USING COMPUTER

ASSISTED AUDIT
TOOLS AND
TECHNIQUES
(CAATT’S)
Computer Assisted Audit Tools and Techniques

• Has two subcomponents:

1. Software used to increase an auditor’s
personal productivity and software used
to perform data extraction and analysis,

2. Techniques to increase the efficiency

and effectiveness of the audit function.
Input Controls
• Designed to ensure that the
transactions that bring data into
the system are valid, accurate, and
complete

 Data input procedures can be

either:
 Source document-triggered (batch)
 Direct input (real-time)
 Source document input requires
human involvement and is prone to
clerical errors.

 Direct input employs real-time

editing techniques to identify and
correct errors immediately
Classes of Input Controls
1) Source document controls
2) Data coding controls
3) Batch controls
4) Validation controls
5) Input error correction
6) Generalized data input systems
Source Document Controls
 Controls in systems using physical source
documents

 To control for exposure, control

procedures are needed over source
documents to account for each one
 Use pre-numbered source documents
 Use source documents in sequence
 Periodically audit source documents
Data Coding Controls
 Checks on data integrity during processing
 Transcription errors
 Addition errors
 Truncation errors
 Substitution errors
 Transposition errors
 Single transposition
 Multiple transposition
 Control = Check digits
 Added to code when created (suffix, prefix,
embedded)
 Sum of digits (ones): transcription errors only
 Modulus 11: different weights per column:
transposition and transcription errors
 Introduces storage and processing inefficiencies
Batch Controls
 Method for handling high volumes of
transaction data – esp. paper-fed IS

 Controls of batch continues thru all phases

of system and all processes (i.e., not JUST an
input control)

1) All records in the batch are processed together

2) No records are processed more than once
3) An audit trail is maintained from input to output

 Requires grouping of similar input

transactions
Batch Controls

 Requires controlling batch throughout

 Batch transmittal sheet (batch control record)
 Unique batch number (serial #)
 A batch date
 A transaction code
 Number of records in the batch
 Total dollar value of financial field
 Sum of unique non-financial field
• Hash total
• E.g., customer number
 Batch control log
 Hash totals
Validation Controls
 Intended to detect errors in data
before processing

 Most effective if performed close to

the source of the transaction

 Some require referencing a master

file
 Field Interrogation
 Missing data checks
 Numeric-alphabetic data checks
 Zero-value checks
 Limit checks
 Range checks
 Validity checks
 Check digit
 Record Interrogation
 Reasonableness checks
 Sign checks
 Sequence checks
 File Interrogation
 Internal label checks (tape)
 Version checks
 Expiration date check
Input Error Connection
 Batch – correct and resubmit

 Controls to make sure errors dealt

with completely and accurately

1) Immediate Correction
2) Create an Error File
 Reverse the effects of partially
processed, resubmit corrected
records
 Reinsert corrected records in
processing stage where error was
detected
3) Reject the Entire Batch
Generalized Data Input Systems (GDIS)
 Centralized procedures to manage data
input for all transaction processing systems

 Eliminates need to create redundant

routines for each new application

 Advantages:

 Improves control by having one

common system perform all data
validation
 Ensures each AIS application applies a
consistent standard of data validation
 Improves systems development
efficiency
 Major components:
1) Generalized Validation
Module
2) Validated Data File
3) Error File
4) Error Reports
5) Transaction Log
Process Controls
1) Run-to-Run Controls

2) Operator Intervention Controls

3) Audit Trail Controls

Run-to-Run (Batch)

 Use batch figures to

monitor the batch as it
moves from one process
to another
1) Recalculate Control
Totals
2) Check Transaction Codes
3) Sequence Checks
Operator Intervention
 When operator manually enters
controls into the system

 Preference is to derive by logic or

provided by system
Audit Trail Controls
 Every transaction becomes
traceable from input to output
 Each processing step is documented
 Preservation is key to auditability of
AIS
 Transaction logs
 Log of automatic transactions
 Listing of automatic transactions
 Unique transaction identifiers [s/n]
 Error listing
Output Controls
 Ensure system output:
1) Not misplaced
2) Not misdirected
3) Not corrupted
4) Privacy policy not violated
 Batch systems more susceptible to exposure,
require greater controls
 Controlling Batch Systems Output
 Many steps from printer to end user
 Data control clerk check point
 Unacceptable printing should be shredded
 Cost/benefit basis for controls
 Sensitivity of data drives levels of controls
 Output spooling – risks:
 Access the output file and change
critical data values
 Access the file and change the
number of copies to be printed
 Make a copy of the output file so
illegal output can be generated
 Destroy the output file before
printing take place
 Print Programs
 Operator Intervention:
1) Pausing the print program to load output paper
2) Entering parameters needed by the print run
3) Restarting the print run at a prescribed checkpoint after
a printer malfunction
4) Removing printer output from the printer for review and
distribution
 Print Program Controls
 Production of unauthorized copies
 Employ output document controls similar to source
document controls
 Unauthorized browsing of sensitive data by
employees
 Special multi-part paper that blocks certain fields
 Bursting
 Supervision
 Waste
 Proper disposal of aborted
copies and carbon copies
 Data control
 Data control group – verify
and log
 Report distribution
 Supervision
 End user controls
 End user detection

