SIM Week 1-3 Flashcards
a tool used by auditors to
determine irregularities from the given data.
CAATS or Computer-Assisted Audit Techniques
What is the meaning of CAATs
Computer-Assisted Audit Techniques
are tools used by auditors as part of
their audit procedures to process data of audit significance contained in an entity’s computer
systems.
Computer-Assisted Audit Techniques
True or False:
Advantage of CAATS
a. Independently access the data stored on a computer system without dependence on
the client
b. Test the reliability of client software
c. Decrease the accuracy of audit tests
d. Perform audit tests less efficiently, which in the long-term will result in a more costeffective audit.
A. True
B. True
C. False
D. False
True or False
Disadvantages of CAATS
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);
True
True or False
Disadvantages of CAATS
Client permission and cooperation are very easy to obtain
False
True or False
Disadvantages of CAATS
Potential compatibility with the client’s computer system
False
True or False
Disadvantages of CAATS
The audit team may not have sufficient IT skills and knowledge to create the complex
data extracts and programming required
True
True or False
Disadvantages of CAATS
The audit team may not have the knowledge or training needed to understand the
results of the CAATs
True
True or False
Disadvantages of CAATS
Data may be corrupted or lost during the application of CAATs.
True
Three Classifications of CAATs
- Audit Software
- Test Data
- Other techniques
generic term used to describe computer programs designed to carry
out tests of control and/or substantive procedures
Audit Software
consist of pre-prepared generalized programs used by auditors and are not
‘client specific
Package Programs
These programs are usually ‘client specific’ and may be used to carry out tests of
control or substantive procedures
Purpose written programs
Programs used in any event the audit firm’s audit plan should ensure that provision is made to ensure
that specified programs are appropriate for a client’s system and the needs of the
audit.
Purpose written programs
used to re-perform computerized control procedures or perhaps to carry out an aged analysis of trade receivable (debtor) balances.
Purpose written programs
These programs are integral to the client’s accounting system; however, they may
be adapted for audit purposes
Enquiry programs
used to test the existence and effectiveness of controls built into an
application program used by an audit client. As such, dummy transactions are
processed through the client’s computerized system. The results of processing are
then compared to the auditor’s expected results to determine whether controls are
operating efficiently and systems’ objectiveness are being achieved.
Audit test data
To avoid the risk of corrupting a client’s account system, by processing test data with
the client’s other ‘live’ data, auditors may instigate special ‘test data only’ processing
runs for audit test data. The major disadvantage of this is that the auditor does not
have total assurance that the test data is being processed in a similar fashion to the
client’s live data. To address this issue, the auditor may therefore seek permission
from the client to establish an _________
Integrated test facilities
Common CAATs Software
a. Spreadsheets (ActiveData for Excel)
b. Access
c. SAS
d. Generalized Audit Software (e.g. ACL, Arbutus, EAS)
e. Business Intelligence ( e.g. Crystal Reports and Business Objects)
