CAATS & ADA

CAATS (Computerised Assisted Audit Techniques)

It is the application of audit procedures using computer as an audit tool.
NOTE:- The overall objective and scope of the audit do not change when the
audit is conducted in a computerised environment. However, the application of
audit procedures may requires the auditor to consider techniques that use the
computer as an audit tool.

CAATS

Test Data

CAATS and ADA 1 By:- Haris Hanif

Audit Software

CAATS and ADA 2 By:- Haris Hanif

Advantages of CAATS
- Larger number of items can be tested quickly and accurately and giving
assurance to the auditor.

- CAATS can be used in multiple clients for the smooth audit.

- There may be digital security to protect the details of the client’s records.

- CAATS facilitates both testing general as well as application controls.

- Auditor can test the transactions like from where it was originated in the
system rather than relying on the paper records which may be incorrect or
manipulated.

Drawbacks of CAATS
- Initial setup of CAATS may be time consuming and expensive for the audit
firm.

- Audit staff might not be well trained and that firm needs to train them and
hence training cost would have to borne by the firm.

- The system of particular client may not be compatible/supportive with

CAATS.

- Any negligency by the audit team may affect the client’s system like lost or
corruption of data, while using the CAATS.

CAATS and ADA 3 By:- Haris Hanif

DATA and BIG DATA

BIG DATA

CAATS and ADA 4 By:- Haris Hanif

NOTE:-

CAATS and ADA 5 By:- Haris Hanif

AUDIT DATA ANALYTICS (ADA)
It is a process of analysing the past data through inspection, extraction, filtering
and selecting the relevant data in order to make a pattern, deviations,
consistencies, inconsistencies, anomalies.
Audit firms use the data analytics to understand the client, performing
preliminary analytical procedures, performing TOC and substantive testing,
sampling and concluding the evidences.

How the Auditor can use Data Analytics

- Understanding the client, its nature of business, S.O.P.s, financial
statements, controls.

- Developing the expectations (by auditor) and comparing the reported

figures by client and investigate the significant variance.

- Compare the performance of client with the similar competitors in the

market to ascertain any kind of manipulation.

- Analyse the accounting figures, like aged receivable and ascertaining

the reasonableness of the provisions made for doubtful debt.

- Analysing the sales and purchase pattern for the trend of slow moving
inventory and consider whether it needs to be written off.

- Analysing the cash flows for the routes of money trail for any hint of
money laundering.

CAATS and ADA 6 By:- Haris Hanif

Data Analytics and Audit Quality
- Large sample

- More procedures can be performed and more evidences.

- Quick performing the audit procedures and low D.R.

- Detailed information analysis.

- Appropriate opinion.

- Can be used in the future audit (recurring audit)

Limitations of Data Analytics

- Time consuming to train the audit staff.

- Training cost.

- CAATs development.

- Any technical error by the audit firm may lead to loss or corruption of
client’s data.

- Issue of IT security

CAATS and ADA 7 By:- Haris Hanif