1. Chapter 12/2 Audit Software Techniques
Dr. Mohamed A. Hamada

2. Audit Software Techniques
Information technology gives auditors a new set of techniques for examining the automated business environment,
Audit software provides auditors with the ability to extract information from several files, with different database management systems, in order to search for underlying patterns or relationships among data.
Audit software is computer programs that help auditors achieve the various tasks of auditing process.

3. Computer Assisted Audit Techniques (CAATs),
Consist of package of programs; purpose written programs, utility programs or system management programs
• Generalized Audit Software (GAS)
• Test data
• Integrated Test Facilities (ITF)
• Parallel Simulation
• Snapshot
• Mapping
• Embedded audit module EAM

4. A. Review of Systems Documentation
The auditor reviews documentation such as narrative descriptions, flowcharts, and program listings. In desk checking the auditor processes test or real data through the program logic.

5. B. Test Data
The auditor prepares input containing both valid and invalid data. Prior to processing the test data, the input is manually processed to determine what the output should look like. The auditor then compares the computer-processed output with the manually processed results.

6. Illustration of Test Data Approach
Computer Operations
Auditors
Prepare Test
Transactions
And Results
Transaction
Test Data
Computer
Application
System
Manually
Processed
Results
Computer
Output
Auditor Compares

7. Test Data Approach 1. Test data should include all relevant
conditions that the auditor wants tested.
2. Application programs tested by the
auditors’ test data must be the same as
those the client used throughout the year.
3. Test data must be eliminated from the
client’s records.

8. Test Data Approach Input test transactions to test key control
procedures
Master files
Application programs
(assume batch system)
Transaction files
(contaminated?)
Contaminated
master files
Control test
results

9. Test Data Approach Control test results Auditor makes comparisons
Auditor-predicted results
of key control procedures
based on an understanding
of internal control
Differences between
actual outcome and
predicted result

10. C. Integrated Test Facility (ITF) Approach
A common form of an ITF is as follows:
A dummy ITF center is created for the auditors.
Auditors create transactions for controls they want to test.
Working papers are created to show expected results from manually processed information.
Auditor transactions are run with actual transactions.
Auditors compare ITF results to working papers.

11. Illustration of ITF Approach
Computer Operations
Auditors
Actual
Transactions
ITF
Transactions
Prepare ITF
Transactions
And Results
Computer
Application
System
Data Files
ITF Data
Reports
With Only
Actual Data
Reports
With Only
ITF Data
Manually
Processed
Results
Auditor
Compares

12. Parallel Simulation The auditor uses auditor-controlled software
to perform parallel operations to the client’s
software by using the same data files.

13. Parallel Simulation Production transactions Master file
Auditor-prepared
program
Client application
system programs
Auditor
results
Client
results
Auditor makes comparisons between
client’s application system output and
the auditor-prepared program output
Exception report
noting differences

14. Illustration of Parallel Simulation
Computer Operations
Auditors
Actual
Transactions
Computer
Application
System
Auditor’s
Simulation
Program
Actual Client
Report
Auditor Compares
Auditor
Simulation
Report

15. Embedded Audit Module Approach
Auditor inserts an audit module in the
client’s application system to identify
specific types of transactions.
Embedded Audit Modules. EAMs are subroutines embedded in the client’s information system that perform control and audit procedures at the same time as the normal application processing

16. Example of EAMs : (Debreceny et, al., 2005)
JOIN INVENTORY to SUPPLIER, PURCHASES
SELECT supplier ID, [(purchase Price- standard Price) purchase Volume]
FROM INVENTORY-SUPPLIER-PURCHASES
IF purchase Price/standard Price > 1.05 OR purchase Price/standard Price < 0.95
RUN trigger

17. End of chapter