Need of Auditing in IT Companies
IT Stands for “Information Technology,” and is pronounced “I.T.” It refers to anything related to computing technology, such as networking, hardware, software, the Internet, or the people that work with these technologies. Many companies now have IT departments for managing the computers, networks, and other technical areas of their businesses. IT jobs include computer programming, network administration, computer engineering, Web development, technical support, and many other related occupations. Since we live in the “information age,” information technology has become a part of our everyday lives. That means the term “IT,” already highly overused, is here to stay.
History of computer technology
Devices have been used to aid computation for thousands of years, probably initially in the form of a tally stick. The Antikythera mechanism, dating from about the beginning of the first century BC, is generally considered to be the earliest known mechanical analog computer, and the earliest known geared mechanism. Comparable geared devices did not emerge in Europe until the 16th century, and it was not until 1645 that the first mechanical calculator capable of performing the four basic arithmetical operations was developed.
Electronic computers, using either relays or valves, began to appear in the early 1940s. The electromechanical Zuse Z3, completed in 1941, was the world’s first programmable computer, and by modern standards one of the first machines that could be considered a complete computing machine. Colossus, developed during the Second World War to decrypt German messages, was the first electronic digital computer. Although it was programmable, it was not general-purpose, being designed to perform only a single task. It also lacked the ability to store its program in memory; programming was carried out using plugs and switches to alter the internal wiring. The first recognisably modern electronic digital stored-program computer was the Manchester Baby, which ran its first program on 21 June 1948.
The development of transistors in the late 1940s at Bell Laboratories allowed a new generation of computers to be designed with greatly reduced power consumption. The first commercially available stored-program computer, the Ferranti Mark I, contained 4050 valves and had a power consumption of 25 kilowatts. By comparison the first transistorized computer, developed at the University of Manchester and operational by November 1953, consumed only 150 watts in its final version.
Auditing & Its Importance in IT Sector Companies
Auditing is a means of evaluating the effectiveness of an IT company’s internal controls. Maintaining an effective system of internal controls is vital for achieving a company’s business objectives, obtaining reliable financial reporting on its operations, preventing fraud and misappropriation of its assets, and minimizing its cost of capital. Both internal and independent auditors contribute to a company’s audit system in different but important ways.
Enables the Pursuit of Business Objectives in an IT Company
Having an effective audit system is important for an IT company because it enables it to pursue and attain its various corporate objectives. Business processes need various forms of internal control to facilitate supervision and monitoring, prevent and detect irregular transactions, measure ongoing performance, maintain adequate business records and to promote operational productivity. Internal auditors review the design of the internal controls and informally propose improvements, and document any material irregularities to enable further investigation by management if it is warranted under the circumstances.
Assess the Risk of Misstatement in an IT Company
Auditors assess the risk of material misstatement in an IT company’s financial reports. Without a system of internal controls or an audit system, a company would not be able to create reliable financial reports for internal or external purposes. Thus, it would not be able to determine how to allocate its resources and would be unable to know which of its segments or product lines are profitable and which are not.
Additionally, it could not manage its affairs, as it would not have the ability to tell the status of its assets and liabilities and would be rendered undependable in the marketplace due to its inability to consistently produce its goods and services in a reliable fashion. Accordingly, an audit system is crucial in preventing debilitating misstatements in a company’s records and reports.
Fraud Prevention and Detection in an IT Company
Internal audit serves an important role for IT companies in fraud prevention. Recurring analysis of a company’s operations and maintaining rigorous systems of internal controls can prevent and detect various forms of fraud and other accounting irregularities. Audit professionals assist in the design and modification of internal control systems the purpose of which includes, among other things, fraud prevention. An important part of prevention can be deterrence, and if a company is known to have an active and diligent audit system in place, by reputation alone it may prevent an employee or vendor from attempting a scheme to defraud the company.
Cost of Capital of an IT Company
The cost of capital is important for every company, regardless of its size. Cost of capital is largely comprised of the risk associated with an investment, and if an investment has more risk, an investor will require a higher rate of return to invest. Strong audit systems can reduce various forms of risk in an enterprise, including its information risk (the risk of material misstatement in financial reporting), the risk of fraud and misappropriation of assets, as well the risk of sub optimal management due to insufficient information on its operations.
How important auditing to IT Companies is. Auditing firms in Dubai, UAE play an important role for businesses in fraud prevention. Auditing is a means of evaluating the inefficiency of a company’s internal controls. Retaining an effective system of internal controls is vital for the Company’s aim, gaining trustworthy financial reporting on its operations, precluding fraud and misuse of its assets, and lessening its cost of capital.
Conclusion
Having regular audits of your financial statements is essential for the trustworthiness of your company. Audits will help you track and solve any internal issues, and will help you convey greater reliability to investors, shareholders, banks and tax officials. Furthermore, thorough audits will give you greater peace of mind and will leave you with more energy to plan for the future.
Looking For Audit Firms in Dubai,UAE ?
Looking for Audit Firms in Dubai ?
1. Auditing Services
We provide year-end annual audit for many DMCC companies at reasonable fee. Our fees are reasonable and affordable by all types of companies.
2. Part Time Accounting Services
We provide Part-time Accounting Services for companies in DMCC Free Zone. You can hire a qualified and experienced part-time accountant from us and minimize your expenses by eliminating your personnel cost.
For More Details : Please visit us on : www.alyaauditors.com or write us to : audit@alyaauditors.com
For Financial Statement Audit,
Alya Auditors
3204, Park Lane Tower, Business Bay, Dubai
Phone : +971 4 876 9377, Mob : +971 52 4754007,+971 52 975 0690
