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Student Name Brief #5 Use of Audit Software: Review and Survey Date

Central Message: Auditing has had to change from “around the computer” to “through the

computer” due to sources only being available in electronic form. CAATs and CAATTs improve

efficiency and effectiveness of audits. A variety of standards and statements were issued because

new guidance was necessary once the growth of IT affected the nature, timing, and extent of audit

procedures. Continuous auditing is the key to improving the efficiency and effectiveness of audits.

Author’s Theme: Auditors are advised to use CAATs to gather evidence so that they can increase

the efficiency of inspection and analytical review. One of the many statements released on IT, SAS

94, stressed that IT’s impact on internal control is a result of the nature and extent of the system’s

complexity rather than the size of the firm, which is why auditing through the computer is

important when testing controls. Auditors can pinpoint the risk areas and thus have a better idea of

what to inquire when questioning management; improving the quality of the evidence and thus the

audit. Importance: Advancement in information technology has a direct impact on business

processes and the audit. Increasingly, auditors are required to perform audits in computerized

environments; therefore, additional standards are required to ensure that financial statements

auditors continue to perform high quality audits. Conclusion/Opinions: (1) The author concludes

that auditing through the computer is important when testing controls because of the impact IT has

on internal control. GAAS field work #2 supports this because the IT system is a part of the entity’s

environment, and especially, when it is complex, the auditor must audit through the computer to

adequately assess internal control risk. (2) Using CAATs can increase the efficiency of audit

procedures. SAS No. 106 indicates that CAATs allow auditors to inspect electronic evidence directly.

(3) Auditors should use data analysis from audit software in order to pinpoint the risk areas and

gain a better idea of what to ask management. AS # 5 states that risk assessment underlies the

entire audit process, including the determination of significant accounts and relevant assertions,

selecting controls to test, and determining the evidence necessary.