Substantive Testing
Computer Assisted Audit
Tools and Techniques
Management Assertions,
Audit Objectives and
Audit Procedures
Auditing the Revenue
Cycle
Auditing the Expenditure
Cycle
Auditing the Financial
Statement Accounts
Computer Assisted Audit
Tools and Techniques
Other CAATs
Test Data
Auditor prepares fictitious
transaction which is
processed by the entity’s
computer program. The
auditor then compares
the processing results
with is predetermined
output.
Objective: Determine
whether the client’s
computer program can
correctly handle valid
and invalid conditions
as they arise.
Disadvantage:
No
assurance that the
program tested is the
same program used by
the client
Integrated Test
Facility (ITF)
Auditor creates fictitious
data that is integrated in the
actual processing of ordinary
transaction without the
knowledge
of
the
management. The resultant
output is then compared to
the predetermined results to
evaluate the reliability of the
client’s program.
Objective: To overcome
the disadvantage of the
test of data technique.
Parallel Simulation
Snapshots
Auditor write a program that
simulates key features or
processes of the program
under review which is then
used to reprocess transactions
that
were
previously
processed by the client’s
program. The results obtained
from simulation is compared
with the client’s output.
Involves taking a picture of
a transaction as it flows
through the computer
systems.
Systems Control
Audit Review Files
(SCARF)
Involves embedding audit
software modules within
an application system to
provide
continuous
monitoring
of
the
systems transactions.
Management Assertions, Audit
Objectives and Audit Procedures
Management Assertions
Assets or liabilities of the
company exist at a given
date,
and
recorded
transactions have occurred
during a given period.
Existence/Occurrence
Completeness
Rights/Obligations
Valuation/Allocation
Presentation/Disclosure
Audit Procedures
Audit Objectives
All
transactions
and
accounts that should be
presented in the financial
statements are so included.
The company holds or
controls rights to the assets,
and liabilities are obligations
of the company at a given
date.
Asset, liability, equity, revenue,
and expense components have
been included in the financial
statements at appropriate
amounts.
The components of the
financial statements are
properly
classified,
described, and disclosed.
Inspection
Observation
Inquiry
Confirmation
Recalculation
Reperformance
Analytical
Procedure
Auditing the Revenue
Cycle
Audit Procedure
Analytical procedures,
inspection, vouching,
inquiry, confirmation
Analytical procedures,
tracing,
inspection,
inquiry, confirmation
Inspection,
tracing
inquiry, confirmation
Analytical procedures,
observation, inspection
recalculation, , inquiry,
confirmation
Inquiry, inspection
Auditing the Expenditure
Cycle
Auditing the Financial
Statement Accounts