Introduction of Information Technology (IT) Controls

        For any business to be competitive, there is an urge for efficient and effective management of organizational as well as accounts and finances’ data. For this management, correct and accurate information is required at a specific time. This flow of desired data and information is only possible through the use of the latest technology (for example, an effective information management system). The purpose behind is to provide the surety for data reliability and compliance with the rules & regulations (Carter, 2012). For business or audit, some of the examples of the effective systems are given below:

To cater to the business needs and to meet the customer’s expectations, the above-said systems need to be implemented in the business flow up to a possible extent. It will make the organization control internal as well as external matters of the organization.

Following is the significance of IT controls for businesses and auditors:

New Product and Services: To understand the customer demands and expectations, market demand, product/ services’ sales, and market competitors, the use of an information management system is crucial. Also, it will better help to manage the workflow of the business. It deals with the future considerations of the business.

Information Storage:  The concept of “internet of things” has made everything quite easy. The accurate information flow requires, as a prerequisite, an innovative system for resources and data management (Berisha-Namani, 2011). There is a great saying that “a company not using management information system (MIS) in its business processes tends to have a shorter period” (Jitpaiboon, 2014). For properly saved data and information, not only an analysis of the problems can be made, but also, a solution can be provided to these problems. The operational data can be recorded and better stored by using the business information system. If we maintain records manually, then it will be the wastage of the time. Also, there are more chances of error and manipulation by using this method for saving information. For example: to record the periodic data, a well-designed database: meeting the business needs can be used. It helps to use the queries for making the search of a specific record easier.

Simplified decision making: The organizational strategies are if formulated wisely, by using some information system, then these strategies can be implemented in a better way. These strategies will be based on proper data and information, which is gathered by using MIS (management information system). It helps the organization to increase its profitability and increase customer’s count. All of this is based on the proper implementation of IT controls. The organizational long term objectives, goals, and profitability is based on this implementation.

Auditing: For audit purposes, the MIS system serves as a basis to maintain the accuracy of the data. (Weber, 1999) elaborates the significance of information systems auditing. The evidence collection and its evaluation through the computer system to determine the assets’ reliability, data integrity maintenance is taken as an example for auditing through the use of the information management system.

Accounts: For accounts and finances’ management, the use of MIS (management information system) is mandatory. There are a few reasons for this: These are as follows:

The loss of financial data will occur due to the loss of the records and the data.

The decision making will be manipulated.

Data consistency and reliability will be compromised.

Important data of the organization will be leaked.

Computer systems can be misused.

Due to accounting mistakes, financial results can be misleading.

Company Culture: The company culture and its values can be better highlighted and acted upon by efficient management of the IT controls.

Behavioral change: The communication gap between the employer and employee is bridged by IT controls. For example the use of business information system for passing the information from higher to a lower level or from lower to a higher level. The employees tend to use the data that is stored in files and the folders for future use and analysis.

Business Valuation: The IT controls serve as a determinant for the overall valuation of a business entity. Along with a sequence of numerical calculations, they tend to provide the means for determining the future potential for the firm. So, it can be said that for a business, the efficiency, effectiveness of operations and its capability is judged through the IT controls.

Fraud Control: The profitability and the goodwill of a business are concerned with the fact that how efficiently it controls the frauds linked with business operations. For this purpose, strong controls are desired to pre-access the nature and effect of fraud. These frauds are if not monitored early and controlled efficiently, and they can cause loss of millions or even billions of dollars to the organization. IT controls are if implemented correctly, they can help to avoid such frauds by timely reporting.

Compliance Controls: The public reputation of a firm is associated with its compliance with the state & federal regulations. An annual audit is a legal requirement for public entities. The non-compliance may lead to heavy fines and penalties. IT controls better help to comply with the laws and regulations.

References of Information Technology (IT) Controls

Berisha-Namani, M. (2011). Information Systems Usage in Business and Management. International Journal of Innovation in the Digital Economy, 2 (2), 12-23.

Carter, L. (2012). The Impact of Information Technology Internal Controls on Firm Performance. Journal of Organizational and End User Computing, 24, 39-49.

Jitpaiboon, T. (2014). The Study of Competitive Priorities and Information Technology Selection: Exploring Buyer and Supplier Performance. Journal of International Technology and Information Management, 23 (3).

Weber, R. (1999). Information system control and auditing. Journal of Business and Information management.