You are the statutory auditor of Tec Fab Industries Ltd., a company that has recently shifted from manual accounting system to a fully automated ERP…

Understanding and evaluating automated environment: In an audit of financial statements, an auditor is required to understand the entity and its business, including IT. Understanding the entity and its automated environment involves understanding how the IT department is organised, IT activities, IT dependencies, relevant risks, and controls. Given below are some of the points that an auditor should consider to obtain an understanding of the company's automated environment: Information systems being used, including one or more application systemsPurpose of the systems, whether financial or non-financialLocation of IT systems, whether local or globalArchitecture, such as desktop-based, client-server, web application or cloud-basedVersion of the applications, as functions and risks could vary in different versions of the same applicationInterfaces within systems, particularly where multiple systems existIn-house or packaged systemsOutsourced activities, such as IT maintenance and supportKey persons, such as CIO, CISO and system administratorsDocumenting business processes using flowcharts or narratives.Preparing Risk and Control Matrices (RCM) to identify risks and controls.Evaluating design of controls through walkthroughs of end-to-end processes.Assessing process-wide considerations, including entity-level controls, segregation of duties, and IT general and application controls. In view of above, the understanding of a company's IT environment that is obtained should be appropriately documented.