CAAP

An Overview

Ataur Rahman
atr71@yahoo.com
www.linkedin.com/in/ataurrahman1
 Excise Audit
 Compliance to law
 Proper payment of tax

Proper availment of CENVAT credit
 Procedural compliance
 EA-2000
 Systematic
 Comprehensive

Reliance on Business records
 CAAP
 Computer Assisted Audit Program

 Within the ambit of EA-2000

 Where records are voluminous and

in electronic format
 Manual audit only sample
verification
 Less recovery
 Less deterrent
 CAAP capable of analysing all the
data fully
 For all or part of audit
 Resources
 CAAP Manual
 CAAP training course
 Trained CAAP Officers
 Equipment and software
 Desktop and Laptop
 IDEA software
 Other hardware/software to import,
read and analyse assessee records
 Computer Assisted Audit
Techniques
 Indexing/ sorting
 Extraction of records (e.g. errors,
large items etc.)
 Key field summarisation (on
accounts, vendors, customers etc.)
 Gap detection (missing
documents)
 Duplicate key detection
 CAAP Methodology
 Survey of Computerization of
Assessees:
 Hardware and Peripherals
 Operating System
 Accounting software
 Accounting Information – like chart of
accounts
 Details of information in electronic records
 Back-up and Data retention methods
 Data export options
Contd..
 CAAP Methodology
(contd..)
 Computer Assisted Audit Feasibility
Evaluation (CAAFE) to select units
 Period of computerisation
 Nature of computer system
 Extent of computerisation & integration
 State of documentation
 Data Transfer Mechanism
 Data Transfer & Data Import
 Only copy
 CAAP Methodology
(contd..)
 Data Analysis
 no alteration-s/w used ensures this
 auditor reviews the data
 validates that all of the records are
included
 Performs CAAT’s based on audit
objectives using software
 extracts records of interest to
reports.
 Data required
 Same as in manual audit
 Sale-Purchase-Inventory-GL-
Financial reports
 Transaction data
 Format:
 Dbase-Excel-Excess
 Text file (ASCII)
 Print files
 Security of data
 Only a copy of records used
 Records handled with extreme care and
are encrypted
 Accessible to only authorized officers.
 After audit process/resolution of dispute
records securely erased/CDs destroyed
or returned to assessee
 No risk to the assessee’s computer or
electronic records.
 Auditors contact with
assessee
 Study of the business system and
computer system
 Procurement of data
 Analysis of records
 validation of integrity
 Resolution of discrepancies
 Legal Provisions
 Records are to be provided to auditors
as per Rule 22
 Part III of Chapter VI of CBEC’s Central
Excise Manual deals with maintenance
of electronic records and requires that
these will be provided to audit
 Audit manual para 2.4.3 also provides
that records relating to production,
inventory, financial records etc. to be
provided to auditors,in electronic format
if so maintained
 Advantages of CAAP
 Faster & exhaustive check of
voluminous transactions possible
 Possibility to provide specific
evidence for each query
 Systematic documentation like
event log for future reference
 Less time at assessee’s premises
 Gains to Assessee
 Time saving : crucial in case of
voluminous records
 Less manpower deployment
 Less photocopying-paper handling
 Better assurance of compliance to
law
 Easier to identify Internal control
problems
THANK YOU