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Questions and Answers
Real-time processing allows for immediate updates to corresponding files.
Real-time processing allows for immediate updates to corresponding files.
True
Only special purpose terminals can perform data validation in a database management system.
Only special purpose terminals can perform data validation in a database management system.
False
A database management system (DBMS) allows users to only read data from databases.
A database management system (DBMS) allows users to only read data from databases.
False
Batch processing is a form of online data entry.
Batch processing is a form of online data entry.
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Data dictionaries are used to describe the metadata in a database management system.
Data dictionaries are used to describe the metadata in a database management system.
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Computer Assisted Audit Techniques (CAAT) modify financial accounting software to suit specific systems.
Computer Assisted Audit Techniques (CAAT) modify financial accounting software to suit specific systems.
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CAATs do not allow for error identification and transaction segregation within accounts.
CAATs do not allow for error identification and transaction segregation within accounts.
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Using CAATs can lead to a decrease in the efficiency of an audit plan.
Using CAATs can lead to a decrease in the efficiency of an audit plan.
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Computer Assisted Sampling allows for the use of non-statistical sampling methods.
Computer Assisted Sampling allows for the use of non-statistical sampling methods.
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Report Generation via CAATs occurs only after data integrity is verified.
Report Generation via CAATs occurs only after data integrity is verified.
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Parallel simulation involves creating a duplicate program to test part of an application.
Parallel simulation involves creating a duplicate program to test part of an application.
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Integrated Test Facilities (ITF) involve establishing a mock department within an accounting system.
Integrated Test Facilities (ITF) involve establishing a mock department within an accounting system.
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Test data is used primarily for error detection and not for validation routines.
Test data is used primarily for error detection and not for validation routines.
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Utility programs are designed to compare two versions of a program and report differences to verify authorized changes.
Utility programs are designed to compare two versions of a program and report differences to verify authorized changes.
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A program code review does not require any specific programming skill or knowledge of program specification.
A program code review does not require any specific programming skill or knowledge of program specification.
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Data file interrogation involves techniques such as searching for duplicate transactions and comparing the contents of multiple files.
Data file interrogation involves techniques such as searching for duplicate transactions and comparing the contents of multiple files.
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An embedded audit module is an audit application that operates temporarily in the main processing system.
An embedded audit module is an audit application that operates temporarily in the main processing system.
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A stand-alone CIS can be connected to a network but does not require that connection for general use.
A stand-alone CIS can be connected to a network but does not require that connection for general use.
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All input data and processing in a stand-alone CIS occurs on the machine itself without external communication.
All input data and processing in a stand-alone CIS occurs on the machine itself without external communication.
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Embedded audit modules examine transactions after they are processed by the system.
Embedded audit modules examine transactions after they are processed by the system.
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The three types of CIS mentioned include stand alone, web-based, and database systems.
The three types of CIS mentioned include stand alone, web-based, and database systems.
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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.
