Types of CAAT’s Advantages Disadvantages

Test Data Method 1. They employ 1. Auditors rely on the

through-the-computer client’s IT personnel to
testing, thus providing obtain a copy of the
the auditor with explicit production application
evidence concerning under test. The audit
application functions. risk here is that the IT
personnel may
2. If properly planned, intentionally or
test data runs can be accidentally provide the
employed with only auditor with the wrong
minimal disruption to version of the
the organization’s application.
operations.
2.Test Data Method
3. They require only produce a static
minimal computer picture of application
expertise on the part of integrity at a single
auditors. point in time. They do
not provide a
convenient means for
gathering evidence of
ongoing application
functionality.

3. High cost of
implementation

Generalize Audit 1.Relatively easy to 1.The high cost of their

Software learn and use. development. It
provides a limited
2.Improved efficiencies avility to verify
by automating manual programming logic
 procedures because its application
is usually directed to
3.Reduce risk by testing testing client files or
entire populations databases
reducing reliance on 2. It involves auditing
sampling 4.GAS can be after the client has
applied to wide variety processed the data
of clients with minimal rather than while the
customization. This is a data is being
single program that can processes.
be applied to a wide
range of task without
having to incur the cost
or inconvenience of
developing
individualized
programs.
6.Provides
documentation of each
test performed in the
software that can be
used as documentation
in auditor's work
papers.
7.Independent of the
system being audited
and needs a ready-only
copy of the file.
Integrated Test Facility 1.Support continuous 1.The potential of
monitoring of controls. corrupting data files
2. Economically tested with test data that may
without disrupting the end up in the financial
user's operations and reporting process.
 without the intervention
of computer services
personnel.
3.Testing can be
unscheduled and
unknown to other staff.
4. It provides prima
facie evidence of correct
program functions.
Parallel Simulation Is a possibility than Lies in significant cost
auditor’s program could of audit programming if
have additional controls written uniquely for
embedded, which one client.
enables the valuation of
effects of non-existent
control procedures.
Embedded Audit 1.Information about 1.CAATs provide the
Module control violations and auditor to set up his
dollar errors is captured own program to
on a continuous, real evaluate transactions
time basis. If EAMs are moving through the
not present, the audit computer system for
organization would processing.
have no choice but to 2. Several
employ traditional ex- disadvantages in this
post auditing setup include that the
approaches. Traditional auditor experiences
sampling approaches extra overhead in using
require the auditor to extra programs to
infer the quality of install into the
accounting outputs company's software.
based on results of 3.The auditor must
applying audit note when an unusual
procedures to the transaction happens,
sample. which may be difficult
2.Using EAMs the audit if not understanding
organization is not the normal types of
confined to sampling business transactions.
processes at the 4.The auditor also runs
traditional interim or the risk of security
year-end periods. Since issues if unauthorized
properly designed EAMs users access the
should capture all software program.
transaction errors,
substantive testing at
year end should be
virtually eliminated
when compared to
traditional sampling-
approaches.
3. EAMs provide a
superior method of
ensuring that material
errors or control
violations are trapped.
Even if EAMs are
operative only
intermittently, sampling
risk is reduced, since
the auditor has
knowledge of all errors
in the periods sampled.
4. Since the audit
organization can
capture control
violations and dollar
 errors at will, this
approach would
seemingly reduce the
extent of compliance
testing compared to
approaches where
EAMs are not used.
5.Where EAMs are to be
used only
intermittently, their use
provides a “surprise”
test capability, since
the application
personnel should not be
aware that the auditor
has activated the EAMs.
Base Case System 1.It develops test data 1.Time consuming
Evaluation that purports to test
every possible condition 2. Expensive to
that an auditor expects develop
a client's software will
confront.
2. Provides auditor with
much more assurance
that test data alone.