Page 242 - CA Final PARAM Digital Book.

Part 1- Digital Auditing & Assurance

QNO Advantages of Auditing Digitally New Course – (SM23)
DAA.100 TITANIUM CNO -- DAA.020
Briefly describe the advantages and challenges of Auditing digitally

Answer Advantages of Digital Audit (Actually it is advantages of auditing digitally)
(Shortcut -- Quality CARE)
Better Audit Quality: Technology's ability to evaluate large volumes of data quickly enhances audit quality by
identifying areas requiring more testing, reducing the risk of overlooked misstatements or issues.
Lower Costs Automation of previously manual processes reduces the time and cost of auditing.
Better Analytics: Advanced analytics capabilities enable management and auditors to identify trends and
patterns, such as potential fraud, which are difficult to detect manually.
Improved Risk Assessment: Automation aids in the audit process and streamlines testing, improving risk
assessment. This allows management and auditors to focus on areas with a higher risk of material
misstatement and make informed decisions.
Enhanced Effectiveness & Efficiency: Digital audit tools and automation techniques standardize processes
and automate routine tasks, such as reconciliation, saving time and costs.

Challenges -
Reluctance to change, challenges with data security and governance, choosing the right tool and automating
the right process, ensuring standardisation and correct configurations to avoid error and bias, evaluating
business benefits the organization wants to achieve with automation and the roadmap for digital strategy.

QNO Stages In Understanding the IT environment. New Course – (SM23)
DAA.200 TITANIUM CNO -- DAA.080

What are the stages involved in understanding the IT environment and what key considerations auditor
should consider?
Answer The stages involved in understanding of IT environment are: Understand – Identify – Assess.

Key Areas for an Auditor to Understand IT Environment
(Shortcut: FAST & Complex)
1. Understand the Flow of transaction: Understand the specific IT applications and aspects related to
transaction flows and information processing. Recognize how program changes or database alterations affect
these flows.
2.Identification of Manual and Automated Controls: Recognize the blend of manual and automated
components in an entity's internal control. These characteristics impact the auditor's risk assessment of
material misstatements.
3. Identification of Significant Systems: Recognize IT applications and infrastructure in relation to the flow of
significant transaction information within the entity's system.
4. Identification of the Technologies used: Comprehend emerging technologies and their role in financial
reporting. Evaluate risks from their use and consider involving experts. Emerging technologies include:
- Blockchain (e.g., token issuers, exchanges)
- Robotics
- Artificial Intelligence
- Internet of Things
- Biometrics
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