 Report retention:
 Statutory requirements (gov’t)
 Number of copies in existence
 Existence of softcopies (backups)
 Destroyed in a manner consistent
with the sensitivity of its
contents
 Controlling real-time systems
output
 Eliminates intermediaries
 Threats:
 Interception
 Disruption
 Destruction
 Corruption
 Exposures:
 Equipment failure
 Subversive acts
 Systems performance controls
 Chain of custody controls
TESTING COMPUTER
APPLICATION CONTROLS
1) Black box (around)

2) White box (through)

Black Box Testing
 Ignore internal logic of application
 Use functional characteristics
 Flowcharts
 Interview key personnel
 Advantages:
 Do not have to remove application from
operations to test it
 Appropriately applied:
 Simple applications
 Relative low level of risk
White Box Testing
 Relies on in-depth understanding of
the internal logic of the application
 Uses small volume of carefully
crafted, custom test transactions to
verify specific aspects of logic and
controls
 Allows auditors to conduct precise
test with known outcomes, which
can be compared objectively to
actual results
White Box Tests Methods
1) Authenticity tests:
 Individuals / users
 Programmed procedure
 Messages to access system (e.g., logons)
 All-American University, student lab:
logon, reboot, logon *
2) Accuracy tests:
 System only processes data values that
conform to specified tolerances
3) Completeness tests:
 Identify missing data (field, records,
files)
4) Redundancy tests:
 Process each record exactly once
5) Audit trail tests:
 Ensure application and/or system
creates an adequate audit trail
 Transactions listing
 Error files or reports for all exceptions

6) Rounding error tests:

 “Salami slicing”
 Monitor activities – excessive ones are
serious exceptions; e.g, rounding and
thousands of entries into a single
account for $1 or 1¢
Computer Aided Audit Tools and
Controls (CAATTs)
1) Test data method
2) Base case system evaluation
3) Tracing
4) Integrated Test Facility [ITF]
5) Parallel simulation
6) GAS
Test Data Method
 Used to establish the application
processing integrity
 Uses a “test deck”
 Valid data
 Purposefully selected invalid data
 Every possible:
 Input error
 Logical processes
 Irregularity

 Procedures:
1) Predetermined results and expectations
2) Run test deck
3) Compare
Base Case System Evaluation
 Variant of Test Data method

 Comprehensive test data

 Repetitive testing throughout SDLC

 When application is modified,

subsequent test (new) results can
be compared with previous results
(base)
Tracing
 Test data technique that takes step-
by-step walk through application

1) The trace option must be enabled for

the application
2) Specific data or types of transactions are
created as test data
3) Test data is “traced” through all
processing steps of the application, and
a listing is produced of all lines of code
as executed (variables, results, etc.)

 Excellent means of debugging a

faculty program
Test Data: Pro’s and Cons

Pro’s Cons
– They employ white – Auditors must rely
box approach, thus on IS personnel to
providing explicit obtain a copy of the
application for
evidence
testing
– Audit evidence is not
– Can be employed entirely independent
with minimal – Provides static
disruption to picture of
operations application integrity
– Relatively high cost
– They require to implement,
auditing inefficiency
minimal computer
expertise on the
part of the auditors
Integrated Test Facility
 ITF is an automated technique that
allows auditors to test logic and
controls during normal operations
 Set up a dummy entity within the
application system
1) Set up a dummy entity within the
application system
2) System able to discriminate between ITF
audit module transactions and routine
transactions
3) Auditor analyzes ITF results against
expected results
Parallel Simulation
 Auditor writes or obtains a copy of
the program that simulates key
features or processes to be
reviewed / tested
1) Auditor gains a thorough
understanding of the application under
review
2) Auditor identifies those processes and
controls critical to the application
3) Auditor creates the simulation using
program or Generalized Audit Software
(GAS)
4) Auditor runs the simulated program
using selected data and files
5) Auditor evaluates results and reconciles
differences