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…..