Chapter EightChapter Eight

Using Computer Assisted Using Computer Assisted Audit Tools and Audit Tools and

Techniques (CAATTs)Techniques (CAATTs)

Two Categories of CAATTsTwo Categories of CAATTs

1) Computer Assisted Audit Tools1) Computer Assisted Audit Tools 2) Computer Assisted Audit Techniques2) Computer Assisted Audit Techniques

Computer Assisted Audit ToolsComputer Assisted Audit Tools

Productivity ToolsProductivity Tools Generalized Audit Software ToolsGeneralized Audit Software Tools

Productivity ToolsProductivity Tools

Include:Include:– E-workpapersE-workpapers– GroupwareGroupware– Time and billing softwareTime and billing software– Reference librariesReference libraries– Document managementDocument management

Generalized Audit Software Generalized Audit Software ToolsTools

Include:Include:– ACLACL– Audit expert systemsAudit expert systems– Utility and statistical softwareUtility and statistical software

ACLACL

Widely used for data extraction and Widely used for data extraction and analysisanalysis

Allows for virtual 100% testing of client Allows for virtual 100% testing of client datadata

Computer Assisted Audit Computer Assisted Audit TechniquesTechniques

CAATs to Validate Audit TechniquesCAATs to Validate Audit Techniques– Test desksTest desks– Integrated test facilityIntegrated test facility– Parallel simulationParallel simulation

CAATs to Verify Data IntegrityCAATs to Verify Data Integrity– Data extraction and analysisData extraction and analysis– Fraud detectionFraud detection– Continuous auditing techniquesContinuous auditing techniques

10 Steps to Using CAATs10 Steps to Using CAATs

1. Set key audit objectives1. Set key audit objectives 2. Identify CAATs to be used2. Identify CAATs to be used 3. Identify which data files are needed3. Identify which data files are needed 4. Determine which format you need4. Determine which format you need 5. Request files from client in preferred 5. Request files from client in preferred

formatformat 6. Import data into ACL6. Import data into ACL

10 Steps (Con’t)10 Steps (Con’t)

7. Use CAATs to verify the data import 7. Use CAATs to verify the data import processprocess

8. Perform other CAATs8. Perform other CAATs 9. Investigate and reconcile exceptions9. Investigate and reconcile exceptions 10. Document results in workpapers10. Document results in workpapers

CAATs to Detect FraudCAATs to Detect Fraud

Digital analysisDigital analysis– Benford’s Law for a series of naturally Benford’s Law for a series of naturally

occurring numbersoccurring numbers– Deals with expected frequency of first digitsDeals with expected frequency of first digits– Exponential distributionExponential distribution– Requires large sample sizeRequires large sample size