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THE USE OF COMPUTER AS AN AUDIT TOOL (to perform various audit tasks),…

- - - - Capacity to track large volume
      - Eliminate manual casting, cross casting
      - Time can be saved
      - The time to review and finalize can be reduced
      - The auditor does not necessarily have to be present at client office
      - Lesser manual procedures
  - - - Audit Software
        
        Types of Audit Software
        
        Package Programs or Generalized Audit Software (GAS)
        
        A generalized computer program designed to perform data processing functions such as read and extract data from an entity’s computer files or database for further audit testing, perform calculations, select samples and provide reports.
        For example, the application of the package program on Account Receivables.
        1st step: Set audit objectives, i.e. to test the accuracy of AR, select sample for confirmation, and print out the confirmation and monthly statement of the selected sample.
        2nd Step: Design the application, i.e. identify data and design format of confirmation.
        3rd Step: Ensure package program able to read data
        4th Step: Process the application, i.e. access the entity’s AR database with package program. The program will process automatically according to the instruction
        5th Step: Evaluate the result. i.e. verify output, review confirmation letter and monthly statement and sent a confirmation.
        
        Written Programs or Custom Audit Software
        
        A written program is audit software written by the auditors for specific audit tasks
        Necessary when the entity’s CIS system is not compatible with Generalised Audit Software.
        It is good to develop if the auditor can use it for other audit engagements in the future.
        It is expensive and takes a longer time to develop and need modification for every time an entity’s changes their system.
        An auditor may need an IT expert to help in developing the program.
        
        Typical testing include of
        
        Conducting new calculations and analyses – e.g. obtain an analysis of static and slow-moving stocks
        
        Selecting items for audit testing – e.g. obtain the sample to sent confirmation.
        
        Detecting violation of system rules – e.g. the program checks all accounts on sales ledger to ensure that no customer has a balance above the credit limit
        
        Completeness checks – e.g. checking continuity of sales invoices to ensure they are all accounted for.
        
        Calculation checks, check addition, select high value, negative value
        
        Detecting unreasonable items – e.g. check that no customers are allowed trade discount of more than 50%
      - Test Data
        
        The auditor uses test data primarily for testing the application controls in the entity’s computer programmes.
        E.g. auditor creates a set of simulated data which include both valid data and invalid data. Then, the auditor manually calculates the result from the simulated data.
        With the simulation data entered into the entity’s computer program, the valid data should be properly processed and invalid data should be identified as error. The results are compared to the auditor’s predetermined result.
        Another e.g. unauthorised password may be used in an attempt to gain entry, transaction with incorrect coding and transaction with non-existing customer or suppliers. These to ensure that the system is properly rejects invalid transactions.