CAATS

Question 1

What is a data CAAT?

Answer 1

• Data CAATs are computer programmes which “manipulate” the computerised data on a client’s system
– Also referred to as Audit Retrieval Software

Question 2

What is a system CAAT?

Answer 2

• System CAATs make use of “Test data” to test controls i.e. would INSPECT or REPERFORM controls that cannot easily be done manually, using test data.

• tests controls
• using test data (dummy data)
  
  • genuine and non-genuine data

Question 3

Data CAATS types of procedures?

R2 A C E2 S3

Answer 3

1. Reconcile:
   - Re-perform reconciliation of [x] to [y] e.g. debtors ledger to AR control account
2. Ratios
   - Extract the following ratios for comparison to prior and budget:
   o [ARPs] e.g. A4DD as a % of revenue
   o Days sales in receivables
   o GP%
3. Audit trail
   - Reconstruct audit trail for inspection
4. Calculate
   - Re-calculate individual amounts e.g. Debtor accounts
   - E.g. Allowance for doubtful debts
5. Exception reports
   - Generate exception reports on (GIVE DETAIL)

o	Duplicates
o	Missing 
o	DR/CR balance
o	0 balance
o	Exceed limits
o	Overdue 
o	No activity last months
o	Unmatched source documents e.g. delivery note

6. Extract
   - Extract anything you want basically e.g. schedule, sample/ eg. credit sales and outstanding invoices (for AR balance)
7. Schedule
   - Generate a schedule of movements
   o Re-perform calculation for AA
   o Agree O/B to prior year audited FS
8. Samples
   - Select a sample of:
   o E.g. debtors for positive circularisation
   o E.g. payments received after year end from bank statements and perform subsequent receipts testing
   o E.g. delivery notes before and after year end
9. Stratify
   - Stratify by types of customer, product, division, high/low value items etc.

Question 4

Advantages of system CAATs (using test data) 4

Answer 4

Advantages of system CAATs (using test data) - CAATs allow the auditor to:
• Independently access the data stored on a computer system without dependence
on the client;
• Test the reliability of client software, i.e. the IT application controls (the results of
which can then be used to assess control risk and design further audit procedures);
• Increase the accuracy of audit tests; and
• Perform audit tests more efficiently, which in the long-term will result in a more cost-
effective audit.

Question 5

Disadvantages of system CAATs (using test data) 6

Answer 5

Disadvantages of system CAATs (using test data)

• CAATs can be expensive and time consuming to set up, the software must either be purchased or designed (in which case specialist IT staff will be needed);
• Client permission and cooperation may be difficult to obtain;
• Potential incompatibility with the client’s computer system;
• The audit team may not have sufficient IT skills and knowledge to create the complex data extracts and programming required;
• The audit team may not have the knowledge or training needed to understand the results of the CAATs; and
• Data may be corrupted or lost during the application of CAATs.

Question 6

How to describe how you would use a system CAAT in answering a question?

Answer 6

Using a system CAAT, run the following test data through the client’s revenue system….
- etc

Then - Note the ability of the client’s system to prevent …. (describe) Or detect …. (describe) Or produce an appropriate exception report showing …. (describe) or prevent access if …. (describe)”

Question 7

What data CAATs can be used for (7)

Answer 7

1. Compute or recalculate amounts
2. Generate exception reports (I.e. identify data that meets certain ‘error’ criteria)
3. Compare data in different files
4. Calculate ratios for use in analytical review procedures
5. Select random samples of items to be audited
6. Select exceptional or material items
7. Reconstruct audit trails for inspection