Question

Using the Computer to Discover Intentional Financial Misstatements in Transactions and Account Balances. AMI International is a large office products company. Headquarters management imposed pressure on operating division managers to meet profit forecasts. The division managers met these profit goals using several accounting manipulations involving the record-keeping system that maintained all transactions and account balances on computer files. Employees who operated the computer accounting system were aware of the modifications of policy the managers ordered to accomplish the financial statement manipulations. The management and employees carried out these activities:

1.Deferred inventory write-downs for obsolete and damaged goods.

2.Kept open the sales entry system after the quarterly and annual cutoff dates, recording sales of goods shipped after the cutoff dates.

3.Recorded as sales transactions that had been coded as leases of office equipment.

4.Recorded shipments to branch offices as sales.

5.Postponed recording vendors’ invoices for parts and services until later, but the actual invoice date was faithfully entered according to accounting policy.

Required:

Describe one or more procedures that could be performed with CAATs to detect signs of each of these transaction manipulations. Limit your answer to the actual work accomplished by the computer software

Answer 1

Answer:-

Automated bookkeeping applications catch and produce voluminous measures of information that more often than not are accessible just on machine - lucid records. Computer Assisted Audit Techniques (CAATs) can be utilized to get to the information and sort out it into an arrangement helpful to the review team.Audit programming can be utilized to achieve various review systems.

Recalculations :

• The review programming can be utilized to test the exactness of customer calculations and to perform scientific methodology to assess the sensibility of record adjusts.

Confirmation:-

• Auditor can program factual or judgmental criteria for choosing client's records receivable,loans and other receivable for affirmation ,what's more ,the utilization of electronic affirmation by evaluator has prompted enhancements in both the adequacy and effectiveness of affirmation process.

Document examination (restrain):-

• Computer Assisted Audit Techniques (CAATs) can contrast review proof from other source with organization records effectively .
• The review proof must be changed over to machine coherent frame and after that contrasted with organization records on PC documents.

Scanning :-

• Auditor can utilize Computer Assisted Audit Techniques (CAATs)to analyze records to decide quality, culmination ,consistency and rightness .
• This is a modernized form of checking the records for exemptions to the inspectors criteria.

Analytical procedure:-

• Computer Assisted Audit techniques(CAATs) capacities can ,coordinate information in particular records to help remove the information important to make examinations among budgetary and non money related data .
• Computer Assisted Audit systems (CAATs) can be utilized to separate the information important to make the correlations with different organizations to same industry.

Fraud investigation :-

Computer Assisted Audit techniques(CAATs) can be utilized in assortment of approaches to look for false exercises.