CAATs Overview and Advantages
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Questions and Answers

Real-time processing allows for immediate updates to corresponding files.

True (A)

Only special purpose terminals can perform data validation in a database management system.

False (B)

A database management system (DBMS) allows users to only read data from databases.

False (B)

Batch processing is a form of online data entry.

<p>True (A)</p> Signup and view all the answers

Data dictionaries are used to describe the metadata in a database management system.

<p>True (A)</p> Signup and view all the answers

Computer Assisted Audit Techniques (CAAT) modify financial accounting software to suit specific systems.

<p>True (A)</p> Signup and view all the answers

CAATs do not allow for error identification and transaction segregation within accounts.

<p>False (B)</p> Signup and view all the answers

Using CAATs can lead to a decrease in the efficiency of an audit plan.

<p>False (B)</p> Signup and view all the answers

Computer Assisted Sampling allows for the use of non-statistical sampling methods.

<p>False (B)</p> Signup and view all the answers

Report Generation via CAATs occurs only after data integrity is verified.

<p>True (A)</p> Signup and view all the answers

Parallel simulation involves creating a duplicate program to test part of an application.

<p>True (A)</p> Signup and view all the answers

Integrated Test Facilities (ITF) involve establishing a mock department within an accounting system.

<p>True (A)</p> Signup and view all the answers

Test data is used primarily for error detection and not for validation routines.

<p>False (B)</p> Signup and view all the answers

Utility programs are designed to compare two versions of a program and report differences to verify authorized changes.

<p>True (A)</p> Signup and view all the answers

A program code review does not require any specific programming skill or knowledge of program specification.

<p>False (B)</p> Signup and view all the answers

Data file interrogation involves techniques such as searching for duplicate transactions and comparing the contents of multiple files.

<p>True (A)</p> Signup and view all the answers

An embedded audit module is an audit application that operates temporarily in the main processing system.

<p>False (B)</p> Signup and view all the answers

A stand-alone CIS can be connected to a network but does not require that connection for general use.

<p>True (A)</p> Signup and view all the answers

All input data and processing in a stand-alone CIS occurs on the machine itself without external communication.

<p>True (A)</p> Signup and view all the answers

Embedded audit modules examine transactions after they are processed by the system.

<p>False (B)</p> Signup and view all the answers

The three types of CIS mentioned include stand alone, web-based, and database systems.

<p>False (B)</p> Signup and view all the answers

Flashcards

Online CIS

A system where devices are connected through a network for real-time transaction processing, updating files instantly, and allowing direct access to data and programs through terminals.

Database Management System (DBMS)

Software that allows users to interact with databases, define, create, maintain, and control access to them.

Online System Types

Real-time data processing, or online data entry; Online data entry / batch processing.

Types of Terminals (Online CIS)

General-purpose terminals (like keyboards/screens), intelligent terminals (process data), microcomputers, special-purpose terminals (POS, ATMs, voice response systems).

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Database System Functions

Data storage, retrieval, and updating; user access to metadata; support during transactions, recovery, authorization, and access from remote locations; enforcement of rules within the data itself.

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CAATs

Computer-Assisted Audit Techniques are methods using financial software to analyze data during an audit.

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CAAT Advantages

CAATs save time, maintain accuracy, allow adjustments easily, and provide earlier audit planning.

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Computer Assisted Sampling

Using random sampling for audit data, often more accurate, and efficient than other methods.

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File Management (CAAT)

Computerized techniques combine, compare, manage, and segregate files in accounting systems.

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Report Generation (CAAT)

CAATs produce reports from complete data sets, once data integrity is verified.

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Test Data (CAAT)

Test data verifies input validation, error detection, processing, and report accuracy during audit testing.

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Integrated Test Facility (ITF)

ITF is a built-in testing facility creating dummy departments or companies to test accounting systems.

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Parallel Simulation

Using a separate program to simulate a part of an application system for auditing purposes.

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Utility Programs for Program Comparison

Software that compares two versions of a program to identify differences, ensuring only authorized changes have been made.

