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Strategic Systems Audit
Introduction
As the organizations’ business strategies are becoming more complex over time, the auditing practices have been evolving correspondingly over the last century (Bell et al. 1997, 10), from a transaction-based audit prior to 1900, to risk-based audit approach during the twentieth century to today’s “Strategic Systems Audit” (SSA) as promoted by Solomon and Peecher over the last several years to reinvent the financial statement audit. Strategic Systems Audit focuses on the auditing procedures that test the assertions at entity-level based on the holistic understanding of the client business environment and business dynamics (Bell et al. 1997, 10, 22). However, there have been many critics of this approach where some criticize that SSA gave rise to a number of audit failures.
In the light of this, the purpose of this essay is to examine and critique the rationale and practicality of the suggested solutions given by the Strategic Systems Audit approach to audit planning and the conduct of the audit. To achieve such purpose, empirical evidence will be used where the principles set forth by the theoretical literature on the Strategic Systems Audit will be applied to a real-life audit scenario. As such, the SEC registrant, Hollywood Media Corp. is chosen as the organization to be audited by the SSA approach.
There are three sections in this paper, 1) Background and literature review, in which the background and fundamental concept of SSA approach will be discussed and critiqued; 2) Business Risk Analysis of Hollywood Media Corp., in which an Entity-Level Business Model suggested by SSA of this organization will be analyzed and the risk of this corporat ...