SPECIFIC ASPECTS OF AUDITING IN A COMPUTER-BASED
  ENVIRONMENT
  JANUARY 2011
  this facility may be utilised by the auditor when auditing salaries and wages in
  the client’s financial statements. Similarly, a facility to report trade payable
  (creditor) long outstanding balances could be used by an auditor when
  verifying the reported value of creditors.
  Test data
  Audit test data
  Audit test data is used to test the existence and effectiveness of controls built
  into an application program used by an audit client. As such, dummy
  transactions are processed through the client’s computerised system. The
  results of processing are then compared to the auditor’s expected results to
  determine whether controls are operating efficiently and systems’
  objectiveness are being achieved. For example, two dummy bank payment
  transactions (one inside and one outside authorised parameters) may be
  processed with the expectation that only the transaction processed within the
  parameters is ‘accepted’ by the system. Clearly, if dummy transactions
  processed do not produce the expected results in output, the auditor will need
  to consider the need for increased substantive procedures in the area being
  reviewed.
  Integrated test facilities
  To avoid the risk of corrupting a client’s account system, by processing test
  data with the client’s other ‘live’ data, auditors may instigate special ‘test data
  only’ processing runs for audit test data. The major disadvantage of this is that
  the auditor does not have total assurance that the test data is being processed
  in a similar fashion to the client’s live data. To address this issue, the auditor
  may therefore seek permission from the client to establish an integrated test
  facility within the accounting system. This entails the establishment of a
  dummy unit, for example, a dummy supplier account against which the
  auditor’s test data is processed during normal processing runs.
  Other techniques
  This section contains useful background information to enhance your overall
  understanding.
  Other CAATs include:
  Embedded audit facilities (EAFs)
  This technique requires the auditor’s own program code to be embedded
  (incorporated) into the client’s application software, such that verification
  procedures can be carried out as required on data being processed. For
  example, tests of control may include the reperformance of specific input
  validation checks (see input controls above) – selected transactions may be
  ‘tagged’ and followed through the system to ascertain whether stated controls
  and processes have been applied to those transactions by the computer
  system. The EAFs should ensure that the results of testing are recorded in a
  special secure file for subsequent review by the auditor, who should be able to
  conclude on the integrity of the processing controls generally, from the results
  of testing. A further EAF, often overlooked by students, is that of an analytical
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  SPECIFIC ASPECTS OF AUDITING IN A COMPUTER-BASED
  ENVIRONMENT
  JANUARY 2011
  review program enabling concurrent performance of analytical review
  procedures on client data as it is being processed through the automated
  system.
  Application program examination
  When determining the extent to which they may rely on application controls,
  auditors need to consider the extent to which specified controls have been
  implemented correctly. For example, where system amendments have
  occurred during an accounting period, the auditor would need assurance as to
  the existence of necessary controls both before and after the amendment. The
  auditor may seek to obtain such assurance by using a software program to
  compare the controls in place prior to, and subsequent to, the amendment
  date.
  Summary
  The key objectives of an audit do not change irrespective of whether the audit
  engagement is carried out in a manual or a computer-based environment. The
  audit approach, planning considerations and techniques used to obtain
  sufficient appropriate audit evidence do of course change. Students are
  encouraged to read further to augment their knowledge of auditing in a
  computer-based environment and to practise their ability to answer exam
  questions on the topic by attempting questions set in previous ACCA exam
  papers.
  Brian Pine is examiner for CAT Paper 8