Page 161 - DCOM204_AUDITING_THEORY

Unit 8: Auditing in an EDP Environment

3. Adaptability Notes

4. Vendor technical support
5. Statistical sampling capability
6. Acceptability

7. Processing capabilities
8. Report writing.
Mechanics of Use: If data of audit interest are processed on a computer, the auditor should be on
the lookout for methods of using the computer to audit such data. The capabilities of most
computer audit packages open up new opportunities to use the computer to fulfill audit
responsibilities. The use of the computer is especially desirable when there is a large volume of
data and the data are readily available from the computer files. The auditor determines the
identity and content of all potentially useful files early to his audit, and obtains a copy of the
data layout for each record written on those files.
Once the auditor has recognized the availability of computer file of interest in the audit, he
considers methods for using a computer audit package, it is important to understand how the
computers audit package work. Basically, the package has the capability of listing those records
which match other records in the same file or in different files. One or more data fields designated
by the auditor are compared. Record layouts of the two files can be different, except for the fields
to be matched. The computer audit package can also print account details and totals for records
defined by the auditor.
In addition, the audit package is capable of performing various calculations and solution of
formulae. Special programs can be used for any computational task required. Sampling plans
can be developed and the results of sampling tests evaluated and projected. In addition, the
computer using its comparison capability, can select all or a sample of records having the
characteristics stated by the auditor. Multiple sets of characteristics can be designated for a
single application. For each stratum, statistics are provided on the number of records on the
input file, the number of records selected, and the sum of designated fields. Each stratum may be
sampled or printed in its entirety.
Applications: There are various areas in internal auditing for use of audit software packages.
Once the techniques are mastered, the applications to computer files are performed manually
and determine the feasibility of applying computer techniques. Another approach is to include
special computer routines in the normal, everyday processing. An example is in the review of
cheques disbursements. As transactions are processed, the computer can automatically select a
sample, or print out expenditures in excess of a specified amount by classification. The following
are some application for potential use by internal auditors.
1. Inventories: The use of computer software packages in reviews of inventories results in
significant savings of audit staff time and elimination of detailed checking of voluminous
data manually. In testing a perpetual inventory, a statistical sample can be taken by the
computer of inventory parts, stratified as to high and low values. Counts summarized and
tabulated by quantity, rupees and percentages. In addition, tests of pricing can be made by
comparison of perpetual inventory records with a master cost tape showing the costs of all
parts. Other application include tests for meeting standards for filling requisitions, printouts
of stocks with recurring shortages or averages, and summaries of trends in losses through
pilferage.

2. Payrolls: There are operational as well as financial areas relating to payrolls that lend
themselves to the use of audit software packages. Printouts can be made to review labour

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