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CAAT requirement in EDP audit.

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CAAT requirement in EDP audit.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 answered

Test programmed controls: in a computer based accounting system, there are large volume of transactions which the auditor will have to audit. The auditor will have to check if the programmed controls are functioning correctly. The only effective way of testing programmed controls is through CAAT. **Test on large volume of data****: CAAT enable auditors to test large amount of data quickly and accurately and therefore increase the confidence they have in their opinion.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 answered

CAAT Requirement for EDP Audit: ------------------------------- Auditing in an EDP environment poses the following problems: - Absence of Input documents - Lack of visible transaction trail - Lack of visible output - Ease of access to data and computer programs Hence, to deal with these situations in an EDP environment; CAAT procedures can be beneficial in the following ways- 1. **Test programmed controls:** in a computer based accounting system, there are large volume of transactions which the auditor will have to audit. The auditor will have to check if the programmed controls are functioning correctly. The only effective way of testing programmed controls is through CAAT. 2. **Test on large volume of data****: CAAT enable auditors to test large amount of data quickly and accurately and therefore increase the confidence they have in their opinion. 3. **Test on source location of data**: CAAT enables auditors to test the accounting systems and its records (e.g. disk files) at its source location rather than testing the printouts of what they believe to be a copy of those records. 4. **Cost effective**: once set up CAAT are likely to be cost effective way of obtaining audit evidence year after year provided that the client does not change the accounting system regularly. 5. **Comparison**: allows results from using CAAT to be compared to traditional testing. Where the two results agree this increase the overall audit confidence.

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