Computer-aided audit tools: Difference between revisions

Revision as of 19:36, 17 January 2022

Revision as of 11:20, 10 March 2022

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{{Essay-like|article|date=August 2009}}

'''Computer-assisted audit tool''' (CAATs) or '''computer-assisted audit tools and techniques''' (CAATs) is a growing field within the IT audit profession. CAATs is the practice of using computers to automate the IT audit processes. CAATs normally includesinclude using basic office [[productivity software]] such as [[spreadsheet]], [[word processors]] and text editing programs and more advanced software packages involving use [[statistical analysis]] and [[business intelligence]] tools. But also more dedicated [[#Specialized software|specialized software]] are available (see below).

CAATs have become synonymous with [[data analytics]] in the audit process.

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===CAATTs alternative===

CAATTs, not CAATs, addresses these problems. CAATTs, as it is commonly used, is the practice of analyzing large volumes of data looking for anomalies. A well -designed CAATTs audit will not be a sample, but rather a complete review of all transactions. Using CAATTs 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.

===Traditional audit vs CAATTs on specific risks===

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Another advantage of CAATTs is that it allows auditors to test for specific risks. For example, an insurance company may want to ensure that it doesn't pay any claims after a policy is terminated. Using traditional audit techniques this risk would be very difficult to test. The auditor would "randomly select" a "statistically valid" sample of claims (usually e if any of those claims were processed after a policy was terminated. Since the insurance company might process millions of claims the odds that any of those 30–50 "randomly selected" claims occurred after the policy was terminated is extremely unlikely.

Using CAATTs the auditor can select every claim that had a date of service after the policy termination date. The auditor then can determine if any claims were inappropriately paid. If they were, the auditor can then figure out why the controls to prevent this failedfailure. In a real -life audit, the CAATTs auditor noted that a number ofseveral claims had been paid after policies were terminated. Using CAATTs the auditor was able to identify every claim that was paid and the exact dollar amount incorrectly paid by the insurance company. Furthermore, the auditor was able to identify the reason why these claims were paid. The reason why they were paid was because the participant paid their premium. The insurance company, having received a payment, paid the claims. Then after paying the claim the participant's check bounced. When the check bounced, the participant's policy was retrospectively terminated, but the claim was still paid costing the company hundreds of thousands of dollars per year.

Which looks better in an audit report:

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"Audit used CAATTs and tested every transaction over the past year. We noted XXX exceptions wherein the company paid YYY dollars on terminated policies."

However, the CAATTs driven review is limited only to the data saved on files in accordance with a systematic pattern. Much data is never documented this way. In addition saved data often contains deficiencies, is poorly classified, is not easy to get, and it might be hard to become convinced about its integrity. So, for the present CAATTs is a complement to an auditor's tools and techniques. In certain audits, CAATTs can't be used at all. But there are also audits whichthat simply can't be made with due care and efficiently without CAATTs.

==Specialized software==

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===CAATs Courses===

CAATs isare the fundamental tool whichthat is used by the auditors. This tool facilitates them to make search from the irregularities from the given data. With the help of this tool, the auditors and accountantaccountants of any firm will be able to provide more analytical results. These tools are used throughout every business environment and also in the industry sectors too. With the help of computer-assisted audit techniques, more forensic accounting with more analysis can be done. It’s really a helpful tool that helps the firm auditor to work in an efficient and productive manner. Working with the CAATs, it is essential for the accountant or the auditor to select the right data, the selection process is very much tricky, and you need to be professional for it. After selecting the right data, import that to the CAATs, now the tool will automatically generate the analytical data. This tool really contributes to the efficiency of the auditors. The fundamental course outline <ref>International Computer Auditing Education Association (ICAEA), "CAATs (Computer Assisted Audit Techniques) Courses", {{cite web |url=http://www.iacae.org/English/Training/CAATs_Courses.php |title=Archived copy |accessdate=2015-02-26 |url-status=dead |archiveurl=https://web.archive.org/web/20150205182521/http://www.iacae.org/English/Training/CAATs_Courses.php |archivedate=2015-02-05 }}</ref> include:

* Computer Auditing Overview

* Legal and Ethical Issues for Computer Auditors

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===Fraud detection===

CAATs providesprovide auditors with tools that can identify unexpected or unexplained patterns in data that may indicate fraud. Whether the CAATs is simple or complex, data analysis provides many benefits in the prevention and detection of fraud.

CAATs can assist the auditor in detecting fraud by performing and creating the following,

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#'''Sort field''': Specifies whether the product supports sorting (indexing) by a specific field (column). Sorting helps identifying blank/empty values or excessive (out-of-band) values.

#'''Sort multiple fields''': Specifies whether the product supports sorting by multiple fields (columns).

#'''Statistics''': Specifies whether the product supports calculation and presentation of various statistics on a specific field (e.g., for the values of a numeric fields valuesfield such as a total number of positive numbers, total number negative numbers, average value (balance), etc.)

#'''Stratification''': Specifies whether the product supports [[Data stratification|stratification]] on number (amount) values in specified intervals. Splits the population into strata (intervals) and aggregates (summarizes) values. Can be used to find largest, smallest and average amount transactions (rows).

#'''Total row''': Specifies whether the products supports displaying a total row for the table/file, e.g. accumulated numerical value.