CAAT (Computer Assisted Auditing

Technique)Tests

What are Computer Assisted Auditing Techniques?

Computer Assisted Auditing Techniques provide
an automated approach to audit tests, replacing
tests that would have been performed manually by
the internal audit team. The completeness of
manual tests is often limited by the completeness
of the data that can be analyzed by an auditor
through a reasonable effort and by a short time. It
is obvious that the quality of audit consistently
depends on the capability of auditors to obtain
additional support and coverage for audit opinion
at a low incremental cost.

 These
techniques
require
the
extraction of data from the clients
information system. Software tools
allow for the analysis of information
by
performing
data
selection,
classification,
ordering,
filtering,
translation, and other functions.

What are the benefits of CAATs?

The use of CAATs gives internal auditors an
opportunity to reach their target by:
1. Addressing expectations
2. Improving audit quality
3. Reducing risks
4. Increasing productivity
5. Giving added value suggestions
6. Indentifying and extending services
7. Improving team technology and information
systems skills.

 When to use CAATs?

The identification of opportunities to
use computer assisted audit tools is
part of the planning process. The
internal audit team should review the
applicability of these techniques
during the planning phase.

CAAT Applications to Industries

This document gives a wide range of
tests that are typically performed by
internal auditors in several areas:
1. General Business Processes
2. Finance and Banking
3. Services and Distribution
4. Healthcare

5.Government
6. Manufacturing
7. Retail
The involvement of the MIS team in your
planning will give you additional
resources to indentify and evaluate EDP
risks and to better chose the tests that
will efficiently reach your objectives.

GENERAL BUSINESS
PROCESSES

Salaries and Payroll

Cash Disbursements
General accounting
Stock and inventory control
Accounts receivable
Accounts payable
Sales order control
Purchase order management

 General ledger
Information Systems/Security
Materials Management/Inventory

 SALARIES AND PAYROLL

1. Summarize and print payroll by
selection criteria for audit review.
2. Summarize payroll distributions for
reconciliation to general ledger.
3. Identify changes in exemptions, gross
pay, hourly rates, salary amounts, etc.
4. Extract all payroll checks where gross
Peso amount exceeds set amount.

 SALARIES AND PAYROLL

5. Recap distributions to jobs, projects,
etc. for audit and reconciliation.
6. Report entries against authorization
records for new or terminated
employees.
7. Compare and summarize costs for
special pay, overtime, premium, etc.
8. Identify duplicate or missing payroll
checks by check, bank, etc.

 SALARIES AND PAYROLL

9. Compare time-card rates and pay to
payroll and indicate variances.
10. Analyze productivity hours.
11. Identify overtime abuses.
12.Review highly paid employees
13.Match payroll records to A/P records.
14. Compare wage and salary rates to
approved ranges.

 CASH DISBURSEMENT
1. Extract cash disbursements by vendor/supplier
for audit verification.
2. Verify that distribution summary is posted
accurately to general ledger.
3. Test for missing, duplicate, void or out of
sequence check numbers.
4. Stop overpayment by checking duplicate
invoices with payment request.
5. Selectively audit payables trial balance for
selected vendors.
6. Summarize check register in order by Peso
amount and vendor.

 CASH DISBURSEMENT
7. Identify check requests that exceed
set or selected peso amounts by
branch.
8. Automatically identify missing or
duplicate check numbers.
9. Sample paid invoices for manual
comparison with actual invoices.
10. Report on check disbursements for
unrecorded liabilities.

 CASH DISBURSEMENT
11. Summarize cash disbursements by
account, by group, vendor, etc.
12.Reconciled inter-branch transfers by
extraction or inclusion.
13. Extract disbursements by bank and
date for zero balance account
transfers.
14. Generate vendor cash activity
summary for loan or payables
management.

