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Effectiveness Of Computer Assisted Audit Techniques Accounting Essay

Research Problem: Many surveies have been conducted to analyse the determiners for effectual application of IT, and analyze the tools used by information system hearers in many foreign states. The usage of engineering has been adopted in about all plants today, particularly with the spread outing function of e-commerce in the economic system, most hearers are following audit package in the audit procedure. But ( I ) to what widen have computing machine assisted audit techniques ( CAATs ) been adopted by hearers in Mauritius? ( two ) given the effectual result produced by information engineering ‘s and public outlook for quality of audit procedure, why are there still some hearers trusting on traditional audit trail in Mauritius?

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Purpose of the survey: The demand for this research crops up due to extremely competitory and continuously altering concern environment in which the accounting and auditing houses operate, and as such hearers are following computing machine assisted audit techniques ( CAATs ) . The intents of this survey are to acquire an overall image of the consciousness, attitudes and degree of engagement of Mauritanian hearers for the acceptance of CAATs in the audit procedure, which package and techniques they use, such that the effectivity of CAATs in helping the hearers in the audit procedure is investigated.

Methods to be used: A sum of 200 hearers shall be chosen indiscriminately and the study shall be carried out by face-to-face interview utilizing a questionnaire. The questionnaire shall be used to measure the factors impacting audit houses to follow CAATs in their work, what are the benefits as compared to their manual manner of working, and to what widen to they believe that CAATs help them in their day-to-day work so as to look into hearers ‘ behavior and attitude in a computerized environment. In add-on directors shall be interviewed every bit good so as to cognize what their positions are on and future program refering CAATs. Data would be analyzed by utilizing tools like SPSS.

Undertaking results ( outlook ) : The expected result shall bespeak that both direction and employees believe that effectual applications of CAATs in the audit procedure have high potency for heightening work efficiency and effectivity, and that in the hereafter old ages, most hearers will travel towards the version of CAATs, switching from a paper-based audit environment altering the nature of audit procedure and obtaining grounds electronically in Mauritius.

Benefits of the research: This research will reply the undermentioned inquiries ; make hearers ‘ truly find the benefits in the usage of engineerings? Does IT lend in retaining the public assurance in hearers ‘ work? Or does the usage of CAATs enhance the credibleness of users ‘ of fiscal statements? Technology enhances work expeditiously, and likewise, hearers can do good, efficient usage of it to acquire the most effectual end product in footings of their audit judgement. Therefore, the benefits of this research will be to increase the consciousness of hearers about the assorted advantages CAATs offer them such that they remain in line with altering environment. Hence the populace, particularly investors, will hold faith in hearers ‘ work, since the usage of engineering surely discourages audit failures. Furthermore being cognizant of the benefits of CAATs greatly influences the point of position of other hearers who want to better their working methods, every bit good as this research could supply thoughts to package developers on how audit package could be improved to better suit for scrutinizing procedure.

Research proposal

Definition of the research job

Brief reappraisal of the literature relevant to the research job

The research aims and their intended benefits

Description of the intended research methodological analysis to be used, including informations aggregation methods.

Probationary “ Gantt ” chart on how I would finish the different undertakings for my research

List of bing mentions ( articles, books, other publications ) that I intend to utilize or entree for my undertaking or thesis.

