0

“Audit Automation in Contemporary

Organizations”

By- Md. Zahid Kalam

BBA ( major in MIS), DU

Extract: Today’s business processes are so complicated and dynamic that

the professionals have to remain updated and well-informed of the latest business events

and technologies whenever these take place. Audit Automation is such a latest technology

that must be informed to the business professionals. An attempt has been made to

introduce the audit automation technologies to the auditors and related professionals

through this study. Presently most of the business processes are going automated day by

day and it has become essential for today’s professionals to get informed of the uses and

importance of the latest tools and techniques of Automation. Audit Automation can be a

competitive advantage for any organization in the business world including Bangladesh

because it’s a new concept yet it is an effective and efficient mechanism for audit. It

provides quality in the activities of Audit while the auditors perform functions with least

time and effort. At ACNABIN the basic procedures and activities of Audit are followed

but the ways of performing the audit is not consistent with latest technologies and systems

performed in the client organizations. In this report it is attempted to present all the

existing tools and software that are useful in performing audit procedures quickly,

efficiently and effectively. Todays auditors must be aware of such type of tools and

software so that they can perform their audit procedures effectively and efficiently.

1

Chapter 1

INTRODUCTION

2

Audits are performed to ascertain the validity and reliability of information as well as to

provide an assessment of a system's internal and external control. The goal of an audit is to

express an opinion of the person / organization / system (etc.) in question, under evaluation

based on work done on a test basis. Here’s we find the close relation of Audit and Information

Systems and it would be great if anyone can establish a link between Audit and Information

Systems which will eventually lead to implications of Management Information Systems in

Auditing. That’s why today’s auditing firms are constantly trying to establish a viable

Information systems in their organizations in order to increase their efficiency and accuracy of

their work. For example, ACNABIN Chartered Accountancy firm of Bangladesh is planning to

establish an integrated information systems for the Verification of Alternative Cash Assistance

files which they believe will enhance their ability to work efficiently and accurately. There have

been two key drivers to the increased adoption of automated systems. Firstly, the technology has

become sufficiently advanced to enable sophisticated automated systems to be easily accessible

both in the office and from client sites. In addition, storage capacities have improved to such an

extent that storing large amounts of detailed audit data electronically for several years no longer

poses problems. The second reason is the increasing pressure auditors have faced to improve

efficiency and profitability, while at the same time improving standards of audit work, following

the introduction of International Standards of Auditing (ISAs) in 2005. The ultimate focus of this

report is on the automation of the activities performed in Auditing.Increased globalization of

businesses, market pressure to improve operations, and rapidly changing business conditions are

creating demand for technology-enabled auditing (TEA) to ensure timely ongoing assurance that

controls are working effectively and that risk is properly mitigated.There are some important

tools and Software that are constantly used for Audit automatically through the world such as-

computer-assisted audit techniques (CAATS), Audit Command Language(ACL), Interactive

Data Extraction and Analysis(IDEA), ESKORT Computer Audit (SESAM), ActiveData For

Excel,Active Datafor Excel, CorpSystem Active Data, Monarch , Picalo, qzCAATTs,

countTXTDB Secrets etc.Some of the key benefits of Audit Automation are – Reduced Audit

Cost, Improved Audit Quality, Improved Operational Effectiveness, Reduced fraud risk, keeping

auditors connected, Managing the work flow effectively, Activity history monitoring, tracking

the issues that are related and so on. For this reason, I tried to convey an important message to

the current and potential auditors of the contemporary organizations through this report.

1.1 Rationale Of Study:

So far I know , no earlier research in Bangladesh has yet been conducted on this area.

That’s why I am interested to work on the prospects and challenges of Audit Automation. From

the very beginning of my life I had a fascination to the procedures of Auditing and at last I got a

chance to do something like Auditing. But as a student of MIS, there I felt the dire need of an

effective information that would help both the clients and the auditors to perform their respective

duties more effectively, more quickly, more accurately and most efficiently. Besides, for a few

years now, the concept of "paperless offices" has hovered on the horizon, but while technologies

such as word processing and accounting software have revolutionized office life, paper-free

working has never fully materialized. However, among auditors at least change really is afoot,

3

with growing numbers switching to paperless audit automation systems. In the past three years

alone, the number is estimated to have jumped eight-fold. Firms of all sizes are now taking the

plunge. The structure of audit work and the need for high levels of consistency and quality

control mean that it lends itself to automation. Automation software cannot do all the hard work

for you; nor will auditors one day be replaced by computers. What it does mean is that the risk of

errors and omissions can be minimized while at the same time improving efficiency. All the

various procedures and documentation auditors need to address and create in a structured

environment are brought together in a logical, consistent and well-thought out on-screen

framework. The internship program is a mandatory requirement for the students who are

graduating from the BBA Program under the faculty of Business Studies of Dhaka University.In

the internship program I was engaged in a host firm named ACNABIN & Co. for three months

period. During this period, I have learned how an audit is conducted. I also learned about the

audit procedures of CA firm and how the engagement is done in case of an annual audit. At that

time I got the opportunity to audit the Financial Statements of two branches(Agrabad br.

&Khatungonj br.) of One Bank Ltd. I also audited the Cash Incentives files of Jute, Composite,

Pet bottle, Leather, Shrimp of One Bank Ltd. And Agrani Bank Ltd. There I felt the necessary to

Automate the audit procedures of those Banks and I tried to develop some Ideas and concepts of

how we can develop a system that will increase both the quality and Efficiency.

1.2 Objectives of the Study:

Most of the business processes today are automated to various degrees and businesses

continue to invest in maintaining and expanding this automation through the acquisition of

computer and telecommunication technologies and various enterprise systems such as Enterprise

Resource Planning(ERP) , Supply Chain Management (SCM), Partnership Relationship

Management(PRM), Customer Relationship Management (CRM), Data Mining etc. Such

automation of business processes has led to compulsory changes in Auditing procedures,

standards and Processes.

The overall objective of the present study is to analyze the prospects and challenges

involved with the development, implementation and promotion of Audit Automation as well as

the necessity of Audit Automation in Bangladesh.

To accomplish this, the study has covered the following objectives:

To identify the basic tools and software used for Audit Automation

To identify the key benefits of Audit Automation.

To identify the key requirements of development and promotion of Audit Automation

To identify the limitations and major drawbacks of Audit Automation.

To recommend some strategies for the development and promotion of Audit

Automation based on my findings.

4

1.3 Scopes of the Study:

Major parts of scope are point out below:

a) Background of the host organization and also their position.

b) Audit procedure, which is followed by the organization for performing any audit.

c) Nature and importance of it has depicted in this study.

d) Audit methodology of the firm, which is followed by the organization for performing

any audit.

e) Audit administration of the firm, which is followed by the organization for performing

any audit.

f) Annual Audit Procedures of Financial Institutions like Banks and Non-financial

institutions as well.

