Computer aided audit techniques (CAATs) use computer tools to automate the audit process and help auditors handle large volumes of data more efficiently. CAATs refer to techniques and programs designed to audit electronic or manually unauditable data. Key benefits of CAATs include making audits more rational, improving quality and effectiveness, providing audit trails, and enabling statistical analysis and identification of outliers. Common CAAT capabilities include file access, reorganization, data selection, and arithmetic/statistical functions. Auditors must take precautions like understanding the CAAT software, identifying correct data, and ensuring data completeness when using CAATs. Excel is a commonly used CAAT tool due to its data import features, flexibility, and

1. COMPUTER AIDED AUDIT
TECHNIQUES (CAAT)

2. INTRODUCTION
While analyzing the financial data of any firm the auditors Have to deal with
humongous data that has been generated by the accounting function of the
firm. Handling such a huge volume of data is time consuming prone to errors
involves high sampling risk and also lacks multiple views of the data.
Using computer tools to automate the audit process supports the auditors
handling these issues effectively.
Computer aided audit technique (CAAT) is a practice to use computers to
automate the audit process. It refers to the techniques and computer programs
that are designed and developed to audit the electronic data or to audit the
data which cannot be audited manually.

3. WHY USING CAAT TOOLS ?
1. Makes the audit more rational.
2. Improve the audit quality and effectiveness of the auditor.
3. Make available an audit trail.
4. Allow splitting of data into groups to have a segregated view of the data
5. Enables the capability to combine the data from different file to have
aggregate view of the data.
6. Remove the probability of sampling errors.
7. Provide the capability to conduct statistical analysis and to identify the
extreme values.
8. Enable generation of instant report.

4. Key capabilities of CAAT
• The CAAT tools automate the process that was earlier handled
manually. The auditors may decide to what extent they need the
automated process for auditing and they can combine the same
with other auditing methods. There is wide range of software that
are used as CAAT tools e.g. interactive data extraction and
analysis(IDEA) and audit command language (ACL) are a few
example of specialized auditing software and MS excel and MS
access (both covered in this book) are examples of common
application software.

5. 1.file accessibility
2. file reorganization
3. data selection
4. Arithmetical and Statistical functions
The CAATs have the following key capabilities that have brought the
paradigm shift in the field of auditing :

6. Key capabilities
1. File access
This refers to the
capability of reading of
different record formats
and fi le structures. These
include common formats
of data such as database,
text formats, excel files.
This is generally done
using the import/ODBC
function.
2. File reorganization
This refers to the features
of indexing, sorting,
merging, linking with
other identified files.
These functions provide
auditor with an instant
view of the data from
different perspectives.
3. Data selection
This involves using of
global filter conditions to
select required data based
on specifi ed criteria.

7. Key capabilities
4. Arithmetical and
Statistical functions
This refers to the features
of sampling, stratification
and frequency analysis.
These functions enable
intelligent analysis of
data. Arithmetical
functions refers to the
functions involving use of
arithmetic operators.
These functions enable
performing re-
computations and re-
performance of results.

8. Precautions in using
CAATs

9. CAATs are very critical tools for auditors therefore in order to improve their
effectiveness. it is important to ensure that they take the following
precaution while using CAATs:
1. Understanding CAATs software
2. Identifying the correct data
3. Collection of correct and relevant data file
4. Identify relevant fields
5. Completeness of the data and the analysis

10. 1. Understanding CAATs software
First of all the auditor must
understand the different
aspect and functionalities of
the CAATs software that will
be used on the audit data.

11. 2. Identifying the correct data
It is important to identify the
critical data. In order to
identify the critical data the
auditors need to identify the
proper source of data and
the proper persons who are
responsible to provide the
data. The data so collected
must be according to the
audit scope and objective.

12. 3. Collection of correct and relevant data file
The auditors have to
ensure that the data file
provided for auditing are
correct and relevant.

13. 4. Identify relevant fields
The auditors must identify
the relevant fields about
which the data has to be
accessed from the system

14. 5. Completeness of the data and the analysis
The data accessed must
be complete and relevant.
It must be as per the audit
plan. The auditors must
perform relevant tests on
the audit data that will
assist in forming the
ultimate opinion.

15. TESTS PERFORMED USING CAATs

16. CAATs are used for compliance or substantive tests. The following
are the few examples of the tests that are commonly performed as
per the audit plan :
1. Identification of exception or extreme values. These values depend upon the
nature and size of the business.
2. Identification exceptional transaction that are based on certain criterion
3. Identification of errors
4. Performance of standard statistical sampling techniques to identify samples
as required
5. Detection of fraud
6. Verification of calculation
7. Testing of data consistency
8. Identification of duplicate payment
9. Identifying transaction exceeding authorized limit

17. USING EXCEL AS A CAATs TOOL

18. Most of the users are familiar of using spreadsheet. It is highly flexible
and simpler than most CAATs tools. It has a huge list of function and
also allows installing add Ins with advanced features. The data
import feature of excel is very powerful excel can easily read and
open the following file formats:
• Text files (*.TXT)
• Comma delimited files (*.CSV)
• Database files (*.DBF)
• Extendible markup language data file (*.XML)
• Lotus 123 databases (*.WK)
• Microsoft access database (*.MDB), etc.
The case of use access and flexibility are the features that make excel
one of the commonly used CAATs tools.