TU3233 CAATs2

Computer Assisted Audit Techniques
1). WinIDEA solely

2). Some or most of us have
been using this technique
one way or the other
3). It could be very simple
is
meaning
We use computer to perform part
of our auditing functions
Prime objective should be to assist in

performing audit in the most effective
and efficient manner
They are tools to be used by the examiners,
NOT a means to an end
Need to first identify the objectives of audit
then look at best method of achieving it
Considerations
Importance of the system to the organisation
Whether the review is a one-off or a
continuing one
Time and cost to set up the technique
Time and cost to maintain the technique
Level of audit assurance required
Expected life of the system
Types of CAATs
Interogation Software
Embedded Audit Module
Parallel simulation
Test Data
Integrated Test Facility
Specialised audit software
Commercial Software
Using the auditee’s system & resources
Interogation Software
Definition
An audit interrogation program extracts
data for subsequent audit review
Examples:
Easytrieve
ACL
IDEA
Impromptu/PowerPlay
Generalised audit software comes in a variety

of forms. It may either be a software package
available commercially or one developed by an
auditing firm. In most cases the purpose of the
software package is to interrogate client’s
computer files and extract information
therefrom.
This type of software may be used to gather

evidence in relation to both the effectiveness of
operations of a programmed controll procedure
and the extent of misstatements in accounts and
underlying classes of transactions. In other
words, this software may be used as either a
test of control or as a substantive procedure.
Stages of Interogation
File Define the file to be interrogated
Field Determine the fields of interest
Selection How data is to be collected
Criteria
Calc. Optional
Output Most important aspect must get
output right to meet objectives
Interogation Software (cont.)
Advantages
Independence form the IT department
More effective use of audit time
More Effective auditing
Training
Cost to set up and process
Flexibility through the use of parameters
Interogation Software (cont.)
Disadvantages
Cost to purchase package
Inexperience
Does not review system controls
Embedded Audit Module
Definition
An audit program which is embedded
in the application system to extract
live data for subsequent audit review
* Automating part of the the audit function

Embedded Audit Module (cont.)
It is a CAAT in which code prepared by the
auditor is embedded in the client’s software.
The code may be designed, for example, to
replicate specific aspect of control procedure,
or to record details of certain transactions in
a file accessible only to the auditor. Thus, it
may be used as both a test of control* or as a
substantive procedure
Advantages
Concurrent auditing
Continuous monitoring of transaction
Reduces need for separate audit runs
Particularly useful for very large files
Extracts unusual transactions for subsequent
audit checking
Disadvantages
Must be included at system specification time
Loss of independence as usually programmed
by IT staff
High set up and maintenance costs
Program maintenance difficult, needs regular review
Processing overheads may be high
To be effective must assign audit staff to follow up
Knowledge of testinging criteria may lead to
circumvention
Parallel simulation
Definition
Live data is processed through the application
system and checked to pre-determined results.
lnvolves auditors developing either part or all
the system and then processing data through to
compare with output from original system.
Parallel simulation (cont.)
Alternatively, actual client data is processed

using a copy of the client’s software that has
undergone program code analysis by the
auditor and is under the control of the
auditor. It provides evidence as to the
effectiveness of design of program control
procedures.
Advantages
Simple and positive verification of specific
programs and program controls
Simple verification fo the integrity of data
Uses live data files but does not corrupt them
Repeatable test
Can check all or part of a system
Disadvantages
May require considerable programming
knowledge
Need detailed knowledge of application system
Expensive to maintain
Need good application documentation
Are error caused by faults in live or
parallel system?
Test Data
Definition
Test data is processed through the application
system and checked to pre-determined results.
INTEGRATED TEST FACILITY is an
enhanced form of this
May use TEST DATA GENERATOR

Pansophic’s PANAUDIT.
Test data is a CAAT in which test data

prepared by the auditor is processed on
the current production version of the
client’s software, but separately form the
client’s normal input data. The test data
that is processed updates the auditor’s copies
of the client’s data files. It is typically used
to gather evidences as to the effectiveness of
design of programmed control procedures.
Advantages
Does not interfere with live processing
Enables the auditor to carry out more
exhaustive testing
Disadvantages
Computer staff assistance required

Additional computer resources required
No assurance that the test data followed
normal processing procedures
Integrated Test Facility
ITF is a facility forming part of the client’s
software that enables the auditor’s test data
to be integrated with the client’s live input
data and then processed using the client’s
current production version of the software.
The facility ensures that the test data updates
special dummy files, rather than actual
operating files. This procedure provides
evidence of the effectiveness of design of
programmed control procedures.
Specialised audit software
It is software designed to perform specific
tasks in specific circumstances, such as
comparison of source and object code, the
analysis of unexecuted code and the generation
of test data. It is used to gather evidence as
to the design effectiveness of client’s software.
• Standard software to audit operating
software or applications
– Webtrend
– Security module
Commercial Software
Such as Microsoft Excel, .., may be used by
the auditor for analysing data imported from
client files, writing audit program, etc.
e.g.
Stress Test is perform on Excel
Breakeven Test (RWCR & NPL)
Using the auditee’s system & resources

Its application system
Its query tools
Its programmer
Using the auditee’s application system

Need to ask for a user-id with “read only”
capability
Need to understand the product
Need to understand the system (command)
Need system documentation
Start with login & exit the application
Using the auditee’s query tools (very much

like WinIdea)
Need to ask for a user-id with “read only”
capability & full assess to query tool
Need to understand the query tool e.g
Query/400, SQL, Crystal report,...
Need system documentation
Start with login & exit the application
Begin extraction with the simplest query
Using their programmer (smart partnership)

Need co-operation
Must understand system flows & file structure
Must know what you want & clearly
communicated to the programmer
Should review source code (program)
Could submit/run the subsequent requests by
yourself.

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Computer Assisted Audit Techniques

Computer Assisted Audit Techniques

1). WinIDEA solely

Prime objective should be to assist in

Generalised audit software comes in a variety

This type of software may be used to gather

* Automating part of the the audit function

Alternatively, actual client data is processed

May use TEST DATA GENERATOR

Test data is a CAAT in which test data

Computer staff assistance required

Using the auditee’s system & resources

Using the auditee’s application system

Using the auditee’s query tools (very much

Using their programmer (smart partnership)

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