Page 166 - DCOM204_AUDITING_THEORY

Auditing Theory

Notes 2. Application of complex analytical review procedures: The can perform complex procedure
and calculations with the help of CIS. He may extract detailed and complex reports also to
support his procedure.
3. Application of statistical sampling techniques to extract the relevant data: While extract
data from the client’s information system, the auditor can take help of complex statistical
and scientific techniques in order to improve the quality and prudence of sample selected.
Application of statistical and scientific methods is almost impossible, without the help of
computer systems.

Example: MS Excel is an application program that contains a number of statistical and
mathematical formulae and techniques.
4. Test of general EDP controls: The auditor may check various input controls; processing
controls; output controls; data storage, transmission and security controls. The auditor can
check the access rules and procedure.

5. Test of Application controls: The auditor can check the functioning of various applications
installed and running in the system. The auditor may check the authenticity of various
application programs.
6. Re-performing calculations and processing: The auditor can also re-perform calculations
performed by the client’s accounting system.

7. Better reporting Methods: Under CIS environment there are a number of reporting
techniques are available with the auditor. The auditor can use of various graphical designs
and multimedia techniques in order to make his report effective, concrete and more
catchy.

Example: MS PowerPoint is one of the software used to prepare presentations.

8.9.5 Considerations in Use of CAAT

While planning an audit with the help of CAAT, the auditor must take care of the following
factors:
1. IT knowledge and experience of the Audit Team: Both the auditor and the audit team
should have sufficient skills and experience to handle the audit under CAAT.
2. Availability of relevant Audit Software and suitable computer facilities: The auditor can
use the CAAT and maintain the independence only if he has sufficient infrastructure, in
the form of computer hardware and audit software, available with him. Otherwise the
cooperation and assistance of the client entity’s personnel will be required.

3. Impracticability of manual test: Now-a-days, many organisations are adopting eco-
friendly approaches while performing the business operations. Moreover, many computer
information system perform tasks where there is no hard copy evidence is generated.
Hence making it impractical for the auditor to perform the tests manually.
4. Effective and Efficiency: With the help of CAAT, it is possible to test large number of
transactions together with a better level of precision. This brings efficiency and effectiveness
in performing the audit assignment.
5. Time Constraint: The auditor is required to perform the assignment in the limited time
span. Whereas, a large amount of data is required to be stored (such as transaction details

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