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Software tools

- A programming tool or software development tool is a computer program that

software developers use to create, debug, maintain, or otherwise support other
programs and applications.
- Traditionally a set of software tools addressed only the essential needs during program
development a typical set might consist of
o Text Editor
o Compiler
o Link Loader
o Some Form of Debug Tools
Auditing software
- is used by auditors to facilitate their work and make day to day tasks easier, and for the
purposes of this post were not including general office productivity software (e.g. word
processing, spreadsheets, email, etc.) as these are not specific Audit Software tools and
are already embedded in virtually every office environment.
2 TYPES of auditing software
- Engagement Management Software
- Generalized Audit Software
Engagement Management Software
- -This type of Audit Software includes products such as work paper management,
document storage, and electronic working papers.
Advantages of EMS
- Easily sharing information amongst the team, facilitating reviewing.
- Standardizing the work flow
- Paperless nature ensures data can be backed up, no risk of losing audit files, lower
storage requirements

Generalized Audit Software

- GAS has a very specific function analyzing data. It is used to mine and analyze data
(often in vast quantities) to identify anomalies, errors and omissions and is used in
gathering audit evidence rather than documenting.
Benefits of GAS
- Improved efficiencies by automating manual procedures
- Reduced risk by testing entire populations reducing reliance on sampling.
- Added value by providing more detailed insight into underlying records
- Increasing the range of testing available to the Auditor.

A database is a collection of information that is organized so that it can be easily accessed,

managed and updated. Data is organized into rows, columns and tables, and it is indexed to make
it easier to find relevant information.

Advantages of using databases

Time saving
Increased consistency
Greater data integrity
Data accessibility
Improved data security.
Reduced data entry, storage, and retrieval costs

Disadvantages of using databases

Database systems are complex, difficult, and time-consuming to design

Substantial hardware and software start-up costs
Damage to database affects virtually all applications programs
Extensive conversion costs in moving form a file-based system to a database system
Initial training required for all programmers and users

Fraud Detection
- Fraud detection means the identification of actual or expected fraud to take place within
an organization.

Benefits of Fraud Detection

Reduced exposure to fraudulent activities

Reduced costs associated with fraud
Find out the vulnerable employees at risk to fraud
Have organizational controls
Improves the results of the organization
Gains the trust and confidence of the shareholders of the organization

Fraud Analytics

- Combination of analytic technology and fraud analytics techniques

Benefits of Fraud Analytics

Identify hidden patterns

Data integration
Enhance existing efforts
Harnessing unstructured data
Improve the performance

MS Excel for Internal Auditors

Common tasks in Excel in Audit Process

Reverse engineering of others Excel files

Data validation

Cross-checking with data from other sources

Common Spreadsheet Risks and Ways to Control Them

1. Unskilled Users- lack of adequate training will result in poor to common spreadsheet
results, such as improper referencing, linking to other spreadsheets, or using inaccurate
formulas to master complex calculations.
2. Lack of Guidelines for Spreadsheet Preparation- the style, content and accountability
for spreadsheets should be documented in the organizations policies and procedures or in
the spreadsheet used.

3. Data Entry and Recycling- to help mitigate spreadsheet recycling risks, auditors need to
make sure the information added to the spreadsheet is as good as the expected output.

4. Spreadsheet Errors- make data entry errors such as skipped entries or transposed

5. Loss of Data- failure to back up data is a common and sometimes fatal error that may
result in the loss of hours of data entry for computer users, which applies equally to all
software tools including spreadsheets.

Detecting Fraud using Excel

A. Proof of Cash

This report specifically tests for the following four items:

1. Tests that all recorded (on the client's books) cash receipts were actually deposited.

2. Tests that all receipts deposited in the bank were recorded on the client's books.

3. Tests that all recorded cash disbursements were processed by the bank.

4. Tests that all disbursements processed by the bank were recorded.

To Prepare a Proof of Cash:

1. Start with a beginning balance, typically a year-end balanced previously reconciled.

2. Reconcile receipts

3. Reconcile disbursements.

4. Complete it with the ending balance, typically the current year-end.

B. Data Analysis Tools

Filtering Data- AutoFilter allows you to view a subset of your data and when
you are done, you can clear the filters to once again redisplay all of your data.

Data Form- A data form provides a convenient means to enter or display one
complete row of information in a range or table without scrolling horizontally.
Data Subtotals- Excels Subtotal command automatically calculates and inserts
subtotals and grand totals in your list or table.