List of Abbreviations

ACL Audit Control Language

AICPA American Institute of Certified Public Accountants

CAE Chief Audit Executive

IFAC International Federation of Accountants

IDEA Interactive Data Extraction and Analysis

ISA International Standards on Auditing

ISACA Information Systems Audit and Control Association

IT Information Technology

1 Research Proposal

Area: Auditing

Field: Information Technology Audit

Aspect: Hearers ‘ work and Information Technology techniques

Subject: Effectiveness of Computer Assisted Audit Techniques on hearers ‘ work

in heightening the audit procedure ; as a beginning of bring forthing a good and

efficient audit sentiment – in Mauritius

1.1 Executive Summary

Nowadays the capablenesss and chances provided by IT have transformed many legitimate concern activities, augmenting the velocity, easiness, and scope with which concern minutess can be conducted electronically, while besides take downing costs. Rapid alterations in engineering indicate that traditional auditing techniques are disused and inefficient in vouching the unity of an entity ‘s minutess. Hearers ‘ work contributes significantly to the stableness of fiscal markets. Furthermore with engineering important alterations have been made to get by with the developments in IT and run into the increasing demands of hearers in scrutinizing professions. In this respect, CAATs have been introduced to assistance hearers. CAATs audit package allows hearers to finish most processs on-line ; ACL and IDEA package. Because many concerns at present usage computing machines to treat their minutess, the scrutinizing profession has been faced with a demand to supply increased counsel for audits conducted in an IT environment. Assorted important organic structures, such as the AICPA, the IFAC and the ISACA have issued criterions in this country such as ISA 401 “ Auditing in a Computer Information Systems Environment ” ; ISA 1008 “ Risk Assessments and Internal Control – Electronic Environment ” . To the predating point, this paper seeks to research hearers ‘ purposes and behavior towards the use and acceptance of CAATs within their audit battles. The survey investigates the usage and acceptance of CAATs by hearers in Mauritius, which acts as the key in making an environment where the populace, particularly investors, will hold faith in hearers ‘ work, since the usage of engineering surely discourages audit failures and enhances audit work.

1.2 Research Problem

With the fiscal crisis stakeholders and regulators, due to their concerns for the audit quality, have criticized the scrutinizing profession. The job is that there are audit failures such as Enron and WorldCom arising, which make people lose assurance in hearers ‘ work. At the same clip, the concern universe is altering, traveling to a computerized dimension. Along this line, hearers ‘ techniques used in transporting out undertaking are altering with this environmental alteration. The demand for this research crops up due to extremely competitory and continuously altering concern environment in which the accounting and auditing houses operate. IT has been introduced in hearer ‘s work. In Mauritius, hearers use assorted IT tools to help them in their audit assignments, whereby these houses have considerable resources to pull upon with respect to the development and execution of new audit engineering. Other auditing houses may non hold the resources to get or develop engineering internally to the same extent as the largest houses. However, scarce literature is available on the perceptual experience of the usage of engineering in the scrutinizing profession in Mauritius. The purpose of this survey is to supply informations viewed from a local position by taking into history the Mauritian ‘s auditing houses ‘ civilization, every bit good as establishments, which provides independent hearers with computerized techniques in transporting out their work, so as to bring forth good audit sentiment.

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1.3 Literature Review

Prior CAAT Research

The rapid escalation of engineering and the usage of computing machines in concern pattern consequence in more criterions and guidelines to help hearers in a computerized environment ( Winograd et al. 2000 ; Shumute and Brooks 2001 ; Pricewaterhouse Coopers 2003 ) . “ Most hearers realize that they could – and should – better use the power of the computing machine, but yet they do n’t ” , says S. Williams ( December 2012 ) . Prior CAAT research is by and large descriptive in nature. A study by Braun and Davis ( 2003 ) sing the acceptance of ACL by governmental hearers shows that hearers perceive the possible benefits associated with ACL. Harmonizing to Debreceny et Al. ( 2005 ) internal hearers in Singapore usage CAATs for particular probes alternatively of following CAATs in their day-to-day audit work, while external hearers do non utilize CAATs believing that utilizing IT to prove fiscal statement averments is inapplicability. Harmonizing to Diane Janvrin et Al ( December 2008 ) the factors act uponing hearer credence of CAATs are public presentation anticipation and easing conditions such as organisational and proficient substructure support influence the likeliness that hearers will utilize CAATs. Previous surveies show that IT significantly changes the audit procedure and plays an of import function in finding the effectivity and efficiency of audit services ( Banker, R.D. , C. H, and Y. Kao 2002 ; Janvrin, Dowling, C. and S.A. Leech, 2007 ; D.J. Bierstaker, and D.J. Lowe, 2008 ) . Protiviti, with its focal point of internal audit capablenesss and demands study on engineering in the audit procedure 2012, clearly states that engineering is important in the audit procedure from the start to the terminal. However, research indicates that hearers do non consistently use CAATs ( Liang et al. 2001 ; Kalaba 2002 ; Debreceny et Al. 2005 ; Shaikh 2005 ; Curtis and Payne 2008 ; Janvrin et Al. 2009 ) due to tauten resource restraint, size and single user perceptual experiences.