1.4 Research Methodology

The outcome of the study is qualitative. But this is also an exploratory research basically

utilize the unstructured research methodology. This type of research required much information

in order to make the report effective or meaningful. In this study an attempt has been made to

include the latest information regarding the available and prospective tools and software for audit

automation and their uses. In order to prepare the assigned project paper, collected necessary

data from two types of sources as follows:

1) Primary sources data

2) Secondary sources data

1. Primary Data:

The primary data has been collected from original sources by the researcher through field

operations. The primary data are those which are collected a fresh and for the first time and are

original in character. So, the primary data are assembled from the first hand field investigation. I

collected primary data working with different audit teams through field operations. I gathered

experience on this matter by Working experience with the different audit teams of ACNABIN &

Co. during my internship period. In order to collect first hand data I discussed the matter of

Automation with the various officials of ACNABIN including the Partners, the Managers, the

Senior Audit staffs, and the articled students of the Firm. I discussed the matter with my clients (

One Bank Ltd. &Agrani Bank Ltd.) including Vice President, Principal Officers of the two banks

concerning the matter of Audit Automation and they respond positively regarding the matter.

5

2. Secondary Data:

The secondary data, on the other hand, are those which have already been collected by

someone else and which have been collected through the statistical process. Secondary sources

of data consisting of all published and reported materials including books, journals, articles etc. I

have collected secondary data from the annual audit report, management audit report, accounting

system & audit working papers audited by the ACNABIN & Co. I have also collected secondary

information from the different publications of different universities and different institutions like

Institute of Chartered Accounts(ICAB) and Institute of Cost and Management Accountants

(ICMA). Other information was obtained from various corresponding files of the firm and

various relevant books mainly Bangladesh Standards on Auditing (BSA).Different types of

websites regarding Automation of Audit also helped me a lot. I also collected secondary data

from different types of articles related to the automation of different business processes.

Finally the collected data have been analyzed with respect to the objectives of the study.

1.5 Organization of the Report :

This report comprises five different chapters in which each of the chapters contains

different flavor of study. The first chapter includes the introduction of the report. In this chapter I

tried to discuss the concept of audit, the objectives of the report i.e. for why am I going to

prepare this report, the scope of the report, the rationale of study etc. I attempted to prepare this

report because so far there is no study done for audit automation. I felt the dire need to inform

the today’s auditors and contemporary organizations of the latest concepts of audit automation

and its use and importance. In the second chapter, I attempted to present the organization where I

have performed my internship period. I have discussed the nature of the organization, the

partners of the organization and their experiences, the human resource of the firm, the services

they provide, the background of the organization , their head offices and their branches, what I

have learned from them etc. In the third chapter I tried to introduce the concepts of Audit

Automation, their importance in the contemporary organizations, the drivers and forces that work

behind this concept etc. The tools and software used for Audit Automation and the benefits

gained from those are discussed in this chapter. In the fourth chapter, the findings are analyzed

e.g what are the benefits of using Audit Automation and what are the limitations that exist in

developing and maintaining an effective Audit Automation. In this chapter I attempted to provide

a flavor of SWOT analysis for using Audit Automation in an organization like ACNABIN. Last

of all, a conclusion is drawn and I attempted to provide some recommendations based on my

findings and analysis.

6

1.6 LIMITATIONS OF THE STUDY:

The study is conducted with an objective to make a thorough study of the overall procedures,

practices, standards, processes and importance of Audit Automation that have been availed many

facilities and faced some obstacles during my study as well. These obstacles may be termed as limitation

of the study. These limitations are as follows:

a)Audit automation is totally a new concept in Bangladesh.As a result I had to go through an

unending attempt to collect the recent information. Nevertheless, I hardly find any perfect sources that

can provide me accurate information and I think it’s a kind of limitation for the study.

b)As the internship was the first practical experience, not everybody was so interested to provide

confidential information regarding the exact procedures of Audit Automation but I tried my best to enrich

the study.

c)The depth analysis has been limited to the extent of information.

d)Audit automation is yet to be practiced by the contemporary organizations of Bangladesh.

7

Chapter 2

DESCRIPTION OF THE

ORGANIZATION

8

2.1 Profile of the Firm:

Profile of the Firm

Name of the Audit Firm

ACNABIN

Chartered Accountants

Date of Establishment 15th

February, 1985

Address of the firm

BDBL Bhaban (13th

Floor)

12, Kawran Bazar Commercial Area

Dhaka-1215, Bangladesh

Telephone, Fax & E-Mail Phone: 880-2-8144347-52

Fax #: 880-2-8144353-54

E-Mail: <acnabin@bangla.net>

Web site: www.acnabin-bd.com.

Branch Office

:

House # 734, Road # 26

CDA Residential Area, Chittagong.

:

9

2.2 Background:

ACNABIN was founded by Seven renowned Fellow Chartered Accountants in 1985. The name

“ACNABIN” comes from the acronyms of the founder partners:

A = ABM Azizuddin

C = AnwaruddinChowdhury

N = Abu Syed Mohammad Nayeem

A = Mohammad Akhtaruzzaman

B = ATMA Bari

I = IftekharHossain

N = Mohammad NurunNabi.

At present the partnership comprises four founder partners and two new partners. ACNABIN

represented BDO in Bangladesh during 1990-92 and Arthur Andersen from 1992 till the later

collapse in 2002.

Registration of Firm:

ACNABIN & Co. Chartered Accountants Firm is registered under The Institute of Chartered

Accountants of Bangladesh in the year 1985.

Age of Firm:

26 Years from 1985.

Nature of Firm:

ACNABIN & Co. is a Partnership firm, since it consists of seven partners.

2.3 Associations:

a) Associated with ASNAF-ASEAN Accounting Firms, Singapore since 18 February

2003.

b) USAID and EC Enlisted: In 1993 they have been enlisted by the United States Office of

Regional Inspector General/Audit, Singapore to perform financial audits of USAID

fund recipients in Bangladesh. We have been also enlisted by the European

Commission to conduct financial audit of the recipient of their fund.

c) In July 2005 ACNABIN achieved “Representative Firm” status of BAKER TILLY

INTERNATIONAL: BAKER TILLY is an independent member of BAKER TILLY

International. BAKER TILLY International is a network of high quality, independent

10

accountancy and business service firms, all of whom are committed to providing the

best possible services to their clients, in their own marketplaces, and across the world,

wherever the client needs help. BAKER TILLY International is the 8th

largest network

in the world by fee income and is represented by 122 firms in 75 countries, with a

global aggregate fee income of US $1.82 billion and 18,600 staff worldwide. In 2003,

the network experienced a 17% growth in revenue.

2.4 Membership:

ACNABIN is the member of:

a) Metropolitan Chamber of Commerce and Industries

b) The Dhaka Chamber of Commerce and Industries

c) American Chamber of Commerce in Bangladesh.

The firm has one office in the capital city of Bangladesh with four different Divisions to manage

its day to day activities. The divisions are:

Auditing,

Income Tax,

Consultancy Services, and

Insolvency.

