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Advantages and Disadvantages to an Assisted Audit
An assisted audit refers to CAATs, or computer-assisted audit tools and techniques, that use software and programs dedicated to the auditing process to help out auditors, especially with large projects. CAATs are numerous in today's technology-driven economy, but in some ways auditors can be slow to adopt new computer-assisted methods. While the methods provide several key advantages, they also come with disadvantages that make auditors wary of them.
Speed and Accuracy
The primary advantage to assisted audits is the increased speed and accuracy. Clearly, if an auditor can use a computer program to run through financial statements and compile data and figures, then the job can be done very quickly compared to only slight reliance on computers. Also, auditing programs tend to come with useful checks and balances that spot not only calculation errors in business books but also mismatched item entries and potential regulatory issues.
Models
The more complex auditing tools can provide another level of aid by generating computer models and simulations for the auditor. This is very useful when an auditor is working to study the business's financial approach and how it can be restructured. A computer model can run several different simulations, setting up different models to show how the accounting process will be affected. It can also use models to judge the potential for risk (from mistakes, fraud and other problems) in the current system.
Adaptability and Training Issues
On the downside, an assisted audit bases much of its usefulness on the auditing software. If the software is out of date or is not designed to be used for a particular auditing purpose, then it can do more damage than good, requiring frequent updates and customization. Also, any time a new program is used auditors must be trained on how to use it correctly, which can lead to high costs in time and money for auditing firms.
Auditor Experience and Judgment
For many audits, auditors must make a judgment call on whether or not the business should change its accounting practices, especially related to the risk of fraud or the need to comply with federal regulations. This call is related to information the auditor has and the auditor's experience with other, similar companies. It is very difficult for a computer system to make such a judgment call, taking into account all potential factors, and lessens the usefulness of assisting programs in the final results of the audit.
Potential advantages of using computer assisted audit techniques:
1. 1. Increase the accuracy of audit tests;
2. 2. Perform audit tests more efficiently;
3. 3. Test the reliability of client software; and
4. 4. Independently access the data stored on a computer system without dependence on the client.
Advantages using CAATs
1. CAATs enable the audit term to test a large volume of data accurately and quickly
2. CAATs reduce the level of human error in testing and hence provide a better quality of audit evidence
3. The use of CAATs frees up audit term members to focus on judgemental and high risk areas, rather than number crunching
4. CAATs results can be compared with traditional audit testing,if these two sources agrees, then overall audit confidence will increase.
