Business Processes and Information Systems
How Transactions Flow Through the Business
Auditors study the client's major business processes and information systems to understand how transactions are initiated, recorded, processed, and reported in the financial statements.
- Revenue and collection process.
- Purchasing and payment process.
- Payroll process.
- Inventory management.
- Financial reporting process.
Note
Modern organizations rely heavily on information technology, making IT controls an important part of audit planning.
Summary
Understanding business processes helps auditors identify where errors or fraud may occur.