2.5 Existing Partners and their area of Specialization:

Name Office Area of Professional

Primary Secondary

ABM Azizuddin Dhaka Office Audit Consultancy

Mohammad NurunNabi Dhaka Office Audit Consultancy

IftekharHossain Dhaka Office Consultancy Audit

A.S.M Nayeem Dhaka Office Audit Tax

M. Moniruzzaman Dhaka Office Audit/Tax Consultancy

Md. MominulKarim Dhaka Office Audit Consultancy

Md. Rokonuzzaman Dhaka Office Audit Consultancy

11

2.6THE ACADEMIC AND PROFESSIONAL QUALIFICATIONS OF PARTNERS:

Name Education and Qualification ICAB registration

no.

ABM Azizudddin B. Com. (Hons.), M.Com., FCA 46

IftekharHossain B.Com., FCA 150

ASM Nayeem B.Com (Hons), M.Com, M.Sc (UK),

FCA, FCCA

353

Mohammad NurunNabi B.Sc., FCA 370

Md. Rokonuzzaman

M.Com., FCA

B.Com., FCA 739

Md. Monirruzzaman B.Com. (Hons.), M.COM., FCA 787

Md. MominulKarim B.Com.(Hons.), M.Com., ACA 934

External Activities Of The Partners:

Mr. ABM Azizuddin, FCA, one of the founder partners was the President of The Institute

of Chartered Accountants of Bangladesh (1990) and presently a council member and the

Chairman of Board of Studies. Three other partners are involved in different committees of the

Institutes. MR. IftekharHossain is now working as administrative partner of ACNABIN.

Experience of the Partners:

ACNABIN partnership came into being in February 1985, with a mission to continually

add value by helping clients succeed. The long and diverse professional background of the

individual partners in academic, administrative, audit, consultation, privatization, system design

(computerized and manual), taxation, feasibility study, cost and management accounting and

budgeting fields have been brought together to establish a multidisciplinary organization. All the

partners of the firm have an in-depth experience of working in Bangladesh and with

international/foreign consultants/ organizations working in Bangladesh and overseas. The diverse

and wide exposure of the partners helps to deal effectively with most of the complex situations

faced by business enterprises in today's competitive world, both in the developed and developing

countries.

12

2.7 Achievement of the Firm:

(i) A Brief statement on the outstanding activities and innovation by ACNABIN:

ACNABIN Introduced stipend to attract brilliant students to the profession of accounting in

Bangladesh. It has introduced and implemented several forms for an effective audit field work. It

is considered to be the market leader in audit and evaluation of microfinance organization.

(ii) Services rendered abroad:

Since its incorporation, ACNABIN has successfully performed the following overseas

assignments:

Qinghai Micro-credit Project, China.

Consultancy assignment on Accounting in DPR of Korea.

Financial Analyst for Operational Performance of Nirdhan, Nepal, Funded by World

Bank-CGAP

Study of Micro-Finance Institution Capacity Assignment, Kuala Lumpur, Malaysia.

Verification of Financial and Accounting System of Rural Credit Operations of

Bhutan BDFC, Thimpu, Bhutan.

Vivekananda Sava Kendra O SishuUddayan, West Bengal, India.

Capacity Building of External Auditors for Micro-finance Audits, an ICPAU

workshop held in Kampala, Uganda under the sponsorship of CGAP.

Training on external audit of micro-finance institution in Addis Ababa, Ethiopia,

sponsored by the Association of Ethiopian MFIs (AEMFI).

(iii) Hosting of International Internship:

During October-November, 2001, ACNABIN has hosted an International Internship program for

two (2) employees of Bank of Indonesia, Indonesia on External Audit of Micro finance

Institution in Bangladesh.

(iv) Firm ranking by fee size for city and/or country:

Bangladesh Bank, the Central Bank of Bangladesh Government has placed ACNABIN in the 2nd

position out of 82 enlisted firms.

There are total 174 audit firms in Bangladesh, of which five (5) firms have 6 or more partners

and ACNABIN is one of those 5 firms.

(v) Publication and manuals used internally by the firm:

ACNABIN has developed the following two manuals which are extensively used by the

ACNABIN staffs:

a) Audit Manual

b) Staff Manual

13

2.8 Human Resources:

The number of personnel available with the firm are as follows:

Partners 07

* Professional Staff :

- Directors/Qualified Assistants 07

- Audit Senior 38

- Articled Students 184

- Probationers 50

- Support Staff 28

Total 314

2.9 Logistics Supports:

We have ample equipment and appliances in our stock to give logistic support to our clients’

enhanced requirements.

Office space 4500 sft.

Computer 24 nos

Laptops 20 nos

Laser Printer 5 nos.

Photocopier 2 nos.

Multimedia projector 2 nos.

List of important industries in which the firm has experience

1. Banks,

2. Micro-Finance Institution (MFI),

3. Non-Government Organization (NGO),

4. Donor funded projects e.g. projects funded by USAID, CIDA, DFID, NORDA,

SIDA

5. Multi-National Companies.

At present ACNABIN have some 120+ audit clients. As one of the top four firms in Bangladesh

ACNABIN have audit clients of all type, e.g. public, private, governmental, profit/non-profit

organizations. ACNABIN have several clients with international operations.

14

2.10 Services Offered:

The services that are offered cover the following areas:

Feasibility study

Management consultation/development

Statutory audit

Accountancy

Taxation

Accountancy and management training

System development

Data processing with computer

Privatization consultancy (Include pre-privatization review, restructuring, valuation

in particular and privatization assistance in general)

Other accounting ancillary services including investigation, internal and

management audit.

Micro- finance consulting.

Human Resource Development Issues

Organizational consulting services

Designing computerized systems for MIS and accounting and its implementation

Share/ business/ asset valuation.

2.11Analysis of Total Practice Turnover:

Audit 40%

Accounts preparation (including data processing and book-keeping) 5%

Tax 15%

Insolvency 10%

Financial Advisory Services 20%

Management Advisory Services 10%

Total 100%

15

2.12 Quality Control and Independence:

Hiring of professional staff:

Professional staffs are recruited based on their academic result, recruitment test, interview and

referrals.

i. Training:

In May 1994, two of our partners actively participated in a workshop on Supreme Audit

Institution held in Singapore. In January 1997 also our firm participated in the training workshop

held in Bangkok on USAID Rules and Regulations.

In March 1998, partners along with two other senior staff members took the opportunity to

participate in the training course on “Procedures for Procurement and Disbursement” under the

World Bank’s “Financed Project” held at BRAC Centre, Rajendrapur, Bangladesh. This is a part

of a continuous process for updating the knowledge in its concerned spheres of work and also to

widen the horizon of latest know how.

ii. Training of staffs on the firm’s audit procedures:

ACNABIN gives out a package on firm audit procedure, office procedures to the newly recruited

staffs. Also, through the weekly training classes’ partners / managers briefed new staffs about the

firm and its procedures. The firm also makes available the information about current

developments in professional technical standards to all professional staffs through office

circulars and notice board display.

Firm’s audit methodology is being taught through on the job training and through the

weekly training classes presenting the real life situations, problem solutions and

discussion on the current audit clients.