Data Validation- Data Validation can be used to limit the data that can be
entered into a cell.

Data Table- The Data Table command enables the process of changing values
in cells to see how those changes will affect the outcome.

Flash Fill- Excels new Flash Fill watches you work and applies logic to help
you complete your tasks.

Power View- Excels Power View inserts new worksheets connected to your
data, and then enables you to create new report types.

Quick Analysis- Excels Quick Analysis tool also helps you analyze data by
offering a variety of formatting, charts, totals, tables and sparkline layouts to
instantly summarize large volumes of data.

Excel Functions Relevance to Auditing

VLOOKUP FUNCTION- This function will look for a piece of information in a large
table of data and pull in any field from that table into your new table.

SUM FUNCTION- This function will just Sum up a group of numbers.

MAX and MIN FUNCTION- these functions will simply return the largest and smallest
result from a range of numbers.

IF FUNCTION- used to determine whether a statement is True or False and then

performs an action based on the result.

SUMIF FUNCTION- this function will look for a certain criteria and if it finds it, then it
will Sum up related cells.

COUNTIF FUNCTION- works the same way as the SUMIF; however it just counts the
fields that match a certain criteria, instead of summing them.

NOW FUNCTION- It is a simple function that will just tell you exactly what time and
day it is.

Excel Macros
- Programming code that you can add to your excel spreadsheets to automate repetitive
- It is the simplest form of automation- show a software program the steps you follow to
get something done, and the software will follow along

Recording a Macro

1 On the Developer tab, in the Code group, click Record Macro.

2 Complete the Record Macro Dialog box.
a In the Macro name box, enter a name for the macro.
b A shortcut key can be assigned to run the macro.
c In the Store macro in list, select the workbook where you want to store the macro.
d In the Description box, type a description of the macro if desired.
3 Click OK to start recording and perform the actions that you want to record.
4 When you are finished recording, on the Developer tab, click Stop Recording. You
can also click the Stop Recording button on the left side of the status bar.

Running a Macro

1 On the Developer tab, in the Code group, click Macros.

2 In the Macro name box, select the macro that you want to run. Then click Run.

Expert System

- Computer system that emulates the decision making ability of a human expert.

- The components of expert system consist of knowledge base, inference engine program,
user interface programs, workstation and user.

- Expert systems can be used to improve the consistency of human responses and mitigate

The Expert System is used to:

Help experts in their routine to improve productivity.

Help experts in some of their move complex and difficult tasks so that the problem can be
managed effectively.

Help an expert to obtain information needed by other experts who have forgotten about it
or who are too busy to search for it.

TICOM (The Internal Control Model)

- TICOM (The Internal Control Model) was the first auditing-based system to implement
artificial intelligence techniques in the system.

- A computer-based analytic tool that aids the auditor first to model the internal control
system and then query the model in order to aid the auditor in evaluating the internal
control system.

AudES - an Expert System for Security Auditing

- It is designed to automate manual security auditing procedures and to alleviate the burden
on human auditors.

- AudES is interposed between a human auditor and Resource Access Control Facility.

- the AudES system incorporates all of the functions pertaining to violation detection.

Peachtree Accounting
- It is an accounting application for small and medium-size businesses made by sage
software. It is now called as SAGE 50 Accounting.


It helps in making transaction faster

Easy to use
Cost effective
Provides Audit Trail
- Audit Trail Report shows the date and time that every transaction was entered or
- The ID of the operator who made the entry or modification can also be listed.

Several Uses:

it can help you find lost transactions where you know nothing about the transaction
except the day on which it was entered
it can help prevent bookkeeping fraud by keeping a record of what transactions were
modified or deleted
it can let you know what data needs to be reentered in the case of data corruption.


Unnecessary Features
Complicated to setup


Press this To do this

ALT+S Save the current record

CTRL+C Copy selected text to the Windows clipboard

CTRL+X Cut selected text to the Windows clipboard

CTRL+V Paste text from the Windows clipboard

CTRL+E Delete the current record

CTRL+F Display the Find Transactions window

CTRL+D Find Next

CTRL+N Create a new company

CTRL+O Open an existing company

CTRL+B Back up a company Back up a company

CTRL+R Restore a company

CTRL+P Print the displayed report, invoice, quote, payment, and so on

F1 Get help for the current window

CTRL+F6 Move to the next window

CTRL+F4 Close the current document window

ALT+F4 Close the application window


Customers and Sales

Vendors and Purchases
Employee and Payroll
Chart of accounts
General Journal Entries
Inventory and Services
Workflow Notifications