1.3.1 Hearer

An hearer is a qualified individual who carries out the audit assignment and studies on the ‘true and just position ‘ of the client entity ‘s fiscal statements so that the users of fiscal statements can trust on the dependability and credibleness of the fiscal statements ( Turner, 2001 ) . Fiscal statements include Income Statements, Statements of Cash Flow, Statement of alterations in Equity and Balance Sheets and note s to the history. After analyzing these fiscal statements, the hearer expresses an sentiment at the terminal of the audit procedure, after geting sufficient and appropriate audit grounds.

1.3.1.1 Importance of hearer giving an appropriate audit sentiment after the audit procedure

Bakar et Al ( 2005 ) province that hearer ‘ sentiment is cardinal to the public assurance or users of fiscal statements, which usually are external paras such as stockholders, investors, creditors and fiscal establishments. Hearers are believed to work on behalf of company stockholders in order to guarantee that fiscal statements are stand foring “ true and just ” position ( Cosseratt, 2004 ) . If users lose religion in the audit procedure due to scrutinize failures this will finally sabotage the stableness of the capital markets. Harmonizing to Peter Wyman ( 2004 ) , failure is the consequence of the hearer misinterpretation of the wider concern dimensions or the countries of hazard inherent in the concern. Thus it is of import that hearers derive appropriate and sufficient audit grounds to give an effectual audit sentiment.

1.3.2 Computer Assisted Audit Techniques ( CAATs )

CAATs are computing machine tools that extract and analyze informations from computing machine applications ( Braun, Davis, Harlod, Harold, 2003 ) . CAATs enhance hearers ‘ work expeditiously and efficaciously while salvaging clip and cost in finishing an audit assignment ( Saygili, 2010 ) , and develop new ways of transporting out their undertaking ( Kamesam, 2001 ) . As per literature, CAATs enable hearers to pull out and deduce more audit grounds during the audit procedure, as it allows an hearer to size up the full population ( Singleton, 2006 ) .

1.3.2.2 Benefits of CAATs

CAATs increases productiveness, completes everyday undertakings faster ( 24- 75 % ) ( Abbe and King ( 1988 ) , Pinsonneault and Rivard ( 1998 ) , Banker et al. , ( 2002 ) , Zhao et Al. ( 2004 ) , Cahyani Windarto, ( 2012 ) ) , For illustration, CAATs can automatize antecedently manual audit trials cut downing entire audit hours expended. They enable hearers to prove the whole population instead than a sample, thereby increasing the dependability of decisions ( AICPA, 2001 ; Curtis and Payne, 2008 ) . Harmonizing to Arnold and Sutton ( 1998 ) , Sayana ( 2003 ) , Curtis and Payne ( 2008 ) , Janvrin et al. , ( 2009 ) , put to deathing an audit without the assistance of CAATs is barely an option as all information needed for carry oning an audit resides within computing machine systems. CAAT helps hearers to develop new audit techniques to accomplish their ends ( Dittenhofer, 2001 ) .

1.3.2.4 Generalized Audit Software

Two popular types of audit package are available to the hearers to use in the audit procedure ( Strand et al, 2005 ) , are ACL and IDEA which provide the agencies to derive entree to and pull strings informations and allows for informations extraction and analysis such as that allow the hearer to analyze a company ‘s informations in a assortment of formats. They are used to analyze the being, truth, completeness, consistence and seasonableness of informations, the quality of procedures embedded within an application system and analytical reappraisal to supervise cardinal audit indexs such as tendency analysis. In add-on, several audit operations such as trying are supported by the package ( Braun and Davis, 2003 ) .