Firm’s ethics and independence are being communicated to the staffs through the weekly

classes, office memo and continuous monitoring by the senior partners.

Students, staffs are taught on the International Accounting Standards as adopted by SEC

and ICAB and locally applicable GAAP in the weekly training class, on the job training

and by the quality control review discussion.

Students, staffs at ACNABIN are informed on the changes in auditing and accounting

standards through weekly class, office memo, distribution of related books and

continuous monitoring by the senior partners.

iii. Activities performed by ACNABIN to recognize that the quality is essential when

performing the engagement:

Partners personally work on the assignment, sometimes on a full time basis.

All audit reports are reviewed by a “Concurring Partner” in addition to the

“Engagement Partners”.

16

Disciplinary action is being taken in case of non-compliance of the uniform standards

followed by the firm.

Students and staffs with quality performance are appreciated with better financial

remuneration, assignment to important and quality clients.

Students and staffs who are guilty of non-compliance are subject to disciplinary

action.

iv. Review of the work performed:

Supervisors, managers as well as partners perform field visits, review of work papers

and make a list of review points.

Review on each and every audit by second partner is done at the office after the

preparation of draft report. The procedures documented and made available to all

staffs.

ACNABIN follows the professional standards issued by the International Federation of

Accountants (IFAC) as adopted by the Institute of Chartered Accountants of Bangladesh

(ICAB). ACNABIN has an audit manual which incorporates all the principles and policies as

issued by IFAC and translating those principles into procedures and forms.

17

Finance

Officer

2.13 Organizational Hierarchy of the ACNABIN:

The Organizational hierarchy of ACNABIN can be shown by the following diagram:

Partners

Audit

Managers / Tax

Managers

Directors

Administrative

Officer

Deputy Managers

Sr. Assistant Mangers

Sr.Articled Student

Jr.Articled Student

IT Officer

18

ACNABIN Audit Administration

Audit Stages Responsibility

1.

Planning

A.

New Client

i. Putting a job number Job-in-charge

ii. Familiarization with client’s business Supervisor/Job-in-charge

iii. Familiarization with client’s accounting and other related work Supervisor/Job-in-charge

iv. Preparation of planning memo: Supervisor/Job-in-charge

a. GRA memo

b. Client profile

c. SRA memo

v. Preparation of time budget & cost estimate Job-in-charge

vi. Preparation of work program Job-in-charge

vii. Audit team selection Supervisor/Job-in-charge

B. Continued Client

i. Putting a new job number Job-in-charge

ii. Updating of the following: Job-in-charge

a. GRA memo

b. Client profile

c. SRA memo

d. Work program

iii. Preparation of the time budget and cost estimate Job-in-charge

iv. Audit team selection Supervisor/Job-in-charge

2. Field Work

i. Preparation of deputation letter Job-in-charge

ii. Briefing to team members Supervisor/Job-in-charge

iii. Issue of circularization to debtors, creditors, banks and donors Job-in-charge

iv. Substantive audit Job-in-charge and other team members

v. Submission of Job Status Report (Saturday) Job-in-charge

vi. Updating of Job Admn. Report (Saturday) Job-in-charge

vii. Compilation of work paper file Job-in-charge

viii. Obtaining management representation letter Job-in-charge

3. Conclusion & Reporting

i. Preparation of audit report Job-in-charge

ii. Review of report and work paper file Supervisor

19

iii. Final review Engagement Partner/Supervisor

iv. Referencing of report Independent referencer

v. Submission of draft report Job-in-charge

vi. Attending discussion meeting with client Partner/Supervisor/Job-in-charge

vii. Submission of final report Job-in-charge

viii. Preparation of time analysis sheet and cost analysis sheet Job-in-charge

Note: Throughout the year all audit staff including supervisors will prepare time sheet and time

report and submit to the office fortnightly.

2.14Role of the Personnel:

Personnel Role

Partners The role of a partner is to get new clients and also sometimes

the clients approach the partners themselves. The partners

also make sure the existing clients are provided with the best

possible service. Partners guide their employees to prepare a

proposal which is to be submitted to the client depending on

what kind of service the client requires.

Audit manager An audit manager is a Chartered Accountant who assists the

partners in various ways. He/ she review reports before

signing by the engagement partner.

Supervisor

A supervisor may or may not be a Chartered Accountant. He

has to complete the course and having some years experience

in the field of accountancy therefore he designated as the

Audit Supervisor of the firm. Audit manager briefs the audit

supervisor on where and when an audit has to be performed

and how the job is to be carried out.

Senior student An audit senior has some years of experience in the

accountancy field therefore he has been designated as the

audit Senior of the firm. Audit senior is briefed by the audit

manager and supervisor about where and when an audit has

to be performed and how the job is to be carried out.

Semi-Senior Student A semi-senior student has to complete at least one year of

article ship in the firm. Every time he is liable to his assigned

senior/s.

Junior Student Junior Students are the fresher who have just joined as an

articled to the firm.

20

Non Professional Staff :

The numbers of non professional staffs involved with the firm are as follows:

General Manager (GM)

Manager, Administration

Accountant

IT Specialist

Computer Operator

Photocopy Machine Operator

Receptionist.

21

Chapter 3

LITERATURE REVIEW

22

3.1 The Concept of Audit Automation:

Automation is the use of control systems and information technologies to reduce the need for

human work and such that Audit Automation is the use of Control systems and information technologies

in the audit procedures with a view to reducing the need for human work and time spent and thus

achieving the efficiency and quality of Audit procedures.

3.2 Why should Auditors use Automation in Audit?

Now a days automation has become a matter of competitive advantage. Most of

companies and firms today adopt automation as a competitive advantage in various business

processes with a view to outracing their competitors. Automation in audit will not only increase

the quality of the audit but also the help to achive efficiency.

.

3.3 Drivers and Forces behind Audit Automation:

The audit process which is performed manually is not able to function well in today’s

increasingly complicated environment. Recognizing the fact the worlds most renowned

accounting institutions like ICAEW, AICPA, ACCA required a preliminary review of computer

usage and Information Systems. Such review evaluates the impact of computerization in the

audit firm’s systems and prescribes the necessary extent of review. The cost factor complicated

the problems faced by auditors. The intrinsic profit margin of Audit activities is probably

decreasing due to the competitive environment in the profession. Ultimately, advanced

information systems require auditors to integrate technology into the audit process. An example

will make it clear that Automated Teller Machines (ATMs) don’t require the creation of a source

document to which auditors are accustomed. Therefore, auditors tend to require the generation of

an equivalent to capture data for audit trail purpose. Besides, the increased competition among

the firms and companies also drive the auditors to make the audit procedures automated.

