Mallari, Sarah Jane M.

BSA 4-10D COMPUTER ASSISTED AUDIT TECHNIQUES (CAATs) COMPUTER ASSISTED AUDIT TECHNIQUES (CAATs) These are computer programs and data which the auditor uses as part of the audit procedures to process data of audit significance contained in an entitys information systems. The techniques are used to analyze large volumes of data for anomalies. This tool facilitates them to make search from the irregularities from the given data. With the help of this tool, the internal accounting department of any firm will be able to provide more analytical results.

Benefits of using CAATs: Increases Audit Economy and Efficiency Improves Audit Effectiveness Enhances Image of Auditing Commonly used CAATs include: 1. Test Data Integrated Test Facility (ITF) Parallel Simulation TEST DATA Primarily designed to test the effectiveness of the internal control procedures which are incorporated in the clients computer program. The objective of the test data technique is to determine whether the clients computer programs can correctly handle valid and invalid conditions as they arise. If the output generated by the clients program is the same as the auditors expected output, the auditor may conclude that the clients program is reliable. The Test Data approach involves: Preparation of the auditors test data (dummy) that consist of valid and invalid conditions. Entering the test data into the system and have the data processed by the entitys computer program. Comparing the processed results with the auditors predetermined output. 2. INTEGRATED TEST FACILITY (ITF) Test using simulated transactions and dummy master records within a client's master file so that test data are processed simultaneously with actual input. The auditor monitors the processing of test data, studying the effects upon the dummy files, exception reports, and other output produced.

When using ITF, the auditor must be alert with the risk that someone may manipulate the real data files by transferring data to or from the dummy files. The ITF must be carefully designed to ensure that real files are not inadvertently contaminated with the fictitious test data.

The ITF involves: Creating a dummy or fictitious data/s within the entitys computer system. These dummy files are processed simultaneously with regular (live) input without adversely affecting the live data files or output. The resultant output, relating to the dummy unit is then compared with the predetermined results to evaluate the reliability of the clients program. 3. PARALLEL SIMULATION Provides auditor with independence from client computer personnel in that software prepared by the auditor rather than the client. Provides no assurance that the clients software is actually used throughout the entire year to process all data. Should be conducted on a surprise basis. Can be accomplished by using: o Generalized Audit Software- consists of generally available computer packages which have been designed to perform common audit tasks. o Purpose written program designed to perform audit tasks in specific circumstances. The Parallel simulation involves: Requiring the auditor to create test inputs to be processed using the clients computer program. The auditor writes a program that simulates key features or processes of the program under review. The simulated program is then used to reprocess transactions that were previously processed by the clients program. The auditor compares the results obtained from the simulation with the clients output to be able to make inference about the reliability of the clients program. CAATs FOR ADVANCED COMPUTER SYSTEMS A. SNAPSHOTS this technique involves taking a picture of a transaction as it flows through the computer system. Such a technique permits an auditor to track data and evaluate the computer processes applied to the data. B. SYSTEMS CONTROL AUDIT REVIEW FILES (SCARF) this uses audit software embedded in the clients system. It gathers information at predetermined points in a system and logs that collect information for review subsequently by the auditor.