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Auditing in A Computer-Based Environment

The document discusses application controls in computer-based accounting systems, focusing on input, processing, output, and master file controls to ensure data integrity and accuracy. It outlines various input validation checks such as format, range, compatibility, validity, exception, sequence checks, control totals, and check digit verification. Additionally, it highlights several CAAT tools for auditing, including ACL Analytics, IDEA, Tableau, Microsoft Power BI, CaseWare IDEA, TeamMate Analytics, and programming languages like Python and R for data analysis.

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0 views34 pages

Auditing in A Computer-Based Environment

The document discusses application controls in computer-based accounting systems, focusing on input, processing, output, and master file controls to ensure data integrity and accuracy. It outlines various input validation checks such as format, range, compatibility, validity, exception, sequence checks, control totals, and check digit verification. Additionally, it highlights several CAAT tools for auditing, including ACL Analytics, IDEA, Tableau, Microsoft Power BI, CaseWare IDEA, TeamMate Analytics, and programming languages like Python and R for data analysis.

Uploaded by

repizoairra
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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AIS 5 Class #911

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APPLICATION
CONTROLS
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APPLICATION
CONTROLS
Application controls are those controls (manual and
computerised) that relate to the transaction and standing
data pertaining to a computer-based accounting system.
They are specific to a given application and their objectives
are to ensure the completeness and accuracy of the
accounting records and the validity of entries made in those
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records.
CONTROLS
INPUT
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INPUT CONTROLS

Control activities designed to ensure that input is authorised,


complete, accurate and timely are referred to as input
controls. Dependent on the complexity of the application
program in question, such controls will vary in terms of
quantity and sophistication. Factors to be considered in
determining these variables include cost considerations, and
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confidentiality requirements with regard to the data input.


Specific input validation checks
may include:
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Format checks

These ensure that information is input in the correct form. For


example, the requirement that the date of a sales invoice be
input in numeric format only – not numeric and
alphanumeric.
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Range checks

These ensure that information input is reasonable in line with


expectations. For example, where an entity rarely, if ever,
makes bulk-buy purchases with a value in excess of $50,000,
a purchase invoice with an input value in excess of $50,000
is rejected for review and follow-up.
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Compatibility checks

These ensure that data input from two or more fields is


compatible. For example, a sales invoice value should be
compatible with the amount of sales tax charged on the
invoice.
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Validity checks

These ensure that the data input is valid. For example, where
an entity operates a job costing system – costs input to a
previously completed job should be rejected as invalid.
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Exception checks

These ensure that an exception report is produced


highlighting unusual situations that have arisen following the
input of a specific item. For example, the carry forward of a
negative value for inventory held.
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Sequence checks

These facilitate completeness of processing by ensuring that


documents processed out of sequence are rejected. For
example, where pre-numbered goods received notes are
issued to acknowledge the receipt of goods into physical
inventory, any input of notes out of sequence should be
rejected.
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Control totals

These also facilitate completeness of processing by ensure


that pre-input, manually prepared control totals are
compared to control totals input. For example, non-matching
totals of a ‘batch’ of purchase invoices should result in an
on-screen user prompt, or the production of an exception
report for follow-up. The use of control totals in this way are
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also commonly referred to as output controls (see below).


Check digit verification

This process uses algorithms to ensure that data input is


accurate. For example, internally generated valid supplier
numerical reference codes, should be formatted in such a
way that any purchase invoices input with an incorrect code
will be automatically rejected.
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PROCESSING
CONTROLS
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PROCESSING
CONTROLS
Processing controls exist to ensure that all data input is
processed correctly and that data files are appropriately
updated accurately in a timely manner. The processing
controls for a specified application program should be
designed and then tested prior to ‘live’ running with real data.
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CONTROLS
OUTPUT
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OUTPUT
CONTROLS
Output controls exist to ensure that all data is processed and
that output is distributed only to prescribed authorised
users.
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MASTER FILE
CONTROLS
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MASTER FILE
CONTROLS
The purpose of master file controls is to ensure the ongoing
integrity of the standing data contained in the master files.
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CAAT TOOLS
FOR AUDITING
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ACL Analytics

ACL Analytics is a popular CAAT tool known for its ease of


use and powerful analytics capabilities. It offers features for
data extraction, analysis, visualization, and reporting. ACL is
often favored for its versatility in analyzing large datasets and
detecting anomalies.
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DEA Data Analysis

IDEA is another widely used CAAT tool that provides


comprehensive functionalities for data analysis, including
data import, manipulation, analysis, and reporting. It offers a
user-friendly interface and supports various data formats.
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Tableau

While primarily known as a data visualization tool, Tableau can


also be used effectively for auditing purposes, especially
when it comes to analyzing and visualizing large datasets to
identify trends, patterns, and anomalies.
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Microsoft Power BI

Similar to Tableau, Power BI is a powerful data visualization


tool that can also be used for auditing purposes. It allows
auditors to import, clean, and analyze data from various
sources and create interactive reports and dashboards.
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CaseWare IDEA

This tool is specifically designed for auditors and offers


features for data analysis, sampling, and reporting. It provides
templates and workflows tailored to auditing processes and
compliance requirements.
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TeamMate Analytics

Developed by Wolters Kluwer, TeamMate Analytics offers a


range of audit-specific analytics tools to support auditors in
areas such as risk assessment, fraud detection, and controls
testing.
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Python/R Programming

For auditors with programming skills, using programming


languages like Python or R can provide flexibility and
customization options for data analysis and automation
tasks. Libraries like pandas (Python) and tidyverse (R) are
commonly used for data manipulation and analysis.
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