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Audit Software Can Perform Computations. Audit software is capable of performing any of the common accounting computations. These normally include addition, subtraction, multiplication, and division. Some audit software packages have the capabilities for calculating percentages. However, when special mathematical computations are needed, such as sum of the years' digit depreciation, the auditor will normally have to write the algorithm for performing that calculation using the previously mentioned computation capabi 1ities. This computational capability enables auditors to perform such calculations as verifying gross wages by multiplying hours worked times hourly wage.
Audit Software Provides The Capabilities To Compare Two Files.
This capability enables the auditor to examine two files simultaneously. This comparison capability enables the auditor to determine if records on the two fi les are equal. Other comparison capabilities, such as greater than, and less than might be available, but the most commonly used comparison is for equal or unequal values or records. This type of capability enables an auditor to examine weekly payroil records from two consecutive weeks. One reason for doing this would be to search for new employees on either this or last week's payroll file that are not on the other weeks' file. By comparing the two fi les, all equal records would be ignored, and only unequals would be listed.
Audit Software Provides The Capability Of Comparing Two Fields.
This capabi hty enables the auditor to determine between two fields, which is greater, which is the lesser, and if the two fields are equal or unequal. This is an analysis that is performed using two fields instead of one. This comparison can be performed with one record, or between records. For example, if an order was comprised of many line item records, the auditor might want to compare invoice number from one record to the next to determine if the line item record being examined belongs to the current invoice being analyzed, or to a new invoice.
Audit Software Can Stratif~ Files. This is one of the more powerful capabilities of au it software that is not available as a command in most computer languages. Stratification will determine how many records in a file fall into a given category, or strata, and the value and number of the records in that strata. This is extremely valuable when sampling is being used. For example, an accounts receivable file could be stratified by accounts receivable balance. The auditor first decides the number of stratas desired. For example, the auditor might pick three stratas, one from zero to $1,000, the second from $1,000.01 to $3,000, and a third for those balances over $3,000. Then by examp 1e to contents of each strata the auditor can decide upon the sampling method.
Audit Software Can Be Used To Select A Random Sample. This capability permits the auditor to quickly generate a sample for audit purposes. One of the major drawbacks to using sampl ing has been the complex procedures an auditor had to follow in selecting a sample. Manually performed, selecting a sample can be an extremely time-consuming task. Computer audit software has automated th i s task and made random samp 1i ng pract i ca 1.
Different packages use different sampl ing algorithms. Some of
the sampling methods available include:
Every Nthitem starting with item X A true random sample that will give X% of the file Dollar value sampling A sample designed to provide a predetermined confidence limit.
Audit Software Has The Capability To Resequence Data.
Frequently computer files are not in the sequence that auditors need for analytical purposes. Some audit software packages have the capability to resequence the order in which data appears for processing. For example, if a payroll fi le is in employee number sequence, an auditor can have that file resequenced using audit software so that it would appear in department number sequence. Some audit software packages have the capability to resequence a few records at a time, but this is unusual. Most resequencing is done with entire files at one time. Some audit software packages use a sort utility program to perform this resequencing.
Audit Software Can Summarize Data. Many audit software packages have the capabi 1ities to accumulate one or several levels of totals for a specific field. For example, if an auditor wanted to get payroll totals by department, by division, by plant, and by company, there would be four levels of totals. This summarization can be performed in two different ways. One way, all the detail records are listed with a total appearing. each time there is a break in sequence.
For example, when one department has ended, the department total is listed before the next department number starts. Then when division numbers change, the division total is printed before the next division records commence. The other way of handling summarization is only to list the totals. For example, payroll could be summarized and only list one payroll summary report line for each department in the company.
Audit Softw~r~__~an Prepare Data For Printing. Data as represented in internal computer format may not be legible when printed in that format. For example, some methods of storing numerical data internally (i.e., packed decimal) in a computer cannot be printed in a legible format without some preparation work performed prior to printing. Even alphabetic data may not be readily readable without preparation work. For example, people's names may be stored without blanks in the computer.
Without knowing the key to decode the data for printing purposes, the auditor would have to guess where the last name stops and the first name starts. In addition, numerical data does not contain decimal points, commas, or negative or positive value signs that are readily understandable when printed using internal computer coding. All this information must be included with the numerical values before they are printed. Audit software has the capabl ity of doing much of this automatically.
Audit Software Can Build New Files. Many times the auditor needs to bUild a file for use in later processing. For example, the auditor may want to build a file of inventory test counts that are to be made. Once this file has been created, it can be used to compare actual counts to book values, using one of the other audit software capabilities, in order to determine if the test counts equal the book, physical inventory. Fi les can be built from scratch, or they can be built using information contained in other files.
Audit Software Can Restructure Information. Frequently, information in a computerized record is not in a format that the auditor needs. For example, states may be carried as a code from one through fifty, rather than as an English word.
