Lecture 14 Flashcards
CAATs=
Computer assisted audit techniques. Any use of computer to aid the audit process
Audit software used
For substantive testing
Audit software typical tests (2)
- Re-perform calculations
- Sorting/ filtering/ sampling
Audit software advantages (3)
- Can process large amounts of info
- Reduces risk of human error
- Increases efficiency and quality > lower cost
Audit software disadvantages (4)
- Could be subject to sampling bias
- Expensive to get bespoke software
- Training required
- Inputs must be correct
Test data used
To test controls. Put in dummy data to see if works
Test data advantages (2)
- Helps test controls auditor wouldn’t otherwise be able to test
- Once designed, costs incurred are minimal
Test data disadvantages (2)
- Risk of corrupting client’s systems/ incompatibility
- Requires time spent on client’s systems if used in a live environment
Integrated test facilities
Creation of dummy ledgers and records to which test data can be sent
Embedded audit software
Purpose written audit programme to embed into client’s accounting system. Can be turned on/off during year to gather information on transactions.
Auditing around the computer
Internal software of computer not tested. but inputs agreed to expected outputs to computer.
Problems with auditing around the computer (2)
- No direct evidence programme working as documented
- When errors found difficult/ impossible to determine why
Live testing =
Ongoing data, transactions processing through
Dead data =
Ledger closed off/ paused/ stopped to go into TB
Why use technology? (4)
- Ability extract and analyse 100% data populations
- Focus testing key exceptions over large volumes
- Identifies inefficiencies in client’s operations
- Dashboards provide user-friendly visuals
