Technology auditing is a business tool that helps a company's top management ensure that information systems, controls and mechanisms are functional, adequate and in compliance with information technology auditing standards. Financial auditing is a business practice that helps top management ensure that accounting and financial reporting guidelines adhere to professional standards.
Technology auditing is a business process that shows a corporation's top leadership that communication systems and "controls" within a firm are "adequate," "functional" and conform to industry practices. A "control" is a set of instructions that top management puts into place to prevent risks of loss due to technological malfunction. A control is "adequate" when it clearly lists steps that an employee must follow to perform tasks, report problems and make decisions. A "functional" control provides appropriate solutions to information technology (IT) problems.
Technology auditing applies generally accepted auditing standards (GAAS) and guidelines issued by the Information Systems Audit and Control Association (ISACA) to improve IT controls, systems and guidelines. For example, an IT auditor at may review a firm's computer systems and software to ensure that the company has the latest updates, virus protection mechanisms and applicable manufacturers' licenses. The IT auditor may also recommend improvements in the company's data backup systems.
Financial auditing is a business method that ensures a corporation's internal controls, guidelines, mechanisms and policies are adequate, functional and in compliance with regulatory standards, such as Securities and Exchange Commission rules, corporate policies and industry requirements. Financial auditing also applies GAAS to ensure that financial statements are accurate, complete and in compliance with generally accepted accounting principles (GAAP).
Financial auditing allows a corporation's top management to improve controls in financial reporting mechanisms and ensure that corporate financial statements are correct. These statements include a balance sheet, statement of income, statement of cash flows and a statement of retained earnings. For example, a financial auditor at a company may review financial controls in balance sheet processes to ensure that they are functional.
Simply put, technology auditing prevents the risk of loss due to information systems malfunction and improves IT controls and mechanisms, whereas financial auditing provides solutions to ensure that accounting and reporting processes are adequate and functional. However, depending on business demands, there may be situations in which technology auditing and financial auditing may interrelate. For instance, both the IT and accounting auditors may partner to review IT controls in the company's financial reporting systems.