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CMA Intermediate · Corporate Accounting and Auditing · Application of Technology in Audit and Audit Trail

An auditor of a company with a complex ERP wants assurance that the payroll program correctly rejects an employee record with an invalid PAN format and computes overtime correctly. The auditor submits fabricated transactions with known expected results through the client's payroll program in a controlled run. This technique is:

This is the test data technique. The auditor feeds fabricated transactions with known expected results through the client's payroll program and compares outputs with expectations, thereby testing validation and calculation controls in the program. Audit software, by contrast, only reads real data files.

  1. ATest data techniqueCorrect
  2. BAudit software extraction
  3. CGeneralised sampling of master file
  4. DAnalytical review of payroll ratios

Explanation

Submitting fabricated transactions with predetermined outcomes through the client's own program, then comparing outputs with expected results, is the test data technique. It tests program controls such as validation and calculation. Audit software instead reads real files and does not test the program's processing of dummy inputs.

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