 GENERAL ACCOUNTING
1. Reconcile inter-branch transfers by
extraction or inclusion.
2. Provide a complete audit trail for all
disbursements by branch, creditors,
etc.
3. Ensure deposits or receipts are applied
to accounts by sample comparisons.
4. Automatically sort and report cash by
amount, branch, account, etc.

 GENERAL ACCOUNTING
5. Provide a complete audit trail for all
cash deposits, withdrawals,
adjustments.
6. Create historical audits based on
any existing or calculated criteria.
7. Generate receipts distribution to
chart of accounts for ledger
comparison.
8. Produce detail list of manual
payments by amount or vendor for

 GENERAL ACCOUNTING
9. Report checks paid that do not
match checks issued, by bank, by
check.
10. Report entries against
authorization records for new or
terminated employees.
11. Compare and summarize costs for
special pay, overtime, premium, etc.
12. Isolate deferred payment and
compare to accrued amounts in

 GENERAL ACCOUNTING
13. Report on assets, compare book
and depreciated values and show
variances.
14. Show items depreciated to cost,
and determine assets higher than
cost.
15. Recap assets values, in peso value
order, by net or cost amount.
16. Compare useful lives of assets by
category and compare costs over

 GENERAL ACCOUNTING
17. Automatically compare current
and prior years files for auditing
changes.
18. Compares summaries by major
account in any order (low-high highlow).
19. Calculate and sort percentage
variances in accounts between
periods.
20. Calculate financial ratios (and

 GENERAL ACCOUNTING
21. Select any journal entry for test
and audit purposes from any period.
22. Track the year-to-date activity for
large operating accounts( rent, taxes,
etc).
23. Analyze, select and confirm
shareholders, accounts and equity.
24. Project trend in stock options and
stock appreciation rights.

 GENERAL ACCOUNTING
25. Prepare trial balance by tax groups
and calculate income tax provision.
and
26. Print special balance sheets, P&L
statements, cash flow analyses, etc.

 STOCK AND INVENTORY CONTROL

1. Select items from perpetual stock
for test reconciliation.
2. Use sampling command for physical
reconciliation testing.
3. Reconcile selected physical counts
to computed amounts.
4. Compare the value of physical
counts to general ledger value.

 STOCK AND INVENTORY CONTROL

5. Statistically analyze usage and ordering to
improve turnover.
6. Report on stock and high value balances
using any selection.
7. Test clerical accuracy of totals and
extensions.
8. Summarize and stratify turnover by stock
item in any order.
9. Test for duplicate parts, item numbers,
prices or descriptions.

 STOCK AND INVENTORY CONTROL

10. Segregate variances from standard
pricing in peso amount order.
11. Identify obsolete inventory by
sorted turnover analysis.
12. Quickly indentify items with yearly
volume under on-hand quantity.
13. Isolate and analyze high value
transactions by value, group, etc.

 STOCK AND INVENTORY CONTROL

14. Identify starting and sending
period balances by class or group.
15. Report on products in order of
profitability (low-high, high-low).
16. Automatically summarize products
by group, location, type, etc.
17. Calculate current inventory items
based on LIFO value or pool.

 STOCK AND INVENTORY CONTROL

18. Assess the financial viability of
LIFO versus FIFO management.
19. Determine the percentage change
in sales, price and/or cost levels.
20. Analyze the difference between
standard costs and actual costs.
21. Isolate stock lines where the cost is
greater than retail price.

 STOCK AND INVENTORY CONTROL

22. Report unrealized profits by
comparing standard vs. sales prices.
23. Extract products with zero
quantities or zero prices.
24.Compare speed and accuracy of
delivery by product and vendor.
25. Match stock receipts with vendor
ledger and report variances.

 STOCK AND INVENTORY CONTROL

26. Generate a stock status exception
report for low stock needs.
27. Check product reordering volume
by item, warehouse, vendor. and
28. Divide inventory into classes and
compare percent investment.

