（2006）Legal and Regulatory Requirements of Online Audit.docVIP

Legal and Regulatory Requirements of Online Audit Dr. Khuram Farooq and Dr. Iram Khan 1. Introduction We live in a world where online Audit is becoming a reality even in developing countries. As computer technology advances, governments are becoming increasingly dependent on computerised information systems to carry out their operations and to process, maintain, and report essential information. Information systems have become critically important in the management of financial institutions. At the same time, risks involving information systems have become diversified and their scope has expanded. Damage stemming from these risks can be immense. Financial institutions must ensure that their information systems provide appropriate information, means of communication and processing functions in line with the business purposes and strategies. To do so, they are required to evaluate accurate information system risks and improve their control systems. It is job of an auditor to ensure that the risks are minimised. For this it is essential that an auditor is given authority commensurate with the responsibility entrusted to him. This paper intends to develop a framework for legal and regulatory requirements of online audit. The introduction is followed by a theoretical framework that examines the issue from theoretical perspective. The third section looks at the Pakistani scenario and has separate discussion on the authority and mandate of the public and private sectors in Pakistan. The fourth section is about the challenges of the public sector auditors faced by Pakistani while the penultimate section makes some recommendations as to how improve public sector auditing with respect to legal and regulatory requirements. Conclusion sums the discussion. 2. Theoretical Framework Traditionally, audit is the independent examination of financial information of an entity, whether profit oriented or not, and irrespective of its size, or legal form, when such an examination is condu