CHAPTER 7
CAATTS FOR DATA EXTRACTION AND ANALYSIS
I.
Uses made of CAATTS by Auditors Include:
A.
Testing Application Controls by analyzing Data Produced by the Application
B.
Performing Substantive Tests such as:
1.
2.
3.
4.
5.
6.
C.
II.
Determining the Correct Value of Inventory
Determining the Accuracy of Prepayments and Accruals
Confirming Accounts Receivable With Client Customers
Searching for Unrecorded Liabilities
Reconciling Bank Accounts
Verify Additions to Fixed Assets
Categories of Data Extraction software
1.
Embedded Audit Modules (EAM)
2.
General Audit Software (GAS)
DATA STRUCTURES
Relates to the arrangement of data in files and data bases
A.
COMPONENTS
1.
ORGANIZATION
Relates to the way records are physically arranged.
Options include:
(a)
SEQUENTIAL STRUCTURE
All records in the file are placed in contiguous storage spaces in a
predetermined sequence. The application starts at the beginning
of the file and processes each record in sequence.
(b)
2.
RANDOM
ACCESS METHOD – Relates to techniques used to locate records and
move around within the data base or file.
Options Include:
(a)
Direct Access
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(b)
B.
Sequential Access
ALTERNATIVE STRUCTURES
1.
FLAT-FILE STRUCTURE
-Individual data files are not integrated with other files
-Data Processing is performed by stand alone rather than integrated
systems
(a)
Sequential Structure or Access Method
-All records in the file are in contiguous storage spaces in a
specified sequence (ascending or descending)
-Applications start at the beginning of the file and process each
record in sequence
-The sequential method is efficient for reading a complete record
or finding the next record in a file. For other operations it is not
very efficient.
(b)
Indexed Structure
Includes the actual data file and a separate index or file of record
addresses. The index contains a record of the disc storage
location of each record in the data file. The actual data file may
be organized either sequentially or randomly. (See illustration 72, page 254.)
Records in an indexed random file are spread throughout a disk
without regard for their actual location with respect to other
related records.
Indexed sequential access methods require routine batch
processing (i.e., little, if any, individual record processing.)
(c)
Indexed Structure
-The data file includes a separate index of the location of each
record
-May be either indexed random or indexed sequential access file
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(d)
Hashing Structure
-A mathematical procedure used to convert the primary key of a
record directly into a storage address (difficult)
(e)
Pointer Structures
-Pointers provide connections between records. They are used to
create linked-list files. The last record in the list contains an endof-file marker. There are three types of pointers:
-Physical address pointers--contains a specific address.
-Relative address pointers—contains the relative position of a
record in the file.
-Logical key pointer—contains the primary key of a related record
2.
HIERARCHICAL AND NETWORK DATABASE STRUCTURES
3.
RELATIONAL DATABASE STRUCTURES
4. USER VIEWS
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III
EMBEDDED AUDIT MODULE
A.
Used to identify important transactions while they are being processed.
1.
2.
IV.
An EAM captures predetermined transaction types for subsequent
analysis.
(a)
Specific dollar amount (threshold) for identified transaction types
and sets the EAM to capture those transactions.
(b)
Transactions equal to or greater than the threshold amount are
captured by the EAM.
Captured transactions are available to the auditor in real time, at period
end, or any time during the period.
B.
EAM’s are used primarily as techniques for substantive tests, however they can
also be used to perform control tests of transactions such as mathematical
calculations, completeness of all data, and posting to a predetermined correct
account.
C.
EAM.s also offer CPA firms an opportunity to perform control monitoring and
evaluation procedures on an interim basis and at remote locations.
D.
Disadvantages of EAMS
1.
Operational performance is decreased as the amount of testing increases.
2.
When there are frequent and significant client program changes, the
EAMS must also be changed and updated. Thus, there may be significant
costs to keep the EAM operating as planned.
GENERALIZED AUDIT SOFTWARE (GAS)
A.
Common uses of GAS
-Footing and balancing files or selected data items.
-Selecting and reporting data contained in files.
-Selecting statistical samples.
-Formatting reports of test results.
-Printing confirmations and other standard documents.
-Selecting data to include or exclude from reports.
-Comparing information in different files and identifying differences. (compare
names and account numbers on sales invoice files with an approved credit
customer list).
-Recalculating data fields
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B.
C.
Factors leading to popularity of GAS
1.
GAS languages are easy to use.
2
GAS can be used on mainframe and PC systems as well as portable
computers.
3.
Auditor’s can perform procedures independent of client’s staff.
4.
GAS can be used on data stored in most file structures and formats.
Using GAS to Access Simple Structures
Gaining access and examining flat-file structures is easy. The auditor can
then perform any number of procedures on the file. (Count, Stratify,
Classify, Age, Etc.)
D.
Using GAS with Complex Structures
The auditor will normally convert files from a complex system into flat
files. She may need to obtain assistance from client EDP personnel to
write a special program. This, of course, can be risky since the EDP
person knows a lot more about the system. Presently, many data based
management systems (DBMS) can reformat information into flat files.
This too has some risk.
THE END
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