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Testing Application Control Activities

If .ge~eral controls ~~~ in place and operating effectively, reliance may also be placed on ap-
pll~atlon control.actlvltles. The auditor can test input and output controls largely through obser-
vation. Processinq controls, on the other hand, may be tested in a variety of ways.
In t~sting.controls over the development of, and changes to, programs and systems design the
auditor rniqht '
 Make inquiries of personnel
Review minutes of meetings of computer staff and users
Insp.ect documentation of testing performed before programs were put into use
::vlew documentation of program changes and compare them to management approv-

Inspect manuals being used by operators and other users

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Auditing with - Module 6 264

Testing Application Control Activities (continued)

Computer assisted audit techniques, or CAATs, are used to test the operation of software.
These include test data, controlled programs, integrated test facilities, program analysis, tagging
and tracing, and generalized audit software programs.

Test data includes one example of each type of exception and is run through the company's
computer programs. The auditor compares results to expected results to evaluate the process-
ing of the data and handling of exceptions.

Controlled programs are copies of the client's programs that are under the control of the audi-
tor. The auditor processes the client's data using these programs and compares the results to
those of the client to evaluate the client's processing of the data.

Using an integrated test facility, fictitious and real transactions are processed simultaneously
using the client's system. The auditor can review the client's processing of the data to evaluate
the effectiveness of the programs.

Program analysis techniques involve the use of software that will allow the computer to gen-
erate flowcharts of other programs. The auditor can examine the flowcharts to evaluate the ef-
fectiveness of the client's programs.

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Auditing with Technology - Module 6 265