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Chapter 11 DQ 35 CAAT

Chapter 11 DQ 35 CAAT. Presented by: Diana Tai Ivan Chen Ronnie Lee Wilson Wong. Background. Client: Wholesale cosmetics distributor with an inventory of thousands of individual items Keep inventory in its own distribution centre and 2 public warehouses

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Chapter 11 DQ 35 CAAT

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  1. Chapter 11 DQ 35CAAT Presented by: Diana Tai Ivan Chen Ronnie Lee Wilson Wong

  2. Background Client: • Wholesale cosmetics distributor with an inventory of thousands of individual items • Keep inventory in its own distribution centre and 2 public warehouses • Inventory computer file is maintained on a computer disk

  3. Background Auditor: • A computer cartridge of the data on the inventory file on the date of the physical count • A general-purpose computer software package

  4. Scope of Audit Work Audit Procedure: • Planning/Compliance test/Substantive testing/Reporting Assumption: • Planning and Compliance test have performed and obtain satisfactory result • Focus will be on substantive testing on balance and transaction only

  5. Assumption • Collection of data is performed by auditor • Client maintain a sound and effective control on the accounting system after evaluation • Client maintain all record in computer format • Auditor is competence with CAAT

  6. Objective of substantive testing • Existence • Completeness • Ownership • Valuation • Accuracy • Identifying Unusual Items

  7. 1. Existence

  8. 1. Existence

  9. 2. Completeness

  10. 2. Completeness

  11. 3. Ownership

  12. 3. Ownership

  13. 3. Ownership

  14. 3. Ownership

  15. 4. Valuation

  16. 4. Valuation

  17. 4. Valuation

  18. 5. Accuracy

  19. 5. Accuracy

  20. 6. Unusual items

  21. 6. Unusual items

  22. Conclusion Advantage of CAAT: • Time saving • Accurate result is obtain • Objectivity in random sampling • Audit work done can easily transfer internationally to other branches when necessary

  23. Conclusion Limitation of CAAT: • Program compatibility of document format • Competence of Auditors Common concern of traditional and CAAT audit: • Evaluation of True and Fairness of inventory account is base on auditors’ professional judgment

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