For example, the state of Florida may be code thirteen. If the code was not restructured (i.e., translated into something legible), it would mean that the auditor would either have to memorize the codes, or look each one up in a catalog every time it is encountered. Other types of data that require
restructuring for presentation purposes include:
Changing minus signs to "CR" or the word credit Converting numeric codes to English words (such as employee number to employee name) Encrypting and decrypting data Audit Software Can Update Files. Audit software has the capability to create and recalculate files containing information which can be updated. Updating can mean adding values, changing values, or deleting values. For example, if auditors are making numerous test counts, and inventory is scattered throughout many locations, the updating capabi 1ity enables the auditor to combine the value of the various counts of the same product on a work file.
Audit Software Provides The Capability Of Performing Statistical Analysis. Some of the newer audit methods use statistical analysis. For example, certain data relationships can be shown through regression analysis. Some of the simpler statistical analyses performed include generation of bar graphs, generation of histograms, and trend charts. Some of the more complex statistical analysis available include linear programming, trend line analysis, correlation analysis, and multiple regression analysis.
Audit Software Provides The Ca abilit Of Simulatin Portions Of A Whole S stem B Parallel Simulation. Audit software can duplicate production processing for audit purposes. For example, an auditor could develop a routine using audit software commands to calculate the interest on saving passbook accounts. The amount calculated by the auditor is then compared to that the bank calculated for their depositors using the production systems. Any discrepancies would be uncovered by the parallel simulation run.
Selection Of An Audit Software Package There are numerous audit software packages available. The selection of a generalized audit software package is a process of determining which of the available packages meets an organization's needs. Referring back to Chapter 8 recall that factors such as the existence or nonexistence of audit trails; real time processing environment; batch processing environment; etc., all affect the investigative techniques used to detect computer fraud. Further, the type of threats in a system might influence the selection of a specific package. As with most generalized software packages, audit software packages have different capabilities, strengths and weaknesses which must be matched to the requirements. In addition, operational and economic considerations must be evaluated. Thus, factors such as the cost of the software package; the equipment required to process it and its cost; efficiency of use; ease of learning; etc., must be evaluated.
The literature provides rather extensive coverage of the generalized audit software package selection process as well as the use of audit software. A few sample packages are provided below as reported in a special publication of the U.S. Department of Commerce, National Bureau of Stardards.
Sample Packages The U.S. Department of Commerce, National Bureau of Standards (NBS) published a document giving the features of seven audit software packages (NBS Special Publication 500-13 1977). Although other packages are available, these seven packages basically typify the capabilities and features of generalized software packages.
The NBS document includes the following packages:
Auditape DYL 260 Easytrieve EDP-Auditor Hewcas Mark IV/Auditor Score.
The seven packages are compared on the basis of:
Availability And Cost Of Software. Different software distribution plans exist. Software to be installed at a customer's site may be available for purchase or lease.
Software may also be available from time-sharing service centers. The rental and purchase costs for each of these systems were obtained from the General Service Administration (GSA) schedule, where available, or from the software vendors.
In certain cases a discount is allowed if more than one copy of the system is acquired within the same government agency.
History Of Software Package. Historical information on the implementation of the software package indicates the extent of development and field usage. The specific information concerns the date of first installation and the name of significant installations.
General Systems Characteristics. The basic design of an auditing software package is important in analyzing the potential performance, flexibility, and transferability of the package. Other characteristics are the avai 1abi 1ity of separate functional components of the package, and the method of combining these components to generate data and information useful to the auditor. The language in which the package is written is of importance if changes have to be made to the program. A so of importance are the ab il ity to 1ink to other programs, and the abi 1ity to accommodate user generated routines, macros or programs.
Modes Of Use. The operator interaction with the software package is described here. Various specifications must be supplied to an auditing package describing client's file characteristics, functions to be performed, and desired presentation of results. The object computer configuration, i.e. the configuration of the computer on which the audit package is run to produce audit results, must also be specified. These specifications can be communicated to the audit program in an interactive dialog from a terminal, or they may be entered by punched cards, requiring preparation of multiple choice forms, questionnaires, coding forms, or other written instructions. Number of forms, detail specified, ability to accommodate changes, affect ease of use of the package.
Computer Environment. The auditing software package may produce a program capable of running on a computer different from the one on which the initial parameters were specified.
The computer on which the initial parameters were specified is called the source computer. The computer on which the auditing software executes the audit functions and derives audit data is called the object computer. The source computer could be a computer at the auditor's location, while the target computer may be a machine at the client's site. The source computer and the object computer could also be the same computer.
Data Types. A variety of. data types that exist in various client's files must be accollUl1odated by general purpose audit packages. These data types are machine representations, but are dealt with by the auditing software in a logical way.
Examples of data types which the vendors are supporting are numeric, numeric signed, alphanumeric, decimal, binary, floating point etc.