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CMA Intermediate · Corporate Accounting and Auditing · Audit Sampling, Audit Techniques and Analytical Procedure

An auditor uses audit software to re-perform the calculation of depreciation on every item in a company's fixed asset register and compares the results with the amounts posted in the ledger. Which feature of Computer-Assisted Audit Techniques is chiefly being used here?

The auditor is using audit software to test the whole population by re-performing calculations on every asset record. CAATs make full-population testing feasible, but they do not remove the need to understand controls or eliminate audit risk altogether.

  1. ATesting the entire population instead of a sample, using software to re-perform calculationsCorrect
  2. BReplacing the need for any understanding of the entity's internal control
  3. CSelecting a judgmental sample of high-value assets only
  4. DEliminating audit risk completely because every item is checked by software

Explanation

CAATs such as audit software allow the auditor to re-perform calculations on all records in a file, so the whole population is tested rather than a sample. Option B is wrong because understanding internal control is still required. Option D is wrong because audit risk is reduced, not eliminated, as other risks such as inappropriate assertions remain.

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