 ACCOUNTS RECEIVABLE
1. Report and automatically age total
receivables in any format.
2. Identify high value credit notes,
balances and invoices.
3. Extract variances in matching
remittances to open receivables.
4. Generate invoice summaries by
customer, invoice amounts etc.

ACCOUNTS RECEIVABLE
5. Report gaps in the sequence of
invoices generated.
6. Identify duplicate invoices, credits or
receipts in any order.
7. Determine carrying costs by
comparing days in collection by
customer.
8. Summarize client days to payment
by client, salesman, region, etc.

ACCOUNTS RECEIVABLE
9. Identify credits taken beyond discount
terms of payment days.
10. Show variances between delivery
documents and invoices.
11. Calculate lost revenue from unpaid
carrying charges by client, etc.
12. Identify accounts with oldest activity for
sales follow-up.
13. Isolate average sales amounts by
products, salesmen, region, etc.

ACCOUNTS PAYABLE
1. Correlate vouchers or invoices
posted versus purchases order
amounts.
2. Extract total posted invoices for the
year for accurate rebates.
3. Isolate vendor unit price variance by
product over time.
4. Summarize large invoices without
purchase

ACCOUNTS PAYABLE
5. Audit paid invoices for manual
comparison with actual invoices.
6. Identify distributions to accounts not in
suppliers account ledgers.
7. Reconcile check register to
disbursements by vendor invoice.
8. Report on selected vouchers for
manual audit or examination.
9. Report on check disbursement for
unrecorded liabilities.

ACCOUNTS PAYABLE
10. Reconcile selected vendors payables
posted against purchase orders.
11. Review recurring monthly expenses
and compare to posted/paid invoices.
12. Extract invoices posted with duplicate
purchase order numbers.
13. Generate cash requirements by bank,
period, product, vendor, etc.
14. Create activity summary for suppliers
with duplicate products.

SALES ORDER CONTROL

1. Report on correlation between items
shipped and items ordered.
2. Compare items ordered to items
canceled by products, salesman, order.
3. Analyze open orders and open invoices
by customer for credit control.
4. Isolate detail and average backlog by
customer, item, location, etc.
5. Manage delinquent orders by showing
days past due, in any order.

SALES ORDER CONTROL

6. Summarize booked orders by salesman to
manage advances, etc.
7. Assess booked versus filled orders by
salesman, products, etc.
8. Reconciled booked items to inventory
reserved (on hold) items.
9.Control profits by calculating line items
margins before shipment.
10. Analyze product demand by summarizing
products ordered by date due.

PURCHASE ORDER MANAGEMENT

1. Extract pricing and receipt quantity
variations by vendor and purchase
order.
2. Track schedule receipt dates versus
actual receipt dates summary and
detail.
3. Isolate purchase order types
(blanket, release, drop-ship) for
audit and tracking.
4. Identify duplicate purchase orders or

PURCHASE ORDER MANAGEMENT

5. Eliminate stale POs by analyzing and
reporting on partial receipts.
6. Reconcile receipts by comparing
accrued payables to received items.
7. Analyze late shipments for impact on
jobs, projects or sales orders due.
8. Audit receipt and ordering by selective
reports by vendor, date, etc.
9. Compare vendor performance by
summarizing item delivery and quality.

GENERAL LEDGER
1. Compute weighted average interest
rates across any periods.
2. Speed closing with quick account
reconciliations and adjustment
transactions.
3. Create budget reports in any format by
account, division, department, etc. and
4. Print custom balance sheets, P&L
statements, cash flow analysis, etc.

INFORMATION SYSTEMS/SECURITY
1.
2.
3.
4.

Identification of corrupt files.

Identification of duplicate records.
Identification of inventory quantity errors.
Compare current employees lists to system
user lists to identify resigned employees
who should not have access.
5. Sort current system lists by system
privilege to identify people who have more
access than required for job duties.
6. Compare current IS employee lists to
system user lists to identify people who
have more access than required for job

MATERIALS
MANAGEMENT/INVENTORY
1. Statistically analyze usage and
ordering to improve turnover.
2. Report on stock and high value
balances using any selection criteria.
3. Test clerical accuracy of totals and
extensions.
4. Summarize and stratify turnover by
stock item in any order.
5. Identify obsolete inventory by sorted
turnover analysis.

