The Use of Computer Assisted Audit Techniques - IDEA - Assignment Example

Introduction Different accounting packages and software are dominating the market so that the irregularities that remain in the data files can be found out. This has increased the use of Computer Assisted Audit Techniques (CAATs) which helps the auditing and other departments to analyze and find the areas which results in frauds and helps to curtail frauds by identifying the sources. Different accounting and auditing firms have increased their dependence on different tools so that the different areas which are important from the point of business can be looked into. This has increased the usage of CAAT which includes different software packages like IDEA, APEX systematic, ACL, Individual audit system, internet security scanner, HAWK, Computerized Accounting Records Comparison System, WINIDEA, IDEA4 Excel, Word and others which are used based on the requirements of a region. This is further demonstrated through a graph which highlights the usage of different tools as (Internal Audit, 2012) The above chart shows the use of software based on the process of extraction and highlights the usage of different software. A look at the usage based on analysis is as follows The above graph thereby highlights the manner in which the use of different software enables the different functions to be managed effectively. This report thereby look to present the manner in which IDEA software is being used in the field of accounting auditors, forensic auditor and information system auditing so that the manner in which this tools help to detect frauds can be identified and the different application of IDEA software can be ascertained. About IDEA IDEA is a Computer Assisted Audit Techniques which is user friendly and has been developed to help financial and auditing professionals so that they are able to assist in analytical purposes, auditing purposes, detection of threats, and to ensure that correct information is retrieved and used for future (Cascarino, 2012). A specialty of IDEA software is that it allows the user to fast import, link, evaluate, analyze, sample and export or remove or extract the facts and figures from generally all the sources, including reports printed to file. This serves as an important point in financial purposes as it ensures that the software can be used in diverse fields and provides the required results that the business is looking forward. The manner in which IDEA software is used has been demonstrated below The above diagram depicts that IDEA process look to import data and perform the analysis based on the users’ inputs which helps to provide the results in different forms and shapes so that the user is able to draw influential findings based on it. IDEA software is capable of extracting different kinds of facts and figures’ documents, involving the print documents (Coderre 2010) and the acceptability in different languages multiplies the uses. The software thereby has its importance and is used in different directions so that the frauds are easily detected and the importance of auditing magnifies. Use of Information Technology by Financial Statement Auditors, Forensic Auditor and information system auditing Rapid transformation in technology and the increasing demand for products which are technologically advanced has increased the research and development taking in the field of technology. This has provided both a positive and negative side. On the positive aspect the development of new and better Computer Assisted Audit Techniques through the use of different software has improved the lives of auditors. On the other hand this has increased crimes through the use of technology as people are able to tamper the valuable information (Albrecht, Steve & Sack, 2000). The use of technology in the direction of financial statement auditing, forensic auditor and information system auditing can be witnessed from the way in which computers has evolved and provided the users different inputs and software based on their individual requirements. Computer development has aided the manner in which technology is used in the field of financial statement auditing, forensic auditor and information system auditing. Despite the development it is important that the information that has been gathered is checked for authenticity and reliability so that frauds can be reduced and correct data interpreted. This requires the use of appropriate techniques and methods so misleading information are found out and the appropriate results for its use in the field of financial statement auditing, forensic auditor and information system auditing can be authenticated. This thereby requires that the required permission and information is obtained before hand so that the vale of data evaluation can be restored and data used for the correct purpose. Value of IDEA software for Financial Statement Auditors, Forensic Auditors & Information System Auditing The rapid development of technology has made both the perpetrators and frauds investigator to look towards ways in which the auditing software can be used for fraud detection. IDEA software package is one in that direction as it helps the users to find out the frauds, the risk associated with it and also helps to perform the different functions related to auditing easily. This software has an advantage as it helps in the accumulation of large data which provides the user the information regarding the consumers and enables the design, implement and evaluate the information system for the business so that authenticity and reliability improves. IDEA software enables the auditors in their respective fields to develop pivot tables, Benford analyses, age analyses, joining, sampling, appending the data repository and the drilling down of statistics and other processed facts and figures which provides important directions and clues so that the cost can be reduced (Dietz, 2009). IDEA software thereby enables the users to perform different functions like data stratifications, data queries, missing sequence identification, sample extractions, calculations, and statistical analysis. This ensures that the auditors are able to understand the different areas through which frauds are done and steps taken to prevent it. IDEA software enables financial statement auditing, forensic auditor and information system auditing to be enhanced as it helps to compare, amend and join the different sources together. This helps in the field of information system auditing as it provides the required paths and routes based on which the business is able to find out the areas of concern and develop tools which will help in fraud detection and thereby improve the overall service quality. IDEA for Accounting Auditors IDEA thereby helps the accounting auditors to