1. Chapter Eight Using Computer Assisted Audit Tools and Techniques (CAATTs)

2. Two Categories of CAATTs • 1) Computer Assisted Audit Tools • 2) Computer Assisted Audit Techniques

3. Computer Assisted Audit Tools • Productivity Tools • Generalized Audit Software Tools

4. Productivity Tools • Include: • E-workpapers • Groupware • Time and billing software • Reference libraries • Document management

5. Generalized Audit Software Tools • Include: • ACL • Audit expert systems • Utility and statistical software

6. ACL • Widely used for data extraction and analysis • Allows for virtual 100% testing of client data

7. Computer Assisted Audit Techniques • CAATs to Validate Audit Techniques • Test desks • Integrated test facility • Parallel simulation • CAATs to Verify Data Integrity • Data extraction and analysis • Fraud detection • Continuous auditing techniques

8. 10 Steps to Using CAATs • 1. Set key audit objectives • 2. Identify CAATs to be used • 3. Identify which data files are needed • 4. Determine which format you need • 5. Request files from client in preferred format • 6. Import data into ACL

9. 10 Steps (Con’t) • 7. Use CAATs to verify the data import process • 8. Perform other CAATs • 9. Investigate and reconcile exceptions • 10. Document results in workpapers

10. CAATs to Detect Fraud • Digital analysis • Benford’s Law for a series of naturally occurring numbers • Deals with expected frequency of first digits • Exponential distribution • Requires large sample size