MATERIALS
MANAGEMENT/INVENTORY
6. Identify items with yearly volume under
on-hand quantity.
7. Isolate and analyze high value
transactions by value, group, etc.
8. Identify starting and ending period
balances by class or group.
9. Compare speed and accuracy of
delivery by product and vendor.
10.Match stock receipts with vendor ledger
and report variances.

MATERIALS
MANAGEMENT/INVENTORY
11. Check product reordering volume by
item, warehouse, vendor.
12. Divide inventory into classes and
compare percent investment.
13. Physical inventory analysis from upload
from bar code scanners.
14. Physical inventory variance analysis.
15. Identify duplicate supply items on
inventory master.
16. Profile supply usage by month, by
department, etc.

FINANCE & BANKING

APLICATIONS

Loans by bank or branch

Asset management
Trust assets
Credit cash management
Savings and demand deposits
Real estate loans
Pension and other trusts
Investment securities

 LOANS BY BANK OR BRANCH

1. Subtotal, total and print outstanding
loan balances by any categories needed.
2. Report trial loan balances by account,
location, branch, peso amount, etc.
3. Calculate unearned revenues from
interest, discount, insurance, etc.
4. Compare unearned revenue with client
balances and report differences.
5. Sort and summarize loans by type of
security, purpose, class, credit rate, etc.

 LOANS BY BANK OR
BRANCH
6. Calculate and print maturity schedules in
detail or summarize and count.
7. Segregate write-offs, bankruptcies, and
summarize by percent, date etc.
8. Select sample balance confirmations and
merge with verification letter.
9. Isolate delinquent accounts issued prior
to a specific date.
10. Extract and print loans for which
payments were under the regular amount.

 LOANS BY BANK OR
BRANCH
11. Determine loans where terms were
extended by more than a specific percent.
12. Select new or purchased loans samples
for documentation, random audits.
13. Identify loans over or under specified
amount, terms, or interest rate.
14. Flag and verify additional principal
payment larger than a specified percent.
15. Verify interest (re) calculations are
correct from unusual principal paydown.

 LOANS BY BANK OR
BRANCH

16. Show loans with remaining payments that

fail to amortize calculated balance.
17. Analyze impact of past-due accounts,
unearned income, accrued interest, etc.
18. Test liability (by branch, location, etc.) in
excess of lending limits.
19. Identify accounts with balances exceeding
credit limits by percent overage.
20. Compare original collateral less depreciation
to outstanding loan balances.
21. Analyze impact of write-off for loans with
late payments or other criteria.

 SAVINGS AND DEMAND DEPOSITS

1. List balances by branch or in total in
any order required.
2. Select samples and print balance
verifications by account.
3. Recalculate interest or service charges
on accounts for audit checks.
4. Select a sample of new or closed
accounts for detail auditing.
5. Test and report accounts with continual
overdraft, dormant activity, etc.

 SAVINGS AND DEMAND DEPOSITS

6. Show accounts with low balance,
incorrectly exempted from service charges.
7. Confirm account relationships, balances,
inactive with letter merge.
8. Extract accounts with excessive
adjustments or variations in amounts.
9. Prepare frequency distribution by amount,
interest or maturity rates.
10.Create reports or analysis required for
changing audit requirements.

 ASSET MANAGEMENT
1. Compare book and tax depreciation and
indicate variances.
2. Show items depreciated to cost, and
determine assets higher than cost.
3. Sample (random or specified) assets for
physical examination.
4. Test for missing or duplicate asset numbers.
5. Recap asset values, in pesos value order,
by net or cost amount.
6. Analyze intercompany profit or loss on
equipment sales.

