Page 91 - CA Inter Audit PARAM

CA Ravi Taori
➢ The shortcut to remember features of automated environment
• LIC FLASH policy has many automatic features.
➢ Text in ITALICS are examples by author for better understanding of answer.
➢ In second question no need to include features of automated environment.

QNO Principals of Automated Environment- Old Course -- (M18M/M19M)
AAE.05 Bhaskar CNO- AAE.020
The fundamental principle of an automated environment is the ability to carry out business with less

manual intervention and more system driven.
Answer ➢ The fundamental principle of an automated environment is the ability to carry out business with less
manual intervention and more system driven. The complexity of a business environment depends
on the level of automation i.e., if a business environment is more automated, it is likely to be more
complex. (Automated Environment = Less Manual Involvement = More Automation = More
Complexity)

➢ Example to support above paragraph
If a company uses an integrated enterprise resource planning system (ERP) viz., SAP, Oracle etc., then
it is considered more complex to audit. On the other hand, if a company is using an off-the-shelf
accounting software, then it is likely to be less automated and hence less complex environment.
Author’s Note
➢ Text in ITALICS are examples by author for better understanding of answer
➢ This answer is also covered in AAE.01

QNO Important IT related terms in brief- #Unique Old Course -- (M20M/SM20/SM21/N22M/M23R)
AAE.07
With respect to audit in an automated environment, explain the following: (any four)

(i) CAATs (ii) Data Analytics (iii) Database (iv) Information Systems (v) Privileged access
Answer (i) CAATs:
Short form for Computer Assisted Audit Techniques, are a collection of computer-based tools and

techniques that are used in an audit for analysing data in electronic form to obtain audit evidence.

(ii) Data Analytics:
A combination of processes, tools and techniques that are used to tap vast amounts of electronic data
to obtain meaningful information

(iii) Database:
A logical subsystem within a larger information system where electronic data is stored in a predefined
form and retrieved for use.

(iv) Information Systems:
Refers to a collection of electronic hardware, software, networks and processes that are used in a
business to carry out operations and transactions.

(v) Privileged access:
A type of super user access to information systems that enforces less or no limits on using that system.

QNO Important IT related terms in brief #Unique Old Course -- (M22R/M23M/N23M)
AAE.
07.50
With respect to audit in an automated environment, explain the following:
(i) Applications
(ii) Automated

(iii) CAATs
(iv) Data Processing
(v) General (IT) Controls
Answer (i) Applications: These are computer software programs that provide a medium for recording, storage and

retrieval of business operations or transactions in electronic format.
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