Table of content:

1. Computer assisted auditing tools

2. Data mining

3. Integration of audit and Data mining

4. Understanding Auditing: Ensuring Financial Integrity

1. Current Auditing Computerized Tools
Why Computer Assisted Auditing Tools?

• It is even more impossible in an e-commerce intensive environment because all

accounting data auditors need to access are computerized
• in the past ten years, auditors frequently outsource technical assistance in some
auditing areas from information system (IS) auditor, also called electronic data
processing (EDP) auditor
• In auditing with the computer, auditors employ CAATs with other auditing
techniques to perform their work. As its name suggests, CAAT is a tool to assist
auditors in performing their work faster, better, and at lower cost.
Generalized Audit Software

• Generalized audit software (GAS) is an automated package originally developed

in-house by professional auditing firms. It facilitates auditor in performing
necessary tasks during most audit procedures but mostly in the execution and
documentation phase
Generalized Audit Software

• Basic features of a GAS are data manipulation (including importing, querying and
sorting), mathematical computation, summarizing and file merging. It also
involves extracting data according to specification, statistical sampling for detailed
tests, generating confirmations, identifying exceptions and unusual transactions
and generating reports. In short, they provide auditors the ability to access,
manipulate, manage, analyze and report data in a variety of formats.
Generalized Audit Software

• ACL (Audit Command Language)

• IDEA (Interactive Data Extraction and Analysis)

• Teammate Analytics
 Audit Process

Planning Risk Assessment

Tests of control - Analytical Review –

Execution and Documentation
Detailed Test – Documentation

Other possibilities Fraud Detection

2. Data mining
What is Data Mining??
• Data mining refers to extracting or “mining” knowledge from large amounts of
data. Also referred as Knowledge Discovery in Database (KDD).
• It is a process of discovering interesting knowledge from large amounts of data
stored either in :
 Databases
 data warehouses
 Text files
 Social networks
 computer simulations
Why Data Mining??
 Pattern Recognition
Data mining helps in identifying patterns and relationships within large datasets,
which can be used to make better business decisions.
 Predictive Analysis
By analyzing historical data, data mining can help in predicting future trends and
behaviors, enabling organizations to proactively adjust their strategies.
 Process Optimization
By analyzing operational data, organizations can identify inefficiencies and
optimize their processes for better performance and cost savings
Why Data Mining??
Overall, data mining can lead to :
 improved competitiveness
 increased profitability
 better understanding of Business needs and preferences..
Data Mining Process?
 Data Collection
 Data Selection
 Data Cleaning
 Data Integration
 Data Transformation
 Data Mining
 Extract Patterns
 Pattern Evaluation
 Knowledge Presentation
Process Mining brings Internal & External Auditing to the
digital age

• Process Mining helps the auditing practice to stay current with developments in
the IT architecture and Big Data.

•The data set is no longer subject to limitations of sample or attention scope, but
provides the full picture, graphically and rich with attributes
Process Mining brings Internal & External Auditing to the
digital age

• Once Process Mining is established as part of the internal audit function, auditors are better able to

identify areas to focus on

• A final and quite critical part of internal auditing that Process Mining supports is process

visualization. This visualization allows an internal audit team to effortlessly achieve transparency

into how processes are executed in real life and gain deeper insight into process

interconnectedness

•
3. Integration of Auditing and Data Mining
3. Integration of Auditing and Data Mining
• Why Integrate Data Mining with Auditing?
• Increase of transaction volume and complexity of accounting and non-
accounting transactions.
• The greater amount of transactions results in business intelligent systems
such as enterprise resource planning (ERP) systems and supply chain
management (SCM) systems.
3. Integration of Auditing and Data Mining
• Data mining techniques offer valuable opportunities to uncover
patterns, detect anomalies, and gain deeper insights during the auditing
process.
Generalized Audit Software Vs Data Mining Packages

• Specifically customized for audit work • Automated capability

• All-in-one features: GAS • High complexity

packages
• Scalability
• User friendliness features
• Ability to handle complex
• little technical skill required problems

• uncover unexpected patterns

Possible areas of data mining and audit processes integration

Audit Processes Appropriate Mining Methods Data Sets Required Possibility

Audit program Classification and Business rating ratios, business rating,

preparation prediction - Industry rating industry rating and controls
- Economic index
- System flowcharts

Audit Processes Appropriate Mining Methods Data Sets Required Possibility

Sample Selection - Cluster analysis - System information Controls can be identified
- Outlier analysis - Results of from normal activities by
risk assessment using classification analysis;
- Accounting
transactions
4. Understanding Auditing: Ensuring Financial Integrity
• Financial Audit
• Operational Audit
• Compliance Audit
• Internal vs. External Audit
Auditing Standards and Regulations

• GAAS, ISA, and other relevant standards

• Regulatory frameworks (e.g., Sarbanes-Oxley Act, SEC regulations)
 Types of Audits

• Financial Audit
• Operational Audit
• Compliance Audit
• Internal vs. External Audit
 Auditing Standards and Regulations

• GAAS, ISA, and other relevant standards

• Regulatory frameworks (e.g., Sarbanes-Oxley Act, SEC regulations)
 Audit Process

• Planning
• Fieldwork
• Reporting
• Follow-up
 Auditor's Responsibilities and Ethics

• Independence and objectivity

• Professional skepticism
• Confidentiality and integrity
 Challenges and Emerging Trends

• Technological advancements
• Globalization
• Regulatory changes
Thank You