Accounts Receivable
Accounts Payable
General Ledger
Financial Statements
Jobs Accounts Reconciliation
Crystal reports
Internal Accounting Review
Daily Register


Invoices And packing slips

Payroll checks
Credit Memos
Customer Labels And Letters
Customer Statements
Employee Labels And letters
Purchase Orders
Receipts And Deposits
Sales orders, proposals and quotes
Tax Forms
Vendor labels and tickets
Work Tickets

New Features

TRANSACTION HISTORY - Peachtree makes it easy to find transactions related to

others, like the quote or sales order that led to a sales invoice or all the payments
tied to a single purchase.
the ability for you to switch quickly and easily between multiple Peachtree company

Have multiple companies open at once In Peachtree 2010, you can now have
access to all of your Peachtree companies at the same time, so you can quickly switch
between open companies to compare data, enter transactions etc.

IMPROVED INVENTORY MANAGEMENT Peachtree helps you manage your

inventory items and track which of your items are being sold to which of your

View Sales History for an item. Peachtree 2010 offers new functionality where you
can view the complete sales history for any selected item. Now you can quickly
access detailed sales information for your inventory items.

Enhanced inventory item search. You can now search by data stored in Description
and Note fields on your inventory item records. You no longer have to memorize Item
IDs/Descriptions or hunt through long lists to find the item you are looking for.

SET AUTOMATIC DATA BACKUPS - Now, with Peachtree 2010, you can schedule
your companys Peachtree backup to run automatically whenever you want it to, such
as during non-business hours. This can save you time and increase your and your
users productivity.

CUSTOMER MANAGEMENT CENTER - Handle your customer relationships with

less effort and better information

One place for managing your customers. Get all the important customer
information without jumping from report to report, transaction to transaction. See and
search contact information, a list of invoices, a list of receipts, a list of quotes, a
history of items sold to the customer, and more all at the same time.

Customizable for each users needs. Get access to the data you need without
dealing with the data you do not need. Change your Customer Management Center
look at the customers and data you are working with, while your co-workers can set
up their own.

FULLY-CUSTOMIZABLE DASHBOARD - Peachtree 2010 offers you a fully-

customizable work area, where you can choose the information you want to see and
arrange it so you can access it quickly and easily. Now you dont have to go to lots of
different places within Peachtree to do your work.

ORDER PROCESS WORKFLOW - With Peachtree 2010, you can now keep track of
all the details in your companys sales and purchasing processes, such as Whats the
status of this order?, Who is currently handling it? and What are the next steps I
need to take?, by setting up your own customized order process workflow. Here you
can ensure that everyone stays informed and make sure that nothing slips through the


2010 you can stay informed as transactions move through your process by defining
customizable rules which will immediately inform you or your other users about any
change to a transactions Tracking Status and/or Assignee.

- created and sold by Intuit, Inc

- has the power to manage basic accounting tasks quickly and easily streamlines business

operations and dramatically simplifies accounting.

System Requirements:
Processor: 2.4 GHz (whether you have a single user or multiple users.)
- 1GB of RAM for a single user,
- 2GB for multiple users
Operating System: Windows XP and later.
Disk space: 2.5GB

Internal control features within the software:

Establish a unique username and password for each employee required to use the
- The use of usernames and passwords allows for two important control-related activities
identification and authentication.

- QuickBooks helps you separate access to financial transactions and reports with its user
permissions and controls.

- Using permissions and roles will not only reduce worry about fraud, but it will also
keep employees focused on the areas assigned to them.

a Admin User
- The Administrator has access to all areas of QuickBooks
- In most cases, the Administrator should be either one of the business owners or the

b External Accountant
- An External Accountant is a powerful user type that can access all areas of
QuickBooks except sensitive customer data, such as credit card numbers

c Other Users

- Sales and Accounts Receivable

- Purchases and Accounts Payable

- Checking and Credit Cards

- Inventory

- Time Tracking

- Payroll and Employees

- Sensitive Accounting Activities

- Sensitive Financial Reports

Limit employee access to only necessary software functions and features

- ability to restrict each users access to functions within the software is dependent upon
having a unique username
- If an employee is given such 100% permission, it makes it absolutely easier for such
employee to conceal funds.

Why NOT to give an employee access to Quickbooks:

a Access To Sensitive Financial Data.

Quickbooks contains some very sensitive financial data so the most trusted employees
should be given access to all the sensitive data in Quickbooks.

b Potential For Data Mismanagement Or Loss.

