Information technology (IT) is the application of computers to store, study, retrieve, transmit, and manipulate data or information, often in the context of a business or other enterprise. Internal control, as defined in accounting and auditing, is a process for assuring achievement of an organization’s objectives in operational effectiveness and efficiency, reliable financial reporting, and compliance with laws, regulations, and policies.
Information technology improves internal control in the following ways:
- Password ensures that only those authorized can handle particular transactions. This helps to ensure that any variance can be traced to one responsible person.
- Completeness of recording is assured by the design of programs and procedures that allow only complete documentation to be entered into the system.
- If correct data is presented to the machine and faultless computer program is used, the output will be error-free.
- Access is usually restricted to the computer environment.