 ASSET MANAGEMENT
7. Recalculate expenses and reserve amounts
using replacement costs.
8. Compare useful lives of assets by category
and compare costs over time.
9. Automatically compare current and prior
years files for auditing changes.
10. Extract assets with useful lives or
depreciation rates beyond set norms.
11. Compute investment tax credits and
compare to credits taken.
12. Select samples for verifying repairs and
maintenance disbursements.

 REAL ESTATE LOANS

1. Examine real estate mortgage loan
file for principal and escrow balances.
2. Generate frequency distribution of
loans by principal value outstanding.
3. Extract and report on loans past due
for specified days or other criteria.
4. Print a schedule of prepaid accounts
in any order or selection.
5. Verify the daily interest accrued,
detail or summary, by any criteria.

 REAL ESTATE LOANS

6. Identify amount and peso volume
on non performing loans in any
sequence.
7. Track activity and market value of
collateral of non-performing loans.

 TRUST ASSETS
1. Compare securities purchased to
securities stipulated in trust
instruments.
2. Test samples (specified, random) to
verify security acquisitions are
approved.
3. Verify that trust income is paid to
beneficiaries on schedule.

 PENSION AND OTHER TRUSTS

1. Select samples (specified of random) of
asset transactions for test or audit.
2. Indentify accounts to be verified for
pension calculations, payments, etc.
3. Scan and total the schedule of
investments (year-end or year-to-date)
4. Verify accrued interest calculations for
assets in trust accounts.
5. Select trust assets for auditing current
market value.

 PENSION AND OTHER TRUSTS

6. Extract trust asset information
based on any criteria.
7. Check participants file for nonallowable data (age, seniority,
gender).
8. Verify interest and capital gain
income/loss distributed to accounts.

 CREDIT CASH MANAGEMENT

1. Identify and list accounts past due for
specified time, order by amount.
2. Extract accounts with balances over
credit limit and sort by criteria.
3. Test for specific conditions (excessive
adjustments, credits, etc.) by account.
4. Select and print detail activity for
auditing selected accounts.
5. Recalculate and verify current
months interest charges.

 INVESTMENT SECURITIES
1. Calculate total accrued interest receivable
by type of security, agent, etc.
2. Test amortization of premiums and
discounts by selected (re) calculations.
3. Segregate securities that are outside
certain investment grade parameters.
4. Calculate average yield by investment
type and show detail variances.

 INVESTMENT SECURITIES
5. Select samples of purchases and
sales since last audit for audit
verification.
6. Indentify investments for which no
dividends or interest have been
received.
7. Select samples (random or
specified) of investments for market
values test.
8. Price investments by merging

 INVESTMENT SECURITIES
9. Generate frequency distributions of
market value, interest, maturity
dates.
10. Compares computed interest to
amount actually received on
investments.
11. Compares dividends declared per
published service to amount
received.

SERVICES & DISTRIBUTION

APPLICATIONS
SALES ANALYSIS
1. Generate sales and profitability
reports by salesman, product,
customer.
2. Recap product sales by region,
customer category, etc.
3. Analyze sales trends by comparing
current and previous periods.
4. Identify top peso volumes sorting by
products, customers, salesman, etc.

 SALES ANALYSIS
5. Create histograms showing trend in
product sales by any selected item.
6. Extract all sales data for audit by
customer, product, region, etc.
7. Summarize sales performance over
time by product, salesman, etc.
8. Select any range of products for
current and period-to-date analysis.

 SALES ANALYSIS
9. Compare current product sales with
booked sales for demand analysis/trends.
10. Analyze variances in sales and
summarize trends numerically or
graphically.
11. Report on creditor balances aged in any
format required.
12. Compare ratios of current sales to open
receivables (high-low, low-high).
13. Summarize shipments by warehouse for
product distribution analysis.

