Which of the following CAATs allow fictitious transactions planted by the auditor to be processed along with real ones on client’s system?
|a) Integrated test facility|
b) Test data approach
c) Generalized audit software
d) Parallel simulation
The Correct Answer Is:
a) Integrated test facility
Correct Answer Explanation
The correct option is: a) Integrated test facility
Integrated Test Facility (ITF) is a type of Computer-Assisted Audit Technique (CAAT) that allows fictitious transactions planted by the auditor to be processed along with real ones on the client’s system.
This technique involves embedding a set of test data directly into the client’s live system. The test data is designed to mimic actual transactions and is processed concurrently with real transactions.
By doing so, auditors can observe how the system handles both real and test transactions, enabling them to assess the effectiveness of the internal controls and identify any irregularities or discrepancies.
Integrated Test Facility is a powerful tool for auditors because it provides a realistic environment to test controls and procedures without disrupting normal operations. It allows auditors to evaluate the system’s response to various inputs and helps in identifying any potential weaknesses or vulnerabilities.
Now, let’s discuss why the other options are not correct:
b) Test data approach:
The test data approach involves the auditor creating a set of fictitious transactions that are processed separately from the client’s live system. This means that the test data is not integrated into the actual system used by the client for day-to-day operations.
Instead, the auditor uses a separate environment to process the test data and then manually compares the results with what should have occurred.
This approach is useful for testing the accuracy and completeness of processing routines, but it doesn’t meet the specific criteria mentioned in the question. It doesn’t allow for the simultaneous processing of fictitious and real transactions within the client’s system.
Therefore, it doesn’t enable auditors to directly observe how the system handles both types of transactions together, which is a key characteristic of Integrated Test Facility (ITF).
c) Generalized audit software:
Generalized audit software (GAS) refers to specialized computer programs designed to assist auditors in performing specific tasks related to auditing. These tasks may include extracting data from the client’s system, performing various analytical procedures, and generating reports.
While GAS is a valuable tool for auditors and can significantly enhance their efficiency and effectiveness, it doesn’t specifically address the scenario described in the question. GAS doesn’t involve the direct processing of fictitious transactions within the client’s live system.
Instead, it focuses on extracting and analyzing data for audit purposes. Therefore, while GAS is a powerful CAAT, it doesn’t align with the specific criteria mentioned in the question.
d) Parallel simulation:
Parallel simulation involves creating a duplicate system that runs alongside the client’s live system. This duplicate system processes the set of fictitious transactions planted by the auditor, while the client’s actual system continues to process real transactions.
The results from the duplicate system are then compared with those from the client’s live system.
While parallel simulation is an effective technique for testing controls and evaluating the accuracy of processing, it differs from Integrated Test Facility (ITF) in a significant way.
In parallel simulation, the auditor is working with a separate, duplicate system, rather than directly processing fictitious transactions within the client’s live system. This distinction sets it apart from ITF, which involves embedding test data directly into the live system.
In conclusion, while the options b), c), and d) are all valuable techniques in the auditor’s toolkit, they do not specifically meet the criteria outlined in the question, which is the ability to process fictitious transactions alongside real ones on the client’s system.
This capability is a unique feature of Integrated Test Facility (ITF)