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Program Code Review

A thorough examination of program code, requiring programming skill and a deep understanding of program specifications.

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Data File Interrogation

Using software to examine computer files, selecting records based on criteria, printing totals/subtotals, identifying value bands, duplicates, gaps in sequences, or comparing files.

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Embedded Audit Modules

Audit applications permanently within processing systems, examining each transaction upon entry based on predefined criteria.

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Stand-Alone CIS

A computer system not connected to or communicating with other systems. All processing happens on the machine itself.

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Data File Interrogation Techniques

Methods used to review data held in computer files, such as selecting, printing, summarizing, comparing, and sorting/merging records.

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Database System

A system that organizes and manages large amounts of data electronically by using computerized files.

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Study Notes

Computer Assisted Audit Techniques (CAATs) Overview

  • CAATs use standard financial accounting software, modified as needed for specific systems
  • Information requested and analyzed is similar to a traditional audit
  • Verified data using computer techniques is retained for use in other audit areas, such as error identification and transaction segregation
  • Customized reports are generated by the computer, and a standard audit trail is maintained

Advantages of Using CAATs

  • Saves time without sacrificing quality or accuracy
  • Data analysis is focused, allowing for easy adjustments with minimal effort
  • Preliminary data can be analyzed early in the audit process, leading to a more efficient audit plan

Specific Areas CAATs are Useful

  • Sampling: Enables random statistical sampling, often more accurate and time-saving than other methods
  • File Management: Combines, compares, manages, segregates, and orders files automatically using accepted computerized file management
  • Report Generation: Produces various reliable reports from the overall data population once data integrity is verified
  • Commonly Used Compliance Testing Techniques: Includes test data, integrated test facilities (ITF), parallel simulation, program code comparison, and program code review

Test Data

  • Used to verify input validation routines, error detection capabilities, processing logic, and report accuracy

Integrated Test Facilities (ITF)

  • Creates a dummy department or company within the accounting system for in-built testing

Parallel Simulation

  • An independent program simulates part of an application

Program Code Comparison

  • Utility programs compare two program versions and report differences, ensuring authorized changes only

Program Code Review

  • A detailed examination of program coding, requiring programming skill and a thorough understanding of program specifications

Commonly Used Substantive Testing Techniques

  • Data File Interrogation:
    • Selects records based on specific criteria
    • Prints selected records for detailed examination
    • Prints totals and subtotals from an accounting file
    • Reports on file contents by value bands
    • Searches for duplicate transactions
    • Searches for gaps in sequences
    • Compares contents of files, printing matches or exceptions
    • Sorts and merges files
  • Embedded Audit Modules:
    • An audit application permanently resident within the main processing system
    • Examines each transaction as it enters the system based on pre-defined criteria before further processing

Types of CIS

  • Stand Alone:
    • Not connected to other computer systems
    • Computing is done by one individual at a time
    • All input and processing occur on a single machine
    • Can be a desktop or laptop computer, used independently without LAN or WAN connections
  • On-Line:
    • Connected to a network for real-time transaction processing
    • Immediately updates corresponding files
    • Enables user access to data and programs directly through terminal devices
    • Terminal devices include general-purpose (keyboard/screen, intelligent terminals) and special-purpose (POS, ATMs, voice response systems)
    • Online systems can be categorized as real-time data entry/processing, or online entry/batch processing
  • Database System:
    • Uses a DBMS (Database Management System) for accessing data
    • Allows users to interact with one or more databases
    • Provides access to all data within the database
    • DBMS is a software system that enables users to define, create, maintain, and control database access
    • DBMS functionality includes data storage, retrieval, and updating, user access to catalogs/data dictionaries, transaction/concurrency support, and database recovery facilities

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Description

Explore the fundamental concepts of Computer Assisted Audit Techniques (CAATs) and their significant advantages in the auditing process. Learn how CAATs enhance efficiency through focused data analysis and early preliminary assessments, while facilitating better sampling and file management. This quiz is essential for those looking to understand modern auditing techniques.

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