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'''Computer Aided Audit Tools''' (CAATS), also known as '''Computer Assisted Audit Tools and Techniques''' (CAATTS), is a growing field within the audit profession. CAATSCAATTS is the practice of using computers to automate or simplify the audit process. In the broadest sense of the term, CAATSCAATTS can refer to any use of a computer during the audit. This would include utilizing basic software packages such as Excel, Microsoft Access, and even word processors. It practice, however, CAATSCAATTS has become synonymous with incorporating Data Analytics into the audit process. This is one of the emerging fields within the audit profession.
==Traditional Auditing vs CAATSCAATTS==
===Traditional Audit Example===
Another common criticism of the audit profession occurs after a problem emerges. Whenever a problem emerges within a department, management asks, "Where was audit." If audit had reviewed the area recently it becomes a sticky situation as the Audit Manager attempts to explain that the reason the problem wasn't identified was because the problem was outside of the scope of the audit. The Audit manager might also try to explain that the sample was "a statistically valid sample with a 95% confidence level." The Audit Committee doesn't care that the audit was conducted according to GAAS, they only care that a problem went unnoted by the audit department.
===CAATSCAATTS Alternative===
CAATSCAATTS addresses these problems. CAATSCAATTS, as it is commonly used, is the practice of analyzing large volumes of data looking for anomalies. A well designed CAATSCAATTS audit will not be a sample, but rather a complete review of all transactions. Using CAATSCAATTS 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 CAATSCAATTS the auditor can find invalid Social Security Numbers (SSN) by comparing the SSN to the issuing criteria of the Social Security Administration. The CAATSCAATTS auditor could also easily look for duplicate vendors or transactions. When such a duplicate is identified, they can approach management with the knowledge that they tested 100% of the transactions and that they identified 100% of the exceptions.
===Traditional Audit vs CAATSCAATTS on Specific Risks===
Another advantage of CAATSCAATTS 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 30-50.) They would then check to see 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. Even if one or two of those claims was for a date of service after the policy termination date, what does that tell the auditor?
Using CAATSCAATTS the auditor can select every claim that had a date of service after 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 failed. In a real life audit, the CAATSCAATTS auditor noted that a number of claims had been paid after policies were terminated. Using CAATSCAATTS 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 retroactively terminated, but the claim was still paid costing the company hundreds of thousands of dollars per year.
==Specialized Software==
In the most general terms, CAATSCAATTS 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 SAS, Excel, Access, Crystal Reports, Business Objects, etc. There are, however, two main companies that have developed specialized data analytic software specifically for auditors. They are [Audit Command Language] (ACL) and IDEA. More audit firms and departments use ACL than IDEA, but IDEA has been eroding ACL's user base.
Benefits of audit software include:
*Duplicate inquires.
==Other uses of CAATSCAATTS==
In addition to using data analysis software, the auditor utilizes CAATS throughout the audit for the following activities while performing data analysis:
*'''Fraud Detection'''
CAATSCAATTS provides 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.
CAATSCAATTS can assist the auditor in detecting fraud by performing and creating the following, respectively:
*'''Analytical Tests'''
== Note on the Acronyms CAATTS vs CAATS==
CAATTS and CAATS are used interchangeably,. butWhile CAATS has emerged as the more common spelling. , CAATTS, however, is probably the more precise acronymn. The acronymn CAATTS solves one of the two problems with whatdefining CAATS standsthe foracronym. CAATS means:
''C''omputer ''A''ided (or ''Assisted) ''A''udit ''T''ools (or ''T''techniques)
The first "A" and the "T" can have two different meanings depending on who uses the term. By using the term CAATTS, one is clearly referring toincoprorating both "Tools" AND "Techniques."
==='''CAATTS and Other BEASTS for Auditors''' by [[David Coderre]]===
'''CAATTS and Other BEASTS for Auditors''' by [[David Coderre]] is the seminal work on CAATTS. While David Coderre might not have coined the term CAATTS, this book entrenched the term in the language of the audit profession. Coderre attempts to differentiate the use of CAATTS for any computer program used to improve the audit with the acronym "BEASTS." BEASTS stands for, "Beneficial Electronic Audit Support Tools." While CAATTS has become a household term in audit units, BEASTS remains realatively unused. BEASTS includes electronic work papers, Microsoft suite of products, and non-analytical programs/applications.
==Web sites of selected audit software vendors==
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