 LIST MANAGEMENT
1. Extract select names from list to merge
with word processor for promotions.
2. Combine extracted data from financial
report for graphics presentations.
3. Automatically manage list with select,
extract, print and count commands.
4. Merge audit verification letters with
accounts and balances for external audit.
5. Generate multiple marketing mailings
based on historical customer purchases.

 LIST MANAGEMENT
6. Perform marketing tests with
random name selection for
promotion letters.
7. Assemble set commands for
recurring graphics display of financial
data.
8. Create auto-extract of activity for
direct transfer to spreadsheet.

 SERVICE MANAGEMENT
1. Create real time service tracking
reports in any format to manage field
work.
2. Integrate dispatching functions with
online field parts requirements.
3. Coordinate multiple service personnel
to maximize.
4. Quickly recap routes and times of
service calls by employees, area, etc.

 SERVICE MANAGEMENT
5. Compare arrival and service times for
field service representatives.
6. Calculate cost of service by call for
labor, materials and transportation.
7. Compare service report time to time
card hours from payroll comparison.
8. Compare the time between servicing
activity performed and field personnel.

GOVERNMENT APPLICATIONS
BUDGET /PROJECTS MANAGEMENT
1. Provide totals and averages of
government program peso spent.
2. Examine budgeted sources of funding to
decide on revenue transfer.
3. Monitor expenditures with respect to
budgets.
4. Extract projects requiring debentures
and amounts.
5. Identify key indicators of completed
projects.

 BUDGET /PROJECTS
MANAGEMENT
6. Extract group and report on capital
projects in useful classifications.
7. Indentify large peso
unfinanced/unexpended capital
projects.

 HEALTH SERVICES
1. Samples on high peso health claims.
2. Check for duplicate payments to claimants and
providers.
3. Summarize claims by medical codes and check
to ensure codes not covered under plan were
not paid.
4. Compare service dates to employee dates of
service to ensure claims are not paid for
terminated, deceased or retired employees.
5. Check eligibility file of claims administrator
against departments eligibility file to ensure
accuracy of eligibility file.

 HEALTH SERVICES
6. Calculate the period from receipt of claim to
adjudication of claim and compare actual
cycle time with contractually required cycle
time.
7. Analyze trends on billing practices of
providers over a period of time to check for
fraudulent billing.
8. Identify providers with high value check
amounts on a weekly basis.
9. Identify services most commonly billed and
amount paid.
10. Analyze prescription and drug
expenditures.

 SOCIAL SERVICES
1. Examine demographics, including age, sex,
ethnicity, primary reason for placement,
goal set for final living arrangement, type of
care provided, distributions on number of
placement changes.
2. Identify children being counted in custody
who should not be included (for e.g., over
the statutory allowed age or adopted with
no subsidy).
3. Determine compliance with mandated
response times; in what percentage of cases
timeliness met, case closures within thirty
days.

 TAX COMPLIANCE
1. Calculate sales tax rebates resulting
from business closures.
2. Reconciled sales reported to general
ledger and product/date summaries.
3. Reconciled general ledger sales to
financial statements and tax returns.
4. Indentify sales made exempt of tax to
confirm propriety.

 TAX COMPLIANCE
5. Extract exempt sales based on criteria
from large sales transaction files.
6. Extract third party information from
exempt sales transactions to use in audit
selections and follow up.
7. Analyze expense accounts for
nonexempt transactions.
8. Extract appropriate sales transactions
from unedited point-of-sale transaction
files.

 TAX COMPLIANCE
9. Examine taxpayers sales journals to
determine frequency distribution of sales
transactions (determine levels of materiality,
sampling ranges).
10. Reconcile payroll reported to general
ledger.
11. Reconcile general ledger payroll to tax
returns.
12. Summarize sales by product type and date.

 TAX COMPLIANCE
13. Summarize electronic tax returns
to reconcile taxable earnings to
payroll tax annual returns (gross
earnings).
14. Extract all sales data, customer
invoices and credit memos to help
gain an understanding of the client
under audit.