The Hindu Business Line : IT edge to auditing

"The traditional role of internal auditing was one of security, compliance, certification and investigation. Its emerging role, however, is constructive, participative, consultative, proactive, advisory and catalytic. Internal auditing focuses more on where a business is going rather than simply debating on where it has been," says Srivatsan, Director, Astral Consulting.

Srivatsan has kept pace with the changes. Though he started his career as a Chartered Accountant 25 years ago, he has, over the years, graduated into offering management consultancy services too for corporates in India and abroad.

While technology as a tool has reduced the burden of an accountant, the internal auditor is forced to go that extra mile before certifying the statement as `true and fair'. `Our job is half-done, not complete, even though the presentation is neat and the balances tally,' he says.

How does his team conduct the random check? `We have developed a tool - CAAT (Computer Assisted Audit Technique), which involves the use of computer in the audit process. CAAT incidentally, will allow us to have access to the client's data independent of the system, test the reliability of the software and perform audit checks more efficiently. It also helps to analyse and interpret the data,' adds Srivatsan.

Say, for instance, the audit team wants to verify the serialisation of vouchers to detect gaps in the sequence or extract information of transactions that have exceeded a certain limit - it can be a strain on the eye to check the system-generated printout and a time-consuming task. This tool would indicate the list at the press of a button.

CAAT is used in testing the details of transactions and balances, for identifying inconsistencies or significant fluctuation tests of general controls, re-performing calculations done by the entity's accounting systems, in application controls, etc.

It may not be possible to perform certain audit procedures manually because they involve huge data. Computer information systems would perform such tasks for which no hard copy evidence would be available and it could be impracticable for the auditor to perform the tests manually.

At times the source of information would be initiated electronically, as in interest calculation and discounts. There is no specific authorisation for such transactions. These can be verified with the use of this tool, says Srivatsan.

The auditor, should, however set the objective of CAAT application, determine the content and accessibility of the entity's files, identify the specific files or databases to be examined, define output requirements, ensure that the use of the tool is properly controlled and refine the estimates of cost and benefits.

The software has been developed using VC++ with Microsoft SQL Desktop Engine (MSDE) as the backend database. Data to be analysed is imported into this database from any source and restructured for analysis. Source data is accessed in a read-only mode.

"Hence there is no danger of the source data being modified by this application. The hardware lock (Microdog from Sentinel) is a secured device.

It is used to keep away unauthorised persons from using this tool," claims Srivatsan.

You walk into his office and see how his team is capitalising on the potential of this tool — as evidenced by the lack of clutter.

It is user-friendly, but to use CAAT, the IT knowledge, expertise and experience of the audit team does matter, says this auditor.

lnr@thehindu.co.in