Question

Research, list and explain at least five advantages and five disadvantages of using CAATs

Answer 1

Answer :-

1) Computer assisted audit techniques refers to those Auditing techniques that take assistance of a computer for being applied to an audit in a computer environment.

2) CAATs can be used for both compliance and substantive testing. CAATs may be used in performing various Auditing procedures like,

i) Test of details of transaction and balances

ii) Analytical review procedure

iii) Sampling program

iv) Compliance test of Genral IT controls

v) CAATs can also used in fraud detection

3) There are two broad categories of CAAT:

i) Audit software

ii) Test data

4) Advantages of CAATs

a) Independently access the data stored on a computer system without dependence on the client.

b) Test the reliability of client software.

c) Increase the accuracy of audit tests

d) Perform audit tests more efficiently

e) The system should be simple to use.

Disadvantages of CAATs

a) CAATs can be expensive and time consuming to set up.

b) Client permission and cooperation may be difficult to obtain.

c) Potential incompatibility with the client's computer system.

d) The audit team may not have sufficient IT skills.

e) The audit team may not have the knowledge or training needed to understand the results of the CAATs.

f) Data may be corrupted or lost during the application of CAATs.

Thank you.