23

3.4Tools and Software for Audit Automation:

After many of the audit firms experimented with application-specific software the audit

tools evolved as a solution to the complicated problems. The integration audit sampling plans

into these generalized software has been done. Although these applications are not widely used

in the accountancy firms, these are commonly used by most of the Fortune 500 companies for

their internal audit purpose. The benefits of using audit software include –they are independent

of the system being audited and will use a read-only copy of the file to avoid any corruption of

an organization’s data, many audit-specific routines are used such as sampling, they provide

documentation of each test performed in the software that can be used as documentation in the

auditor’s work papers.However some of the audit Tools with automation software are discussed

below:

3.4.1 Computer-assisted audit techniques(CAATS):

Computer-assisted audit techniques(CAATS) is considered to be the most popular tool for

Auditing automatically. It is a growing field within the audit profession. CAATs is the practice of using

computers to automate the audit process. CAATS normally includes utilizing basic office productivity

software such as Spreadsheet and Word processors programs and more advanced software packages

involving use of Statistical Analysis and Business Intelligence tools.

CAATs is referred as synonymous with incorporating data analytics into the audit

process. This is one of basic fields within the audit profession. There is clearly a difference

between CAATs and traditional audit procedures.

As we know the traditional method of auditing directs auditors to build conclusions based

upon a sample of a population, rather than an examination of all available data. The use of

samples may diminish the validity of audit conclusions. Management realizes that they conduct

thousands or perhaps millions of transactions a year and the auditor only sampled a handful. The

auditor will then state that they conducted the sample based upon generally accepted audit

standards (GAAS) and that their sample was statistically valid.Another common criticism of the

audit profession occurs after a problem emerges. Whenever a problem emerges within a

department, management might ask, "Where were the auditors?" This is stupid question, because

nobody can see beyond the present.

CAATs is used to these types of problems. CAATs, as it is commonly used, is the

practice of analyzing large volumes of data looking for anomalies. A well designed CAATs audit

will not be a sample, but rather a complete review of all transactions. Using CAATs the auditor

will extract every transaction the business unit performed during the period reviewed. The

auditor will then test that data to determine if there are any problems in the data. For example,

using CAATs the auditor can find invalid Social Security Numbers (SSN) by comparing the SSN

to the issuing criteria of the social security administration. The CAATs auditor could also easily

look for duplicate vendors or transactions. When such a duplicate is identified, they can approach

management with the knowledge that they tested 100% of the transactions and that they

identified 100% of the exceptions.

24

CAATs allows auditors to test for specific risks. For example, an insurance company

may want to ensure that it doesn't pay any claims after a policy is terminated. Using traditional

audit techniques this risk would be very difficult to test. The auditor would "randomly select" a

"statistically valid" sample of claims (usually 30–50.) They would then check to see if any of

those claims were processed after a policy was terminated. Since the insurance company might

process millions of claims the odds that any of those 30–50 "randomly selected" claims occurred

after the policy was terminated is extremely unlikely.Using CAATs the auditor can select every

claim that had a date of service after the policy termination date. The auditor then can determine

if any claims were inappropriately paid. If they were, the auditor can then figure out why the

controls to prevent this failed. In a real life audit, the CAATs auditor noted that a number of

claims had been paid after policies were terminated. Using CAATs the auditor was able to

identify every claim that was paid and the exact dollar amount incorrectly paid by the insurance

company. Furthermore, the auditor was able to identify the reason why these claims were paid.

The reason why they were paid was because the participant paid their premium. The insurance

company, having received a payment, paid the claims. Then after paying the claim the

participant's check bounced. When the check bounced, the participant's policy was

retrospectively terminated, but the claim was still paid costing the company hundreds of

thousands of dollars per year.

However, the CAATs driven review is limited only to the data saved on files in

accordance with a systematic pattern. Much data is never documented this way. In addition saved

data often contains deficiencies, is poorly classified, is not easy to get, and it might be hard to

become convinced about its integrity. So, for the present CAATs is complement to an auditor's

tools and techniques. In certain audits CAATs can't be used at all. But there are also audits which

simply can't be made with due care and efficiently without CAATs.

In the most general terms, CAATTs can refer to any computer program utilized to

improve the audit process. Generally, however, it is used to refer to any data extraction and

analysis software. This would include programs such as Spreadsheets (e.g Excel), databases (e.g.

Access), Statistical Analysis (e.gSAS ), Business Intelligence (e.g Crystal Reports and Business

Objects ) etc. There are, however, companies that have developed dedicated specialized data

analytic software specifically for auditors.

Product Name /Brand Company

Audit Command Language (ACL) ACL Services Ltd.

Interactive data extraction and analysis (IDEA) Caseware International

ESKORT Computer Audit (SESAM) Intracom IT Services Denmark A/S

ActiveData For Excel InformationActiveInc

CorpSystem ActiveData CCH / Wolters Kluwer

Monarch Datawatch Corporation

TopCAATs for Excel Reinvent Data Ltd

Picalo Partly Open Source

QzCAATT QuadZero LLC

25

countTXT Bollingen Software Ltd.

DB Secrets Soft Magnet Technologies

Find Duplicate Records (FDR) Bollingen Software, LLC

In addition to using data analysis software, the auditor uses CAATS throughout the audit

for the following activities while performing data analysis:

Creation of electronic work papers

Keeping electronic work papers on a centralized audit file or database will allow the auditor to navigate

through current and archived working papers with ease. The database will make it easier for auditors to

coordinate current audits and ensure they consider findings from prior or related projects. Additionally,

the auditor will be able to electronically standardize audit forms and formats, which can improve both the

quality and consistency of the audit working papers.

Fraud detection

CAATTs provides auditors with tools that can identify unexpected or unexplained patterns in

data that may indicate fraud. Whether the CAATS is simple or complex, data analysis provides

many benefits in the prevention and detection of fraud. CAATs can assist the auditor in detecting

fraud by performing and creating the following Tests which is shown in the following figure -

26

Analytical tests

Evaluations of financial information made by studying plausible relationships among both

financial and non-financial data to assess whether account balances appear reasonable (AU 329).

Examples include ratio, trend, and Benford’s Law tests.

Data analysis reports

Reports produced using specific audit commands such as filtering records and joining data files.

Continuous monitoring

Continuous Monitoring is an ongoing process for acquiring, analyzing, and reporting on business

data to identify and respond to operational business risks. For auditors to ensure a comprehensive

approach to acquire, analyze, and report on business data, they must make certain the

organization continuously monitors user activity on all computer systems, business transactions

and processes, and application controls.

Fraud Detection by

CAATs

Analytical Tests

Curb stoning surveys

Data Analysis Reports Continuous Monitoring

27

Curb stoning in surveys

Curb stoning is the term for instances where a surveyor completes a survey form by making up

data. Because some of the data should conform with Benford's law, this practice can be detected

using CAATTs which provide the capability of performing such tests.

3.4.2 :AutoAudit :

AutoAudit is a specialized software designed for the Automated Solution of Internal

Audit Departments in any organization. Increased audit workloads stemming from expanding

risk assessment responsibilities, increased regulatory scrutiny, and constrained budgets leave

internal audit departments consistently trying to do more with fewer resources.Despite this, many

audit departments still use manual and paper intensive processes, spending countless hours

documenting workpapers and preparing reports.

