computerized accounting and auditing techniques (caat)

S. Y. BAF(IV SEMESTER)

Information Technology

Presented

By……………Rikesh Chaurasia –

807Ekta Chheda – 808

COMPUTERISED ACCOUNTING AUDITING TECHNOLOGY

CAATTs is a growing field within the accounting audit profession.

CAATs is the practice of using computers to automate the accounting and audit processes.

CAATs normally includes using basic office productivity software such as spreadsheet, word processors and text editing programs and more advanced software packages involves use statistical analysis and business intelligence tools.

Traditional Accounting and Auditing exampleThe traditional method of accounting and auditing,

allows auditors to build conclusions based upon a limited sample of a population, rather than an examination of all available or a large sample of data.

The use of small samples may diminish the validity of accounting and audit conclusions.

Management realizes that they conduct thousands or perhaps millions of transactions a year and the auditor only sampled a handful.

CAAT’s AlternativeCAATs, as it is commonly used, is the practice of

analyzing large volumes of data .

Using CAATs the auditor will extract every transaction the business unit performed during the period reviewed.

The auditor will then test that data, to determine if there are any problems in the data.

For example, using CAATs the auditor can find invalid Social Security Numbers (SSN) by comparing the SSN to the issuing criteria of the social security administration.

Specialized SoftwareIn the most general terms, CAATTs can refer to any

computer program utilized to improve the audit process.

Generally, however, it is used to refer to any data extraction and analysis software.

This would include programs such as spreadsheets (e.g. Excel), databases (e.g. Access), statistical analysis (e.g. SAS), business intelligence (e.g. Crystal Reports and Business Objects), etc.

Other uses of CAATs

Creation of electronic work papers

Fraud detection

Analytical tests

Data analysis reports

Computerized AccountingFinancial reports are automatically generated at the

end of accounting year.

The computerized accounting eliminates paper work making it easier and faster to collect.

A Computerized Accounting System is now a basic necessity and no longer a luxury among businesses of whatever orientation and size.

In the past, accounting was done manually by business owners and that process was time consuming.

Why Do You Need To Computerize Accounting Process?

Over the centuries, traditional way to keep accounts was to use calculators, pen and set of paper books which was time consuming.

But with today's changing world and computerization are widely used, there seems no need to have to take the manual way.

The computer system should be able to perform these basic tasks in a flash and keep you up to date.

By this, you will increase efficiency and accuracy that eventually lead to saving time and money.  

Advantages of Computerized Accounting

Automatic document production

Accuracy

Up-to-date information

Staff motivation 

Speed

Disadvantages of Computerised Accounting

Cost

Difficulty

Fraud

Additional software

Training

Computerized AuditingInternal Auditors are advising organizations on

internal control attributes and ways to gain assurance from information.

Internal Audit groups faced with growing workloads

Audit technology tools facilitate more granular analysis of data and help to determine the accuracy of the information.

An IT audit should not be confused with a financial statement audit.

A financial audit's primary purpose is to evaluate whether an organization is adhering to standard accounting practices.

The primary functions of an IT audit are to evaluate the system's efficiency and security protocols.

Scope Of Computerized Auditing

Procedures For Computerized Auditing

Preparation for computer processing

Preparation of a check list

Data processing

Audit MethodsTest-data method

Detailed examination of selected programs and reprocessing of selected data with these programs

Use of general-purpose programs

Advantages of Auditing TechniquesExamination of data is more rapid

Examination of data is more accurate

The only practical method of examining large amounts of data

Provides new opportunities to the auditor

Disadvantages of Auditing Techniques

Can be expensive to set up or acquire.

Some technical knowledge is required.

A variety of programming languages is used in business.

Standard computer audit programs may not be compatible.

Audit Through ComputersAuditing around the computer is one of the

methods used to test or evaluate a PC or Mac.

It involves grabbing random chunks of data, and then executing or testing them to see what output is given.

Auditing around the computer is an excellent way to tell if there is an overall PC problem.

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.

Thank You…..