1.3.3 Hearers in a computerized audit procedure

Use of IT in the audit procedure is a accelerator for heightening audit efficiency and audit quality ( Stuart et Al, ( 2001 ) , Alan W. Anderson, ( 2011 ) ) . The audit procedure alterations in footings of location, timing, entree, processs and working documents. Manual audit procedures can non work good within this progressively complex environment ( Miklos A. Vasarhelyi, April 1985 ) . “ The relationship between IT and audit procedure identifies important alterations in every stage of audit procedure as new technological tendency emerge ” provinces Bierstaker et al. , ( 2001 ) . However, the overall aims and range of an audit do non alter when an audit is conducted in a computerized environment.

1.3.3.1 Uses of CAATs

CAATs assist internal hearers in their hunt for abnormalities in informations files, to assist internal accounting sections with more elaborate analysis and to back up the forensic comptroller with generalizing big sums of informations for farther analysis and fraud sensing ( James Bourke, 2010 ) . CAATs include fraud sensing whereby hearers can place unexpected forms in informations that may bespeak fraud ( Strand et al 2005 ) ; CAATs besides enable hearers to transport out analytical trials by measuring the plausible relationships among both fiscal and non-financial informations to measure whether history balances appear sensible ( Vuchnich, 2008 ) , examples include ratio and tendency ; and CAATs allow for uninterrupted monitoring, which is an on-going procedure for geting, analysing, and describing on concern informations to place and react to operational concern hazards ( Bierstaker, Burnaby and Thibodeau, 2001 ) . However, as point out by Vendrzyk and Bagranoff, ( 2003 ) , “ the civilization of public accounting may make hindrances to the acceptance of new engineerings by audit squads ” .

1.3.3.2 Hearers utilizing CAATs worldwide

Harmonizing to Brozina et Al ( 2004 ) little houses do non follow such techniques, connoting that larger audit houses are able to better their audit work efficiencies and effectivity by utilizing usage informations extraction and analysis package tools, while smaller houses remain vulnerable to traditional audit procedure. A study conducted by Boritz ( 1989 ) , shows that a deficiency of necessary calculating resources to transport out the CAATs during audit procedure lead to scrutinize failure. Furthermore, ACL Services reports that a huge bulk of hearers perform informations analysis techniques, but besides that 9 % of hearers use automated audit techniques, and that about 70 % of hearers consider that the “ the highest degree of coveted use ” is uninterrupted monitoring by the concern. In United States 83 % of hearers use CAATs tools, United Kingdom ( 5 % ) , Australia ( 4 % ) , Canada ( 1 % ) , Switzerland ( 1 % ) and other ( 6 % ) .

Table 1: CAE Results- Three twelvemonth comparing on version of CAATs

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Rank

2012

2011

2010

1

CAATs

Continuous scrutinizing

CAATs

2

Continuous scrutinizing

Data analysis tools-statistical analysis

CAATs

Continuous scrutinizing

3

Data analysis tools- informations use

Data analysis tools-sampling

Data analysis tools-statistical analysis

4

Continuous scrutinizing

Data analysis tools- informations use

5

Data analysis tools-statistical analysis

Fraud-monitoring

Beginning: Protivit- internal audit capablenesss and demands study on engineering in the audit procedure

1.3.3.3 Auditing Software Used

Table 2: States utilizing ACL and IDEA package

States

Name of package

Main map

Belgium, Costa Rica, Guinea, Indonesia, Japan, Malaysia, Oman, Papua New, Poland, Switzerland, South Africa

ACL

Gathering, analysis of informations and informations extraction, trying and describing

Canada, Cyprus, Denmark, Grenada, Hungary, India, Ireland, Korea, Norway, Puerto Rico, Saint Lucia, Sweden, Trinidad & A ; Tobago, U.K. , U.S.A, Zimbabwe