AutoAudit takes the paperwork out of workpapers and enables you to standardize,

automate and manage key aspects of your audit process. AutoAudit is proven to improve the

productivity, efficiency and consistency of internal audit departments.

AutoAudit automates processes including risk assessment, scheduling, work papers and

reporting. Easy to implement, maintain, and use, AutoAudit comes complete with a standard

library of templates that makes it easy to implement a consistent audit methodology. Multi-level

risk assessment allows for quick and easy tracking and reporting, and users are able to generate a

broad array of reports with the touch of a button. AutoAudit is the only audit automation tool that

stores workpapers in a highly secure and centralized database for a streamlined review process.

AutoAudit is a comprehensive audit management software package that adapts to any

audit structure (COSO, CoCo, CSA) and offers a number of features designed to ease the

burdens of a busy audit department.

The most remarkable functions of AutoAudit includes -

Risk assessment

Planning

Scheduling

Workpapers

Reporting

Issue tracking

Time and expenses

Quality assurance

Personnel records

28

3.4.3 :Tax audit automation

With the resounding success of the automated elections, many people and business entities

have now recognized that automating certain processes facilitates timely completion of tasks and

eases the load of employees. This is high time for the National Board of Revenue to consider

conducting their tax assessment entirely through computerized audit.

Actually, some of the operations of the NBR are already done electronically, such as the

filing of receipts of tax returns and payments through the Electronic Filing and Payment System

(eFPS). The NBR has also recognized that in today’s business environment, the use of computers

and accounting applications to process business transactions has become indispensable, even for

SMEs. The emergence of various technologies in data processing has changed the way a tax

audit or examination can be efficiently and effectively done, prompting the NBR to provide

guidelines to the NBR revenue officers or examiners on the use of computer-assisted audit tools

and techniques (CAATTS).

I have no doubt that in the future, all tax assessments will be performed through

computerized audit once the NBR revenue officers or examiners fully embrace the use of audit

tools.

In recent NBR issuances and pronouncements, it is apparent that the NBR is gearing towards

computerized audit.

Now the question arises - what would be the benefit to the NBR and to the taxpayers?

On the part of the NBR in general, the use of computerized audit will shorten the audit

cycle, which would result in the timely submission of the reports of investigation. The NBR

examiners will also be able to increase the number of taxpayers who are examined in a given

year. Moreover, the tax examination will be focused on critical aspects of the taxpayer’s

financial operations – i.e., the operations or processes with critical tax issues -- which would

ensure that a quality audit has been conducted.

On the part of the NBR examiners in particular, the use of computerized audit will enable

them to concentrate on analyzing, interpreting and evaluating the reports generated from the

computerized audit rather than doing the non-analytical procedures. As an audit practitioner

myself, the use of audit tools has helped me profoundly in reducing the time spent conducting an

audit without sacrificing the quality of the audit; in fact, it helps enhance the quality. I believe

that the NBR examiners will truly welcome such opportunities.

Conducting an audit using electronic records would also save on cost for taxpayers in

producing the required documents, and they don’t have to worry about the documents getting

lost (which some taxpayers have experienced) since these will be submitted electronically.

29

Also, the tax findings of the NBR examiners will hopefully arise from valid tax issues. A

lot of taxpayers have complained that the tax findings of the NBR examiners have no legal basis

and would be eliminated had the NBR examiners done the necessary analysis and reconciliation.

As a result, the taxpayers have to perform the necessary reconciliation and explanation and in the

process incur unnecessary costs.

Moreover, with the use of audit tools, the tax examination will be completed faster,

enabling the taxpayers to focus on their business operations rather than the NBR

examination. The NBR’s use of computerized audit will be an eye-opener for taxpayers in terms

of ensuring compliance with tax laws and regulations.

The use of audit tools will broaden the scope of the NBR tax audit. With the effort of the

NBR to strictly implement compliance with tax rules and regulations as a means of increasing

revenue taxes, I believe that the NBR will fully adopt computerized audit as a tool in generating

tax assessments. Thus, the taxpayers should now be serious and honest in evaluating whether

their current tax practices are compliant with tax rules and regulations.With the use of

computerized audit, I do hope tax audits will now be completed in weeks and not in months or

even in years.

3.4.4: Audit Administration Information Management System

(AAIMS)

Audit Administration Information Management System (AAIMS) will help Auditors

manage their day-to-day activities and provide a single data base of all information pertinent to

department operations. AAIMS addresses the following business functions: audit universe (to

inventory all potential audits), risk assessment (to prioritize the workload), planning (to establish

what audits will be performed), scheduling of audits and auditors, time reporting, cost accounting

(to charge the various business units for audit work), maintenance of personnel files, and

quality/productivity measurements.

AAIMS will use the client/server architecture where the data and business logic reside on

a file server and the presentation (graphical user interface) resides on the PC. The system will be

LAN-based, utilizing Novell Netware/386 to gain access to OS/2's Data Base Manager System

from workstations using MS-DOS/Microsoft Windows 3.1. AAIMS will be a fully compatible

Windows 3.1 application. The system was developed using Texas Instruments Information

Engineering Facility (IEF), which uses a model developed with the user's active participation to

create the data base. The user of the system thus establishes the needed elements and the

relationships between the data elements.

By using IEF and a phased release schedule, auditors will be able to implement the audit

universe, risk assessment and planning functions of the system within nine months; the complete

system will be implemented in 15 months. Considering the normal life cycle of a major system

development project, this is a significant accomplishment.

30

3.4.5 Telecom Audit and Telecom Auditing

Automating the Telecom Audit

VocioTelecom and mobility career experts has created a specialized software to quickly and

accurately audit telecom invoices. Their methodology is the result of utilizing the latest software

and OCR technology combined with time tested telecom auditing "best practices". By combining

the latest technology, along with industry "best practices", organizations will be able to quickly

and accurately find billing errors, out of date inventory, incorrectly applied tariff's and numerous

other mistakes on carrier invoices.

Telecom Audit Methodology

Using the latest technology and software is only part of the telecom audit process. The

methodology combines the latest technology with an experienced team of telecom auditors who

review and analyze all of the invoice, contract and CSR (customer service record) data. This

results in a comprehensive telecom audit which includes:

A validated inventory of all telecom and wireless services, in addition a site survey may be

required to physically validate circuits or trunks

Recommendations for optimizing current network services by eliminating services or upgrading

to newer technologies such as: MPLS, SIP Trunking, Ethernet over Copper

Evaluation of existing contracts. We benchmark your contracted pricing to ensure all network

costs are in line with current tariff's, promotions for like sized enterprises.

3.4.6 Digital Forensic Auditing

The range of services of Digital Forensic Auditing includes consulting facilities in digital

forensic auditing. Forensic Auditing deals with the detection and prevention of fraud, including

the abuse or misuse of any organization’s assets.

The tools of Digital Forensic Auditing are specialized in digital forensics that involves the use of

legally recognized tools and techniques for the recovery and analysis of electronic data with the

ultimate aim of either:

Presenting a reconstruction of the evidence found to be criminal and which can be used in

legal matters.

