CAATs and Audit Evidence in IS Audit
CAATs let you test the data itself. The evidence is only as good as the extract behind it.
Computer-assisted audit tools and techniques (CAATs) let the auditor read and test the entity's data directly instead of relying on printouts the entity prepared. In a GST-era ERP with lakhs of invoices a year, a CAAT can test the whole population for duplicates or gaps in a sequence in minutes, which no sample can match.
The flip side is evidence quality. Data you analyse is only as good as its extraction. SA 500 requires the auditor to evaluate whether information produced by the entity is reliable enough for the purpose, which in practice means confirming the extract is complete and accurate before you draw conclusions from it.
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The Three Types of CAATs
ICAI's Module 1 classification.
Generalised audit software (GAS)
What it is
Off-the-shelf packages built to read, select, sample, total, age and calculate data from many systems (the material names ACL and IDEA)
Example use
Duplicate-payment test across the vendor ledger; ageing of receivables
Specialised audit software
What it is
Written for a particular business or environment, by the auditee, the auditor or embedded in the application
Example use
Testing NPA classification in a bank; overnight deals in a forex system
Utility software
What it is
General tools in operating systems, databases and office suites, not built for audit
Example use
Comparing this year's file with last year's; SQL queries; spreadsheet analysis
| Type | What it is | Example use |
|---|---|---|
| Generalised audit software (GAS) | Off-the-shelf packages built to read, select, sample, total, age and calculate data from many systems (the material names ACL and IDEA) | Duplicate-payment test across the vendor ledger; ageing of receivables |
| Specialised audit software | Written for a particular business or environment, by the auditee, the auditor or embedded in the application | Testing NPA classification in a bank; overnight deals in a forex system |
| Utility software | General tools in operating systems, databases and office suites, not built for audit | Comparing this year's file with last year's; SQL queries; spreadsheet analysis |
Continuous Auditing Techniques
Embedded or concurrent techniques for systems that run round the clock, where period-end testing comes too late.
- Snapshot
- Captures images of a transaction at points as it moves through processing, producing an audit trail of how it was handled.
- Integrated test facility (ITF)
- Test transactions are run through the live system against dummy entities and the results compared with expectations. The dummy entries must be reversed afterwards because they sit in live data.
- SCARF (system control audit review file)
- Audit modules embedded in the application continuously log exceptions and policy variances to a file for the auditor.
- Audit hooks
- Embedded routines that flag selected suspicious transactions in real time so action can be taken quickly.
- Continuous and intermittent simulation (CIS)
- When a transaction meets set criteria, the audit routine simulates its processing and compares results.
What Makes IS Audit Evidence Reliable
The material's reliability ladder is the one CAs know from SA 500, applied to electronic records: evidence from independent sources beats internal evidence; evidence the auditor obtains directly beats evidence handed over; written beats oral; objective beats judgemental. A third-party confirmation outranks management's control self-assessment.
Two IS-specific points. Timing: some electronic data exists only for a limited period, so retention must be secured before fieldwork. Preservation: where fraud is suspected, work on a forensic image or copy, never the original, and keep a chain of custody showing who handled the evidence and when.
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Using a CAAT Without Compromising the Evidence
- 1
Fix the objective
Know the assertion or control you are testing before you request data.
- 2
Understand the data
Get the table structure and field definitions; know what each field means in the business.
- 3
Obtain a copy, not live access
Run tests on copies of the application files and keep them secure until conclusions are reviewed.
- 4
Reconcile the extract
Agree record counts and control totals to the system or the trial balance so you know the population is complete.
- 5
Run, investigate, conclude
Exceptions are leads, not findings. Follow each one to source before it reaches the report.
How the DISA Assessment Test Tests This
- check_circleMatching technique to need: in the material's own question, the tool most useful "when an audit trail is required" is the snapshot. ITF is for test transactions in live processing; audit hooks are for flagging selected transactions.
- check_circle"Which tool would detect duplicate invoice payments in the files?": generalised audit software, not ITF or statistical sampling.
- check_circle"Most reliable evidence": a third-party confirmation over management assurances or ratio analysis on management's reports.
- check_circleITF's known weakness: test data lands in live files and must be removed. Questions ask for the disadvantage.
FAQs
What are CAATs in auditing?expand_more
Computer-assisted audit tools and techniques: software and methods that let the auditor extract and analyse the entity's electronic data directly, from generalised audit software to embedded continuous-audit modules.
What is the difference between ITF and snapshot?expand_more
ITF pushes test transactions through the live system against dummy accounts to check processing. Snapshot records images of real transactions at points in processing to show how they were handled.
Can a CAAT replace sampling?expand_more
Often, for data tests. SA 500 lists selecting all items as a valid approach, and a CAAT makes 100% testing practical for large electronic populations. Judgement still decides what to test.
What is chain of custody in IS audit?expand_more
A documented record of who collected, held, transferred or examined a piece of evidence and when, so its integrity can be shown later, including in court.
Next steps
- Data Analyticsarrow_forward
- Audit Samplingarrow_forward
- Audit Trail & Logsarrow_forward
- IS Audit Processarrow_forward
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