summarize millions of transaction and checks its authenticity as seen in appendix 1. The chart shows that the accountant is able to summarize millions of transaction so that its authenticity and reliability gauged. Further, the use of IDEA enables the accountant to understand the manner in which data can be gathered and accumulated so that the retrieval process ensures correct results and helps to identify the sources which results in frauds. Further the IDEA software also enables the auditor to look into minute aspect of each transaction and provides multiple inputs opportunities which the auditor can use based on the requirements. This is provided in Appendix 2. This enables the auditor to gauge the effectiveness and the manner in which the expenses have been incurred from different angles. This thereby ensures that each and every transaction can be looked into from different angles. This helps the auditor to ensure that the information provided can be checked for validity and each and every transaction can be summarized and then extracted to find out its relevance and contribution towards the overall effectiveness in the maintenance of accounts. IDEA for Forensic Auditors IDEA software also enables the forensic auditors to gather valuable information pertaining to different transaction together so that all data can be interpreted and the authenticity of the system can be gauged. This is shown in appendix 3. This enables the forensic auditor to understand the manner in which the past details of the transaction can be understood. Since, IDEA looks towards presenting the unique customer identifier code this helps to check the validity of the past transaction. It results in identifying the different areas that the business has been affected and helps to deal with the aspect of frauds in a better manner. The IDEA software supports the user in extracting information with regard to employees and their spending purpose for different purposes. This is provided in Appendix 4. The chart highlights that the forensic auditor based on the data pertaining to employees year after year can identify the trends. Further, since the software allows the users to gain the ability to easily acquire copies of the client’s facts since the software comes with various tools which help the user in obtaining appropriate facts and figures involving the extraction of popular small business accounting packages like accounting and quick books it ensures easy applicability for the forensic auditors. This thereby helps to ensure that the final results achieved magnifies the value and importance of the overall surrounding and integrates different data. IDEA for Information System Auditing IDEA software helps to multiply the help of auditors and ensures better interface and development of different parameters since it provides information from different directions. This is highlighted in the Appendix 5. It is seen that IDEA helps to multiply the interface as it provides useful information which provides an advantage of simulation and develops an system which helps to retrieve large information so that the business is able to gather useful information which has relevance in decision making. Using the IDEA software helps the business to develop different images in different forms and sizes which helps the business to determine the future requirements. Further, using this software the business is able to develop different important findings which help to understand the mechanism through which customer requirements and developments in different direction can be found out so that the business is able to use for their future purposes. Situations under which Financial Statement Auditors, Forensic Auditors & Information System Auditing use IDEA software Different audit software are being continuously being used by business organizations in varied fields. Different reasons have been attributed for the use of different audit software. This has made it difficult to visualize an auditor without any audit software as it helps to serve different purposes. One of the prime reasons for the use of audit software like IDEA is the increasing number of frauds that are taking place. This still provides the scope and room for more software to be developed in this direction. This requires the development of IDEA software that helps to develop new procedures and programs so that the database of the organization can be protected. Another reason identified for the use of IDEA software by auditors is that it provides a technique through which the efficiency of the internal control process within the organization can be verified (O'Leary, 2010). This helps to check the efficiency of the internal control system and helps to provide the internal auditors with the required information so that the efficiency of the system can be enhanced. Also, the increase in the demand of auditors for internal management has increased the use of IDEA as a tool. Since, this tool helps the user to get valuable information which helps them to be more effective and efficient in their services so that the high expectations of the industry and the organization can be met. This requires the auditors in the various fields to gain relevant knowledge about the use of software so that they are able to reduce frauds and ensure better strategies to deal with it. Working on this skills and developing their knowledge ensures better implementation of techniques so that information can be retrieved in a better manner and the entire information is reviewed from time to time. This also increases the efficiency and ensures that frauds are caught early on so that necessary steps can be taken (Gelinas, Ulric, Elliott, Levy, Jay & Thibodeau; 2001). This will help the business to reduce their chances of being involved in frauds and will help the auditors as they don’t have to undergo the process through which they need to check the entire transactions. IDEA software helps the auditors due to the added advantage associated with it. Auditors through the use of IDEA software are able to determine the transaction cycle and account balances of the business as it provides a direction to get it. The software also helps the business to find out the root cause of frauds and supports a system through which the auditors are able to save information related to enterprises management, customer, supplier, computer, and human resource. The importance of this software increases as it provides even complex results in a second which humans are unable to do easily. This thereby helps the auditors to save on time and at the same time ascertains that data can be extracted anytime. The importance of IDEA software magnifies as it allows user to only read the files and no alteration can be made neither the files can be deleted which helps to