One wrong move by an employee can result in months or even years of data being lost

overnight. All it takes is accidentally pressing the delete button or closing a file without

saving a backup.

c Potential For Incorrectly Entered Data.

There is a considerable amount of risk involved in trusting your employees to enter data
into quickbooks. The Quickbooks interface, though far better than most competing
software, still has many areas where the potential for poorly entered data presents major

d Risk Of Fraud.

Giving your employees direct access to Quickbooks, makes theft and other forms of
shrinkage painfully easy. It is extremely for anybody with access to Quickbooks to
manipulate financial data. But statistics show that employee theftincluding fraudcosts
businesses over $50,000,000,000 a year, or 7% of their total revenues.

e Risk of Data Leaks.

This is particularly the case with employees who are not trained accountants or
bookkeepers, and do not fully understand Quickbooks security features.

Disallow the editing or deletion of transactions for users other than the

Use Closing Date Exception Report and Audit Trail Report

a Closing Date Exception Report in QuickBooks shows all transactions sorted by
transaction type (e. g., Bill, Check, Invoice) dated on or before the Closing Date that
were first recorded or modified after that date was established.

- To produce this report, click on the Reports->Accountant & Taxes->Closing Date

Exception Report menu selection.

b Audit Trail captures each transaction as it is initially entered into QuickBooks and certain
subsequent changes made to the transactions.

- To produce an Audit Trail report, simply choose the Reports menus Accountant and
Taxes command and then select the Audit Trail command from the submenu.

- Audit Trail Reports scans the system to check for modified payee entry. Additionally,
you can sort out the report by transaction in order to authenticate who made changes to payee
and at what period.

Install QuickBooks on only necessary workstations in the office

Activate Require Accounts setting to avoid unassigned amounts

Enable Customer Credit Card Protection

- the software does not show full customer credit card numbers, but rather

shows only the final four digits

10 Reasons Why You Should Use QuickBooks

1 You save time on bookkeeping and paperwork

2 You can easily generate the reports with the information you need

3 You save money

4 Your business can grow with QuickBooks.

5 You can customize QuickBooks to work the way you want.

6 You can rest assured knowing that QuickBooks is a stable, reliable and proven product.

7 You save typing time and errors by sharing data between QuickBooks and over 100
business applications.

8 You will get paid faster with QuickBooks online payments.

9 You can easily accept Credit Cards.

10 You can pay your bills and bank online.

SAP (Systems, Applications, Products in Data Processing)

- headquartered in Walldorf, Germany.

- provide business software designed to help companies execute and optimize
business and IT strategies.

SAP currently has:

More than 51,000 employees in over 50 countries developing, marketing, and selling
applications and services

82,000 customers of all sizes across 25 industries and in over 120 countries
Listings on the Frankfurt and New York stock exchanges

SAP operates in three geographic regions: EMEA (representing Europe, Middle East, and
Africa) and APJ ( representing Japan, Australia, and parts of Asia).

SAP Latest Products

SAP Customer Relationship Management
SAP ERP (enterprise resource planning)
SAP Product Lifecycle Management
SAP Supply Chain Management
SAP Supplier Relationship Management

History, Evolution & Market position:

In 1972, five former IBM employees launch a company called SAP Systems Analysis and
Program Development in Mannheim, Germany.
One year later, forming the basis for the continuous development of other software
components in what later came to be known as the "R/1 system."
By the end of the decade, intensive examination of SAP's IBM database and dialog
control system leads to the birth of SAP R/2.
The 1980s Rapid Growth: The SAP R/2 system attains the high level of stability of the
previous generation of programs.
The 1990s: A New Approach to Software and Solutions SAP R/3 is unleashed on the

With SAP R/3, SAP ushers in a new generation of enterprise software -- from mainframe
computing to the three-tier architecture of database, application, and user interface. To this day,
the client-server architecture is the standard in business software.
1996: 1,089 new SAP R/3 customers, more than 9,000 installations worldwide.
1997: employee strength 12,900
The 2000s Innovation for the New Millennium: With the Internet, the user becomes the
focus of software applications
2004: 84,000 installations worldwide, 1,000 partners, over 25 industry-specific business
solutions and more than 24,450 customers in 120 countries. SAP is the world's 3rd largest
independent software vendor.
System Requirements:

Processor: 32 bit


256 MB RAM
500 MB Hard Disk
512 RAM
1 GB Hard Disk

Microsoft Windows XP and later
Microsoft Internet Explorer Version 6.0/7.0
SAP MaxDB 7.6
Sun Java Runtime Environment
Benefits of SAP Software
1. Increased Productivity- with an SAP system, theres no need for redundant data entry
within different software programs and fewer communication struggles between separate
but interdependent facets of a company.

