Substantive testing of computer records is possible and necessary. The extent depends on the degree of reliance the auditor has placed on the internal controls. Substantive testing includes 2 basic approaches both of which will be used.
Manual Testing Techniques
- Review of exception reports: The auditor then attempts to confirm these with other data for example the comparison of an outstanding despatch note listing with the actual despatch notes.
- Totalling: Relevant totals for example of debtors and creditors listings can be manually verified.
- Re-performance: The auditor may re-perform a sample of computer generated calculations for example stock extensions, depreciation or interest.
- Reconciliation’s: These will include reconciliation’s of computer listings with creditors statements, bank statements, actual stock and personnel records.
- Comparison with other evidence such as results of a debtors circularisation, attendance at stock take and physical inspection of fixed assets.
Computer Audit Programs sometimes called generalised computer audit software. Computer audit programs are computer programs used by an auditor to:-
- Read magnetic files and to extract specified information from the files.
- To carry out audit work on the contents of the file.
These programs are sometimes known as Inquiry or Integration programs.
Uses of computer audit programs:
- In the selection of representative or randomly chosen transactions or items for audit tests.
- The scrutiny of files and selection of exceptional items for examination e.g. on wages payments over Shs.1000 or all stock items worth more than Shs.100,000 in total.
- Comparison of 2 files and the printing out of the differences e.g. payrolls at 2 selected dates.
- Exception reports can be prepared using these programs e.g. overdue debtors.
- Stratification of data such as stock items or debtors with a view to examination only of materialitems.
- Carrying out detailed tests and calculations.
- Verifying data such as stock or fixed assets at the interim stage and then comparing the examinedfile with the year end file so that only changed items need to be examined at the final audit.