ensure a strong step which will reduce frauds through the tampering of data. Different applications of IDEA software The software package IDEA is slowly gaining relevance and is now being used by auditors for different purposes. The use of IDEA software package is found in auditing, forensic auditor and information system auditors due to the varied advantage and services that can be achieved through the use of the software. IDEA thereby helps in the extraction of data so that the gap between the past and present data can be identified and services delivered which helps to ensure customer satisfaction (Sherer, 2009). This will thereby ensure that different information will be used for summarizing the data, so that appropriate results could be drawn for analysis and frauds can be reduced. Extraction IDEA software allows the auditors to reuse the information which has been previously stored for future purpose. This serves the purpose of auditor as it enables the auditor to use the information by rewriting the programs. This helps to ensure that the tool is able to perform different functions like trends analysis, select samples, conduct preliminary analysis and test which help to check the efficiency and validity of the information. The different functions help the business to understand the different customers and accordingly different efforts can be directed so that customer satisfaction gets enhanced and the business is able to work in correct direction. This helps the business to store important information and can be retrieved in the near future which has been shown in appendix 3 where the required information is retrieved. This thereby helps to ensure better use of the software and helps to develop required area from which the information can be retrieved Gap Detection IDEA software also helps the auditor in gap detection which ensures that the auditor through the process of auditing are able to identify the gaps and use data so that the data is free from frauds and also reduces the chances of frauds in the near future. This software allows the auditors to undergo the process of testing completeness which helps to find out the gaps in the testing process from time to time. This thereby ensures that the gaps in the process of auditing are identified and the auditors are able to fill the loopholes so that the business is able to grow. The testing process thereby helps the auditors to search the numeric sequence which helps to find out the gap and identifies the area through which frauds can be done. This thereby helps in searching duplicate records as seen in appendix 3 and helps to remove the confusion during testing as duplicates can be easily identified and worked on. Satisfaction The use of IDEA software by auditors from all around the world has ensured that the satisfaction level among the use of software has grown. Even different surveys and strategies conducted in this direction shows that the demand for IDEA software is slowly growing as seen from the graph below The above chart shows that the level of satisfaction is increasing through the use of audit related software. IDEA software has also ensured better improvement of the business and performance growth as different supporting compliances and tools enables the auditors to use the software again and again so that the business is able to ensure better results. Further, the satisfaction level of clients ensures that the business is able to provide quality products and services to its clients and has enabled the auditors to move a step ahead and develop tools in the field of fraud detection, continuous monitoring, and extraction and analysis of data (Moeller, 2009). This thereby ensures that the business is able to provide better results and helps to move from one strength to other. This has thereby ensured that the auditors are able to measure the efficiency and effectiveness of audit reviews so that operational process and controls can be improved. This thereby ensures better use of the system and provides better results for future use. Summarization IDEA software also enables the auditors to summarize the information so that the extracted information can be retrieved to gather appropriate results. IDEA software helps to ensure that the information is selected from the correct sources; the appropriate calculations are performed and then based on it the result is published so that the report is available in the required format. This software also helps to ensure that the data is dealt in the most effective manner and also looks towards scanning, testing and summarizing the information so that better understanding of the computer aided operations can be developed. Conclusion The report thereby presents the manner in which IDEA software helps different auditors like accounting auditors, forensic auditor and information system auditing to ensure effectiveness in their operations. The use of IDEA software helps the auditors to ensure that the information retrieved and entered is correct which thereby helps to reduce the chances of frauds as the auditors are able to identify the gaps and then work on the different areas through which efficiency is yielded. IDEA software has helped to develop the auditors’ use of audit assisted software and will thereby help the business to develop better use of the resources and will help to control the inefficiencies and control frauds. References Albrecht, W., Steve, R. & Sack, J. 2000. Accounting Education: Charting the Course Through a Perilous Future, Accounting Education Series, American Accounting Association, Volume 16, USA Cascarino, R. 2012. Auditor's Guide to It Auditing, John Wiley & Sons. Coderre, D. 2010. Computer Aided Fraud Prevention and Detection: A Step by Step Guide, John Wiley & Sons. Dietz, J. 2009. Project Summary: Evaluation of New and Emerging Technologies, U.S. project agency. Gelinas, Jr., Ulric J.; Elliott S. Levy; Jay C. Thibodeau; 2001. Norwood Office Supplies Inc.: A Teaching Case to Integrate Computer-assisted Auditing Techniques into the Auditing Course,” Issues in Accounting Education, pp. 603-636 Internal Audit. 2012. The 2006 Internal Auditor Siftware Survey Result. ACL Services Ltd. Canada Moeller, R. 2009. Brink's Modern Internal Auditing: A Common Body of Knowledge, John Wiley & Sons. O'Leary, D. 2010. Artificial Intelligence in Accounting and Auditing: Creating value with AI, Markus Wiener Publishers. Sherer, M. 2009. Audit Automation: The Use of Information Technology in the Planning, Controlling and Recording of Audit Work, The Institute of Chartered Accountants of Scotland Appendix 1 Accumulation of Expenses using IDEA Appendix 2 Summarization of Information for Auditors Appendix 3 Merchant Idenfier Code for Forensic Accountant Appendix 4 Details Pertaining to Employee Appendix 5 Read More