System Integrity & Validation

System Integrity and Validation

With the recent implementation of automated software at Kudler Fine Foods, there is the need to address system integrity and the use of computer assisted auditing techniques (CAATs). This brief will examine the following: how CAAT is used to validate data and system integrity within the system, explain the functions of audit productivity software, and explanation of how audit productivity software might be used in the system designed.

How CAAT is used to validate data and system integrity

Auditors prefer to use computer assisted auditing techniques (CAATs) for many reasons. They enable auditors to use software applications, extract data for analyzing, look for trends within the data, and identify any potential areas for fraud detect fraudulent data. CAATs are valuable tools for auditors to test and validate computer applications and they can determine whether or not the source code has been compromised. The implementation of CAATs will increase efficiency and the effectiveness of both internal and external audits allowing auditors to analyze all of the financial data, a feat which would not be possible if the audit were conducted manually.

SAS 94, The Effect of Information Technology on the Auditor's Consideration of Internal Control in a Financial Statement Audit, provides guidance to auditors regarding the need for the auditor to address internal controls activities during the course of an IT (Cerullo, 2003). Auditors must have a working knowledge of the client’s software program and an understanding of the relationship with the company’s financial statements. Auditors must also comprehend the processing of transactions into the general ledger, the recording of both regular and special journal entries, recurring and nonrecurring adjusting entries, and the types of material misstatements that may occur.

To verify system integrity, auditors can validate applications through test data, an integrated test...