Idea

Data Analysis & A ; Sampling

( Beginning: hypertext transfer protocol: //www.intosaiitaudit.org/directory/topic/Soft2.htm )

Table 3: Audited account Software Percentage of Use

Type of CAATs usage by hearers

Percentage of use ( % )

Data Extraction Software

86

Data Analysis Software

94

Fraud Detection and Prevention Software

50

Audit Management Software

78

Hazard Management/Analysis Software

96

Continuous Monitoring Software

38

Beginning: Jackson ( 2004 )

1.3.3.4 Hearers following CAATs in Mauritius

Mauritius supreme audit uses IDEA as it meets the outlooks of clients who invest to a great extent in engineering and want the hearers to utilize it ; increases efficiency and productiveness ; addition clip by automatizing manual undertakings ; performs data analysis efficaciously ; and offers value-added services, such as tendencies analysis, choice samples from general leger minutess, histories receivable outstanding points, stock list points, plus add-ons and paysheet. In 2008 Ernst & A ; Young conducted a research, which shows that 42 % of hearers adapt uninterrupted auditing, chiefly to place lacks, proctor hazards and place possible fraud activities. The study besides reports that the grounds curtailing houses to implement uninterrupted scrutinizing are a deficiency of skill sets within internal audit, budget restraints and no sensed value in the plan. S.Williams ( December 2012 ) studies that hearers prefer to go on scrutinizing through manual methods ” . This is illustrated by the figures of 63 % saying that they would look to use computer-assisted audit techniques, 55 % implementing electronic working documents, 54 % implementing a continuous/real-time audit procedure and 52 % looking to concentrate on informations excavation over the following five old ages. Large clients houses like the Accountant General ( Treasury ) , National Pensions Fund, the Central Electricity Board, Central Water Authority, Customs Department, VAT Department, Income section, and in add-on there are PWC, Baker Tilly Mauritius, Grant Thornton, KPMG are among those houses which implement CAATs ( IDEA ) , already in Mauritius. The paysheet and Treasury accounting of the Government are computerized. As such, hearers deal with soft transcripts or straight from clients ‘ systems alternatively of documents. It is believe that in the hereafter old ages, all audit houses will switch to paperless systems altering the nature of audit procedure and obtaining grounds electronically.

1.4 Research Objective ( s )

1.4.1 Aims of the research

This assignment has two overall aims:

This assignment examines the engagement and behaviour of hearers in a computerized environment

Examines the impact of IT, that is CAATs in the audit process-whether the usage of technology/CAAT efficaciously act as a beginning of audit grounds in order to retain populace ‘s trust in Mauritius

Specific aims:

To foreground the importance of hearers ‘ work and how it is cardinal to the populace

To foreground the importance of CAATs in hearers ‘ work in today ‘s changing universe

To analyze the impacts that CAATs have on audit work

To find the extent to which Mauritanian hearers adopt CAAT in their work.

To the predating point, the intent of this paper is to look into about the acceptance of CAATs by hearers within different houses in Mauritius.

1.4.2 Intended benefits of the survey

To the best of my cognition, in Mauritius, no survey to look into hearers ‘ consciousness on the benefits that CAATs can convey to their work and the version of the usage of IT has been done yet. This survey can therefore give an thought on how far hearers in Mauritius usage CAATs and happen it utile than traditional manual paper-based techniques. Through this survey, users of the fiscal statements will be able to acquire an penetration about how efficient and effectual computerized tools are used to supply them with an audit sentiment which is believable. This will guarantee them that necessary controls and stairss are taken to guarantee that audit quality is assured, and therefore minimise fraud such that they can trust on hearers ‘ work. Therefore, this survey will profit audit houses as it will let hearers to measure how efficient they can transport out their undertaking with the usage of CAAT. This will let them to convey along other benefits as follows: cut down costs since hearers work in a paperless environment ; an addition in their audit client satisfaction with a proper manner of maintaining their information firmly ; increased hearers ‘ satisfaction and committedness ; better return on investing ; and deriving competitory advantage thereby increasing efficiency. The consequence of the survey may therefore lend positively to the version of CAATs by hearers.

