the controls are weak, the risk is higher, and the audit may be more detailed.

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3. Accessing and Analyzing the Data

Auditors use special tools and techniques to review the data stored in the system:

They extract data using software like ACL, IDEA, or Microsoft Excel.

They look for errors, duplicate entries, or unusual transactions.

They test samples of transactions to see if they follow company policies.

They may also check the audit trail, which shows who made changes to the records and when.

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4. Testing the System

Auditors may perform tests of controls to make sure the system works correctly:

They try entering fake data to see if the system blocks it.

They review user access rights to make sure only authorized staff can make changes.

They check whether the software calculates amounts correctly (e.g., taxes, totals).

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5. Comparing with Documents

Even though the records are in a computer, auditors often compare them with:

Bank statements

Invoices

Receipts

Contracts

This helps confirm that the data in the database is backed by real-world evidence.

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6. Reporting the Findings

After the audit, the auditors prepare a report that includes:

Any errors or problems found

Suggestions for improvement

An opinion on whether the accounting records are reliable

This report is shared with company management, auditors, and sometimes government agencies or investors.

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Challenges in Auditing Computerized Records

Some common challenges include:

Large volume of data: Databases can store millions of records, so auditors use sampling and automated tools.

Complex systems: Some accounting software can be difficult to understand without training.

Data security risks: Auditors must protect sensitive financial data while working on the audit.

WRITTEN BY :

Hassan Umar Karaye (NIM, CNA)