Computer aided audit techniques (CAAT) sourav mathur

TOPICS:
1.INTRODUCTION
2.WHY USING CAAT TOOLS ?
3.Key capabilities of CAAT
4.The CAATs have the following key capabilities that have brought the paradigm shift in the field of auditing
5.Precautions in using CAATs
6.CAATs are very critical tools for auditors therefore in order to improve their effectiveness. it is important to ensure that they take the following precaution while using CAATs
7.TESTS PERFORMED USING CAATs
8.USING EXCEL AS A CAATs TOOL

1. COMPUTER AIDED AUDIT TECHNIQUES (CAAT) SOURAV MATHUR 143 DELHI UNIVERSITY

2. INTRODUCTION While analyzing the financial data of any firm the auditors Have to deal with humongous data that has been generated by the accounting function of the firm. Handling such a huge volume of data is time consuming prone to errors involves high sampling risk and also lacks multiple views of the data . Using computer tools to automate the audit process supports the auditors handling these issues effectively. Computer aided audit technique (CAAT) is a practice to use computers to automate the audit process. It refers to the techniques and computer programs that are designed and developed to audit the electronic data or to audit the data which cannot be audited manually.

3. WHY USING CAAT TOOLS ? Makes the audit more rational. Improve the audit quality and effectiveness of the auditor. Make available an audit trail. Allow splitting of data into groups to have a segregated view of the data Enables the capability to combine the data from different file to have aggregate view of the data. Remove the probability of sampling errors. Provide the capability to conduct statistical analysis and to identify the extreme values. Enable generation of instant report.

4.   Key capabilities of CAAT The CAAT tools automate the process that was earlier handled manually. The auditors may decide to what extent they need the automated process for auditing and they can combine the same with other auditing methods. There is wide range of software that are used as CAAT tools e.g. interactive data extraction and analysis(IDEA) and audit command language (ACL) are a few example of specialized auditing software and MS excel and MS access (both covered in this book) are examples of common application software.

5. 1.file accessibility 2. file reorganization 3. data selection 4. Arithmetical and Statistical functions The CAATs have the following key capabilities that have brought the paradigm shift in the field of auditing :

6. Key capabilities 1. File access This refers to the capability of reading of different record formats and fi le structures. These include common formats of data such as database, text formats, excel files. This is generally done using the import/ODBC function. 2 . File reorganization This refers to the features of indexing, sorting, merging, linking with other identified files. These functions provide auditor with an instant view of the data from different perspectives. 3. Data selection This involves using of global filter conditions to select required data based on specifi ed criteria.

7. Key capabilities 4. Arithmetical and Statistical functions This refers to the features of sampling, stratification and frequency analysis. These functions enable intelligent analysis of data. Arithmetical functions refers to the functions involving use of arithmetic operators. These functions enable performing re-computations and re-performance of results.

8. Precautions in using CAATs

9. CAATs are very critical tools for auditors therefore in order to improve their effectiveness. it is important to ensure that they take the following precaution while using CAATs: Understanding CAATs software 2. Identifying the correct data 3. Collection of correct and relevant data file 4. Identify relevant fields 5. Completeness of the data and the analysis

10. 1. Understanding CAATs software First of all the auditor must understand the different aspect and functionalities of the CAATs software that will be used on the audit data.  

11. 2. Identifying the correct data It is important to identify the critical data. In order to identify the critical data the auditors need to identify the proper source of data and the proper persons who are responsible to provide the data. The data so collected must be according to the audit scope and objective.

12. 3. Collection of correct and relevant data file The auditors have to ensure that the data file provided for auditing are correct and relevant.

13. 4. Identify relevant fields The auditors must identify the relevant fields about which the data has to be accessed from the system

14. 5. Completeness of the data and the analysis The data accessed must be complete and relevant. It must be as per the audit plan. The auditors must perform relevant tests on the audit data that will assist in forming the ultimate opinion.

15. TESTS PERFORMED USING CAATs

16. CAATs are used for compliance or substantive tests. The following are the few examples of the tests that are commonly performed as per the audit plan : Identification of exception or extreme values. These values depend upon the nature and size of the business. Identification exceptional transaction that are based on certain criterion Identification of errors Performance of standard statistical sampling techniques to identify samples as required Detection of fraud Verification of calculation Testing of data consistency Identification of duplicate payment Identifying transaction exceeding authorized limit

17. USING EXCEL AS A CAATs TOOL

18. Most of the users are familiar of using spreadsheet. It is highly flexible and simpler than most CAATs tools. It has a huge list of function and also allows installing add Ins with advanced features. The data import feature of excel is very powerful excel can easily read and open the following file formats: Text files (*.TXT) Comma delimited files (*.CSV) Database files (*.DBF) Extendible markup language data file (*.XML) Lotus 123 databases (*.WK) Microsoft access database (*.MDB), etc. The case of use access and flexibility are the features that make excel one of the commonly used CAATs tools.