1.4.3 Research Hypotheses

From the research objectives, the followers is hypothesized:

Ho- The acceptance of CAATs enhances hearers ‘ productiveness, by run intoing the hearer ‘s aims expeditiously and efficaciously

H1-The version of CAATs does non heighten hearers ‘ productiveness, as it can non help hearers in all the audit undertakings

1.5 Research Methodology

1.5.1 Type of methodological analysis to be used and informations aggregation methods

Research methods can be defined as the beginning or foundation of cognition in any given field of research ( Dube & A ; Pare, 2003 ) . Both quantitative research and qualitative research will be adopted in the survey. Data will be collected from secondary such as articles published by the well-known periodicals, books, and thesiss and primary beginnings via a questionnaire. Before planing the questionnaire, I shall foremost of all get a list of all auditing houses in Mauritius, and take a sample of the whole population, since it will be time-consuming and dearly-won to measure all the houses that exist. The methodological analysis to be used in the survey will dwell of a random sampling among the hearers of audit houses through the disposal of questionnaire and at least three interviews with the directors of three accounting houses. The focal point of these interviews will be to larn which audit engineerings are presently being used, its current impact of engineering on the audit procedure and to look into their hereafter programs for technological applications for the auditing profession. The research questionnaire will be designed to bring forth consequences that are every bit nonsubjective as possible. Close-ended inquiries included such that to guarantee that full quantitative information was collected. Furthermore, these inquiries will be constructed in the signifier that will let the participant to attach few remarks to back up his/her position on a graduated table provided of 1-7 where 1 indicate wholly disagree and 7 indicating wholly agree. Participants will be asked to give positions sing the usage ofA CAATs ; that is, how do they understand it, and what are their purposes in following these audit techniques. Last the participants were asked to rate the adulthood and use of CAATs within their unit in a graduated table of 1 to 5.

1.5.2 Population or Sampling choice

The research population to function the intent of this survey shall be comprised of hearers from different audit houses throughout the island.

1.5.3 Sampling program

As to the sample, taking into consideration the clip of the survey, cost and resources available of this survey, a sample size comprising of around 200 Certified Auditors is decided.

1.5.4 Sampling method

Random sampling will be used. The single hearers will be indiscriminately selected from both genders and from different parts of the island for the informations aggregation.

1.6 Gantt chart

Below is my probationary “ Gantt ” chart on how I would finish the different undertakings for my research

Column 1

Aug

Sept

Oct

Nov

Dec

Jan

Feb

Mar

Choice of accounting houses

Questionnaire design

Pilot proving

Administration of questionnaire

Methodology

Data aggregation

Datas Analysis

Discussion

Finalizing thesis

1.7 Budgeting

The demand for doing photocopies of the questionnaires for atleast 200 Certified Auditors will be a batch and to pay for conveyance cost.

Outgos

Equivalent cost

Photocopies

Rs 1, 000

Traveling cost

Around Rs 500

1 questionnaire contains around 5 pages.

200 transcripts of the questionnaire = ( 5pages x Rs 1 per page ) x 200 = Rs 1, 000

Traveling costs will depend on the location of the houses I am traveling to interview and administrate my questionnaires.

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Page count

1 page 275 words

Deadline

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Effectiveness Of Computer Assisted Audit Techniques Accounting Essay
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Research Problem: Many surveies have been conducted to analyse the determiners for effectual application of IT, and analyze the tools used by information system hearers in many foreign states. The usage of engineering has been adopted in about all plants today, particularly with the spread outing function of e-commerce in the economic system, most hearers are following audit package in the audit procedure. But ( I ) to what widen have computing machine assisted audit techniques ( CAATs )

2018-10-21 00:41:24
Effectiveness Of Computer Assisted Audit Techniques Accounting Essay
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