Page 98 - CA Inter Audit PARAM

CA Ravi Taori
o Assertions being addressed, etc
The auditor should document the nature of test (or combination of tests) applied along with the
judgements in the audit file as required by SA 230.

➢ Further elaboration of methods / application of methods

When testing in an automated environment, some of the more common methods are as follows:
• Inquiry Combinations
• Obtain an understanding of how an automated transaction is processed by doing a
walkthrough of one end-to-end transaction using a combination of inquiry,
observation and inspection.

• Observation
• Observe how a user processes transaction under different scenarios.
• Carry out a test check (negative testing) and observe the error message displayed by
the application.

• Inspection
• Inspect technical manual / user manual of systems and applications.
• Inspect the configuration defined in an application.
• Inspect the system logs to determine any changes made since last audit testing.

• Reperformance
• Conduct reperformance using raw source data and independently applying formulae,
business rules or validations on the source data using CAATs.

QNO Uses of Data Analytics- Old Course -- (M19M/M20R/N20M/N20E/M21R/N23M/M23E)
AAE.40 Bhaskar CNO- AAE.240 New Course – (SM25/S24R)
In today’s digital age when companies rely on more and more on IT systems and networks to operate
business, the amount of data and information that exists in these systems is enormous. Explain stating uses
of Data analytics.
OR

"Data analytics can be used in testing of electronic records and data residing in IT systems using
spreadsheets and specialised audit tools viz., IDEA and ACL to perform check completeness of data and
population that is used in either test of controls or substantive audit tests. Explain in detail stating all the
relevant points."
Answer ➢ Importance of Data
In today’s digital age when companies rely on more and more on IT systems and networks to operate
business, the amount of data and information that exists in these systems is enormous. A famous
businessman recently said, “Data is the new Oil”.

➢ Definition of Data Analytics
The combination of processes, tools and techniques that are used to tap vast amounts of electronic
data to obtain meaningful information is called data analytics.

➢ Both Company and Auditors are Benefitted (CAAT)
While it is true that companies can benefit immensely from the use of data analytics in terms of
increased profitability, better customer service, gaining competitive advantage, more efficient
operations, etc., even auditors can make use of similar tools and techniques in the audit process and
obtain good results. The tools and techniques that auditors use in applying the principles of data
analytics are known as Computer Assisted Auditing Techniques or CAATs in short.

➢ Uses of Data Analytics
2
( use of data analytics to detect C-A-R -D-S F-raud)

Data analytics can be used in testing of electronic records and data residing in IT systems using
spreadsheets and specialized audit tools viz., IDEA and ACL to perform the following:
• Check Completeness of data and population that is used in either test of controls or
substantive audit tests.
• Selection of audit Samples – random sampling, systematic sampling.
www.auditguru.in 3.53