2. Significant Cost Savings- specifically, by using one software program to track all of a
companys data and generate reports, businesses dont have to worry about purchasing
multiple pieces of software for multiple departments.
3. Consistent Operations- through the consistent entering and reporting of numbers and the
generation of reports, management can get a better idea as to whats going on within the
company in a broader scope.

Disadvantages of SAP
1. A contract is required to sign by the company to use SAP software and it holds that
companies to the vendor untill the expiry of the contract.
2. It is inflexible because sometimes the vendor package does not fit a companys business
3. To implement and use SAP can be very expensive.
4. This is not secure as a risk of project failure is there.
1. SAP Financial Accounting (FI)
deals in managing financial transactions within enterprises.

helps employees to manage data involved in any financial and business transactions in a
unified system.
2. SAP Controlling (CO)
supports in the process works of planning, reporting and monitoring operations of
businesses. It involves methods to view and organize costs that are required for financial
3. SAP Sales and Distribution (SD)
deal in managing all transactions ranging from enquiries, proposals, quotations, pricing
and more.
helps greatly in inventory control and management.

4. SAP Production Planning (PP)

designed specifically for production planning and management.

consists of master data, system configuration and transactions in order to accomplish plan
procedure for production.
5. SAP Materials Management (MM)
manages materials required, processed and produced in enterprises.

different types of procurement processes are managed with this system.

6. SAP Quality Management (QM)

helps in management of quality in productions across processes in an organization.

helps an organization to accelerate their business by adopting a structured and functional

way of managing quality in different processes.
7. SAP Human Capital Management (HCM)
enhances the work process and data management within HR department of enterprises.

Right from hiring a person to evaluating ones performance, managing promotions,

compensations, handling payroll and other related activities of an HR is processed using
this module.

CAAT or Computer Assisted Auditing Techniques, uses computer audit software, and is a
trusted tool with auditors and data analysts, as well as with forensic or fraud investigators, who
find it an ideal tool for fraud detection and prevention.


The nature of computer-based accounting systems is such that auditors may use the audit client
companys computer, or their own, as an audit tool, to assist them in their audit procedures. The
extent to which an auditor may choose between using CAATs and manual techniques on a
specific audit engagement depends on the following factors:

the practicality of carrying out manual testing

the cost effectiveness of using CAATs
the availability of audit time
the availability of the audit clients computer facility
the level of audit experience and expertise in using a specified CAAT
the level of CAATs carried out by the audit clients internal audit function and the extent
to which the extern al auditor can rely on this work.
Three classifications of CAATs

Audit software
Test data
Other techniques

Audit software
Audit software is a generic term used to describe computer programs designed to carry out tests
of control and/or substantive procedures.

1.1 Types of Audit Programs

1.Packaged programs
2.Purpose written programs
3.Enquiry programs

1.2 The uses of audit software

Calculation checks: e.g. program gives the total amount of individual entries in

purchases day book in a particular period. Auditor then agree this total amount to the

amount posted in purchases ledger control a/c.

Detecting system violation rule: e.g. program checks that no customer has balance above
specified credit limit.

Detecting unreasonable items: programs checks that no customer has discount of 50% or
sales ledger balance (i.e. debtors balance) is more than the amount of sales made to that

New calculation and analysis: e.g. statistical analysis of inventory movements to

identify slow moving items.

Selecting items for audit testing: e.g. obtaining a stratified sample of sales ledger

balances to be used as a basis for a circularization of debtors. Completeness checks: e.g.

checking continuity of sales invoices to ensure that they are all accounted for.

1.3 difficulties in using audit software

Set up cost is high: set up cost is high as initially client procedures need to be
investigated and understood thoroughly prior to the audit software can be used to access and
interrogate those files.

Changes are costly: if there are changes to client system, this will require costly

alterations to the audit softwares.

Not suitable for small installations: there may be no suitable audit software for use on mini
or micro computer installations. Client accounting system documentation may be incomplete so
that it is difficult to identify all procedures. The cost of writing specific audit software to test
those systems may be difficult to justify against the possible benefit on the audit or possibility of
recovering the cost of the software.

Over elaboration: tendency to produce over elaborate enquiry programs which are expensive
to develop, time consuming in processing and reviewing. Hence audit cost goes up and its
difficult to justify its use.