Helping to anticipate acts which can prove to be disruptive to your business.

31

Chapter 4

ANALYSIS AND FINDINGS OF THE STUDY

32

Why need

Automation in Audit?

.The findings of the study have been discussed in the following heads in a descriptive manner –

4.1 The Benefits of Audit Automation :

The study has found the following benefits of using Automation in Audit.However, a

diagram will clarify the benefits of Audit automation to auditors which is as follows-

Reduced Fraud

Risk

Issues Tracking Keeping Auditors connected

Reduced Audit

Cost

Improved

Operational Effect.

Improved Audit

Quality

Managing the

workflow

Activity History

Monitoring

33

Now I am going to present how the above advantages can be achieved through Audit

Automation.

Reduced Audit Cost

Audit Automation reduce audit testing time by up to 75% for critical systems and business

processes. Automation software help eliminate the need to re-perform most point-in-time audit

tests once continuous monitoring is in place. Audit Automation save valuable time for busy

auditors, reduce travel requirements and improve retention and job quality.

Improved Audit Quality

Audit Automation tools move from sample-based testing to monitoring full populations of data

and identifying all exceptions. It ensures consistency of testing processes and enable auditors to

focus time and attention on the most important business areas. It enables real time disclosure in

the reporting cycle.

Improved Operational Effectiveness

Audit Automation maintain an audit department’s independence while still providing managers

visibility into potential business risks or problems early so they can take appropriate action. It

improves cash flow by identifying best practices and non-compliance with corporate policy (e.g.

payment terms) resulting in optimized business processes.

Reduced Fraud Risk

Automation help internal auditors prevent occupational fraud including collusive fraud by

creating a perception of monitoring. The Association of Certified Fraud Examiners (ACFE)

estimates that fraud costs 5% of annual revenue, on average. Eliminating just 10% of this cash

leak can result in significant savings.

Keeping Auditors Connected

Because much of audit work takes place in remote locations around the world, a major goal of

automating the audit process is providing staff auditors and audit management alike with on-

demand access to complete and current information. To achieve this, an audit automation tool

named Auditor Assistant harnesses the power of the server component of Lotus Notes to create

and maintain documentation databases. And it employs the Notes client to replicate the server-

based information to individual auditors' computers so that it can be viewed or processed even

after the clients are disconnected from the network.

Although Notes provides the capability to replicate information, the Auditor Assistant "desktop"

makes this information easy to use. For example, Auditor Assistant can be customized so that

users see only those icons that correspond to Notes databases that are relevant to their current

projects. Moreover, Auditor Assistant ships with a host of forms and templates that are

commonly used in the audit documentation world. Notes-only users would not only have to

34

create all of those documents from scratch, they would also have to program the workflow and

other logic underlying them.

Managing the Workflow:

Audit Automation helps auditors to manage the overall workflow so smoothly that they easily

identify the work break down structure whenever they need it. Automation helps to manage the

workflow of an organization (whether it is an audit firm or any other type doesn’t matter) so

accurately and perfectly.

Activity History Monitoring:

In the past, it was tough to keep track of what audit work had been done within a given business

unit, and this lack of information was frustrating to the audit staff and its clients alike. Now, the

online documentation allows anyone to see not only the communications that have taken place

with any given audit customer, but also the scope and results of all past audit work. This has

resulted in better auditor-client relationships.

Issues Tracking:

Timely follow-up of issues also poses a problem when the audit process is not automated.

Although the audit maintains issue-tracking spreadsheets, it nonetheless is difficult to determine

what issues required follow-up and when. In fact, it is difficult just to ensure that all the needed

issue-related information had been entered into the spreadsheets. And organization-wide issue

trends were even more difficult to identify.

With Auditor Assistant, however, issue tracking is automatic and follow-up is mandatory. That

is, if an issue achieves a materiality threshold, the software automatically creates a "follow-up

project proposal" in the system that must be approved, entered into the workflow process, and

addressed before a project can be closed. In effect, this feature is a forced control

4.2 Limitations of Audit Automation:

Automation creates certain problems which must be borne in mind by the management.

We can refer these problems as the limitations for the Audit Automation. I tried to analyze these

limitations from both micro and macro levels.

35

These problems are:

Heavy Capital Investment :

One of the most critical problem for any organization to implement Audit Automation is the cost

of the Investment. Audit automation will require a lot of investment of money, labor and time but

in the long run it will benefit the organization in many ways by using economies of scale. So

Heavy Capital Investment is an important factor in the implementation of an appropriate audit

automation systems.

Displacement of Labor:

In spite of assurances to the contrary, Audit automation does not result in worker replacement,

and often in management replacement as well. Workers in unions will oppose the move for

automation. There are still some audit procedures that cant be replaced by machines and for that

displacement of labor is not possible in all the cases.

Strict monitoring and

maintenance needed Heavy Capital Investment

Dehumanization

Problem for developing

countries

Benefits of Experts

Suggestions lost

Displacement of Labor

Problems/ Limitations of

Audit Automation

36

Benefit of Experts Suggestions Lost:

Sometimes the suggestions got from the senior experts will be overlooked by the automated

procedures and it will affect the audit procedures severely. The audit firms will lose the valuable

advice from the experts and at the same time organizations will lose the top level suggestions

that would help the audit procedures. When the Labor being displaced, the benefit of suggestions

from employees is lost .This is an irreparable loss to the management.

Tighter Monitoring may be needed:

Strict monitoring and maintenance must be ensured in order to receive the ultimate benefit of the

Audit Automation. This will cost a huge amount of money and time as monitoring and

maintenance cost.

Dehumanization

Automation, carried to its logical end, dehumanizes the organization and generates a peculiar

atmosphere in it. True, it offers several advantages .It is also true that an automated systems frees

the management from labor troubles .At the same time, it should not be forgotten that the

employment of thousands of persons in a single organization carries its own charm and gives a

sense of pride and satisfaction in achievement which hundreds of computers and robots cannot.

Problem of Developing Countries

Audit Automation poses certain peculiar problems for developing countries like

Bangladesh.These countries are characterized by a high rate of unemployment, scarcity of

foreign exchange, shortage of highly skilled personnel, shortage of capital, etc. All these are

impediments in the introduction of new technology. Not that automation has any relevance in

developing countries .In fact; it has a definite role to play in these countries as well. The

developing countries cannot, for some more time to come, afford the luxury of automation as it is

understood and introduced in highly developed countries Selective automation to ensure

accuracy, if not speed may be more relevant in the developing companies, where automation

without tears is a cry which should be needed and respected for sometime to come.

4.3 SWOT Analysis:

Based on the above findings including the benefits and limitations of developing,

maintaining and implementing the audit automation systems I can prepare a SWOT Analysis.

The central purpose of this analysis is to identify the strategies that will help a firm exploit the

external opportunities, counter threats, build on and protect company strenghsand eradicate

weakness.The SWOT Analysis for development and implementation of Audit Automation for

any kind of organization like ACNABIN will have the following External threats and

opportunities as well as the following strengths and weakness.

