USE OF CAAT
CAAT are used to perform various Audit Procedures like –
1. Tests of Details of transactions and balances e.g. use of Audit software to test all / few transactions in a computer file. As substantive procedures.
2. Analytical Review Procedures e.g. use of Audit software to identify unusual fluctuations or unusual items.
3. Compliance Test of General IT Controls e.g. use of test data to test access procedures to the program libraries.
4. Compliance Test of IT Application Controls e.g. use of test data to test the functioning of a programmed procedure.
Use of CAAT / Audit Software Systems in Fraud Detection:
1. Even while auditing in an EDP environment, the Auditor is required to plan his work by exercising reasonable care and skill in such a manner that there is reasonable expectation of detecting material misstatements in the financial information resulting from fraud or error.
2. Use of the above CAAT / audit software systems will help the Auditor to identify errors and frauds in the accounting and internal control system.
3. However, frauds are intentional and generally deep-laid. While auditing through the computer with adequate knowledge of computer systems may highlight some frauds, there is not empirical evidence to prove the assertion that the use of audit software systems has unearthed well-concealed frauds. Thus it cannot be conclusively said that use of audit software systems increases the probability of detection of fraud due to inherent limitation present in any audit.
Consideration in use of CAATs
1. Computer knowledge, expertise and experience of the auditor.
2. Availability of CAATs and suitable computer facilities.
3. Impracticability of manual tests.
4. Effectiveness and efficiency.
5. Timing.
Steps in application of CAATs
1. Setting objective of CAAT.
2. Content and accessibility of entity’s files.
3. Tr. type to be tested.
4. Procedure to be performed on data.
5. Define output req.
6. Personnel.
7. Refine cost and benefit estimates.
8. Ensure documentation of CAAT use.
9. Arrange administrative activities.
10. Execute CAAT application.
11. Evaluate the results.
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