Quantities of output: it may arise that output is too large either due to poor design of the
software or using inappropriate parameters on a test. Hence overdetailed output hardly serve any
purpose apart from wasting auditor time in trying to figure out what is important and what is not.

Live database: the audit program need to be run on the live database (i.e. actual files) of the
client because the auditor is testing the actual system of the client. Some clients may be
unwilling to let auditors run the audit program on the live/actual files as this need to be fully
tested that it wont corrupt the actual database files. Alternative solution is to run the audit
software on backup copies of the live database. But the problem is of ensuring that the copied
files are true replicate of the live files.

Audit Software Reason for test

Calculation check of the sales day book. Ensures that the computerised sales day
book has been cast correctly and helps to

the sales balance in the financial


Analysis of the ageing of items in the Detect old items that need to be written
inventory ledger. down to net realisable value rather than

Selecting a sample of inventory at year Removes bias from sample

end as part of the physical verification. selection+enable user to select items
rapidly compared to
manual selection

Selecting a sample of sales invoices for Removes bias from sample

checking to dispatch documentation. selection+enable user to select items
rapidly compared to

manual selection.

Checking completeness of sales invoice Ensures that all sales invoices are recorded
numbers.. in the sales day book.

Checking that all sales invoices have All sales are paid on ordering, unpaid sales
been paid for. would be a violation of system rules and

would need to be investigated by the


List large credit notes for investigation by Need to find reason for which there has
the auditor. been returns. This may also be a check on

ordering system. As returns may be caused

by errors in ordering with the result that

customers have to return goods later

Test Data

Audit test data

Audit test data is used to test the existence and effectiveness of controls built into an application
program used by an audit client. As such, dummy transactions are processed through the clients

Test Data Reason for test

Input of an order for a negative number Ensures that only positive quantities are
of tennis racquets. accepted although the company cannot
despatch negative quantities anyway

Input of an order for ten tennis racquets. There are reasonableness checks in the
system to identify possible input errors. A
warning message should appear on screen
asking the customer to confirm any order
for more than say two racquets

Input of an order without payment. Ensures that orders are paid for prior to
despatch this also limits the number of
bad debts

Input of invalid inventory code Ensures that the computer detects the
invalid code and presents an error
message rather

than taking the nearest code and

accepting that.

Input of invalid customer credit card Online checking of credit card details to
details. the credit card company ensures that
goods cannot be despatched without
payment. This will also limit the number
of bad debts

Input of invalid address Ensures that the address and valid zip
code is valid, possibly by accessing a
database of

valid codes. If the code is not valid an

error message should be displayed. This

that goods are only despatched to valid


Advantages of CAAT to the auditor

1. Test programmed controls: in a computer based accounting system, there are large
volume of transactions which the auditor will have to audit. The auditor will have to check if
the programmed controls are functioning correctly. The only effective way of testing
programmed controls is through CAAT.
2. Test on large volume of data: CAAT enable auditors to test large amount of data
quicklyand accurately and therefore increase the confidence they have in their opinion.
3. Test on source location of data: CAAT enables auditors to test the accounting systems and
its records (e.g. disk files) at its source location rather than testing the printouts of what they
believe to be a copy of those records.
4. Cost effective: once set up CAAT are likely to be cost effective way of obtaining audit
evidence year after year provided that the client does not change the accounting system

Disadvantages of CAATs

1. CAATs can be expensive and time consuming to set up, the software must either be
purchased or designed (in which case specialist IT staff will be needed);

2. Client permission and cooperation may be difficult to obtain;

3. Potential incompatibility with the client's computer system;

4. The audit team may not have sufficient IT skills and knowledge to create the complex data
extracts and programming required;

5. The audit team may not have the knowledge or training needed to understand the results of
the CAATs; and

6. Data may be corrupted or lost during the application of CAATs.


1. Complexity of the Computer system

2. Non Existence of Visible Evidence

3. Possibility of Systematic Errors

4. Non Retention of Files and Data

5. Lack of Audit Trail


1. The Audit Trail

2. The Audit Object

3. The Audit Tool

4. The Audit Evidence

5. Internal Control

6. Audit Environment

7. The Audit File

8. The Auditors

Conclusion: Internal Auditors can take advantage of CAATs to improve efficiency and
effectiveness of the audit. With the right tools, training and methodology, CAAT-Enabled
Auditing can help speed up the audit process, and provide access to data that would otherwise
remain untapped.