37

Strengths:

ACNABIN has well skilled, professional and experienced Auditors.

ACNABIN has good reputation in the market.

ACNABIN has articled students from various reputed universities of Bangladesh including

Dhaka University, NSU, AIUB,CU etc.

ACNABIN has enough capital to develop and implement the Audit Automation systems.

ACNABIN has a large number of clients in the market.

Weaknesses:

Though ACNABIN has well reputed professionals and skilled students it has some unskilled

students and managers which is a strong impediment against the development of Audit

Automation Procedures.

ACNABIN is concerned of dehumanization. It concerns for the job of some clerks that would be

a problem for the firm to implement the Audit Automation.

Opportunities:

The Audit Automation can be a competitive advantage since any firm in Bangladesh is yet to

develop and maintain the Audit Automation.

It can take advantage of the Economies of Scale and thus reduce the cost of developing and

maintaining audit automation.

ACNABIN can increase the number of clients by providing services at a lower cost and yet with

quality .

ACNABIN can attract a large number of talents from different backgrounds including

engineering, business, Information systems by the introduction of Audit Automation.

Threats:

The other firms may introduce Audit Automation when they will observe the benefits of

Automation and ultimately will be a competitor.

The number clients who don’t really prefer automated audit may reduce.

38

Chapter 5

CONCLUSION & RECOMMENDATIONS

39

Audit Automation is a new concept in the arena of Accountancy and it is believed that it will

help the auditors perform their activities so efficiently and perfectly while maintaining the

quality of Audit. Audit Automation has huge potentiality to be widespread because in the near

future everything will be automated from the production of needle to the manufacturing of

vessels. The Auditors of today have to be aware of the latest technologies used in the production

and manufacturing of goods and services as well as the latest information systems used in the

supply chain because only they are only certified persons who are able certify the documents of

those firms and organizations. The auditors must be updated with the various new technologies

and new ways of doing things. The audit automation is totally a new concept in Bangladesh and

no previous research was done on this topic. That’s why I attempted to make the auditors and

related professionalsunderstand of the new concepts of Audit and various tools and software

used in Audit. I tried to explain how these software and tools can help an auditor in various

ways and how they can take advantage of the new technologies used in audit that will distinguish

in the market from other firms and organizations. Today’s business processes are so dynamic and

complicated and requires to be updated and well-informed of the latest events occurred in the

today’s business world. In this study I tried to describe the benefits of developing and

maintaining an audit automation systems and the limitations that an organization will face while

they are going to design a automated systems for audit. The sample SWOT Analysis for a

chartered Accountancy firm like ACNABIN has been done so that it can make the auditors

understand the importance of Audit Automation. I very well believe that all the accountancy

firm will be able to develop and maintain an effective and efficient Automation systems for their

Audit procedures and they will surely be driven to do this. Hence, I urge all the accountancy

firms and related institutions as well as other organizations (for internal audit purpose )come

forward to take advantage of this new technology. Finally, we should keep in mind that we have

to take the decision to develop and maintain an automated system after a complete analysis of the

organization’s capacity because if the organization is not capable enough to maintain such

systems then the automation will be a burden for any organization.

“The first rule of any technology used in a

business is that automation applied to an

efficient operation will magnify the efficiency.

The second is that automation applied to an

inefficient operation will magnify the inefficiency.” -Bill Gates

40

REFERENCES

41

Alvin A. Arens & James K. Loebbecke (2000), Auditing: An Integrated Approach,8th edition, Prentice Hall, New Jersey.

K.C Laudon & J.P Laudon(2006), Management Information Systems : Managing the digital firm, 11th edition, Pearson education, USA.

Awad E. (1988) Management Information Systems : Concepts , Structures and Applications, Benjamin Cummings

Thomson Reuters Accelus (2009), AutoAudit: An automated solution for internal audit departments

Karl E. Wiegers (2010), Automating Requirements Management

Bach, J. “Test Automation Snake Oil”, 1999. Published in Windows Tech Journal, 10/96, and proceedings of the 14th International Conference and Exposition on Testing

Hoffman, D. (1999) “Test Automation Architectures: Planning for Test

Automation,” Quality Week 1999

Kaner, C. (1997) “Improving the Maintainability of Automated Test Suites,”

Quality Week 1997

Kaner, C. (1998) “Avoiding Shelfware: A Manager’s View of Automated GUI Testing”

.Alles, M.A., and Datar, S. (2004). Cooking the Books: A management-

controlperspective on financial accounting standard setting and the section 404requirements of the Sarbanes-Oxley Act. International Journal of Disclosure andGovernance, Vol. 1, No. 2

David L. Cannon, (2011).CISA Certified Information Systems Auditor

Study Guide, 3rd edition,Sybex, New york

Vasarhelyi, M.A. (1984). Automation and changes in the audit process. Auditing: A Journal of Practice & Theory 4(1) (Fall).

David Coderre(2008), Internal Audit : Efficiency Through Automation, 1st

edition Wiley; New York

42

David Coderre (2009). Fraud Analysis Techniques using ACL,1st edition (August 3, 2009), , Wiley, New York

Charles W.L Hill and Gareth R. Jones (2006), Theory of Strategic Management with Cases, 8th edition, South-Western Cengage Learning, Canada.

Wendy Robson(1997), Strategic Management & Information Systems,2nd

Edition, Prentice Hall, England

www.approva.net

www.amazon.com

www.hayesmanagement.com

accelus.thomsonreuters.com

www.punongbayan-araullo.com

processimpact.com

www.acnabin-bd.com

www. wikipedia.com

43

APPENDIX

44

Appendix A

Acronyms

Acronyms Full Name CAATs Computer-Assisted Audit Techniques

ICAEW Institute of Chartered Accountants in England & Wales

ICAB Institute of Chartered Accountants of Bangladesh

ICMAB Institute of Cost and Management Accountants of Bangladesh

AICPA American Institute Certified Public Accountants

ACL Audit Command Language

CRM Customer Relationship Management

PRM Partnership Relationship Management

SCM Supply Chain Management

MIS Management Information Systems

ERP Enterprize Resource Planning

ACCA Association of Certified Chartered Accountants

ATM Automated Teller Machines

IDEA Interactive data extraction and analysis

FDR Find Duplicate Records

CSA Canadian Standards Association

COSO Committee of Sponsoring Organizations

IIA Institute of Internal Auditors

ISO International Standards Organization

EFPS Electronic Filling and Payments System

NBR National Board of Revenue

ISA International Society of Automation

BSA Bangladesh Standards of Auditing

BAPS Bangladesh Auditing Practice Statements

IAS International Accounting Standards

PAL Patient Accounting Language

PAM Priority Audit Memorandum

PARD Provider Audit & Reimbursement Department

PASS Procurement Automatic Source System

45

Appendix B

The Time Sheet of the Internship

Date Particulars Hours Worked

09/01/2012 Orientation program Introduction of various norms and code of conduct of Chartered Accountacy. Introduction of Dress code for this profession A simple Interview program held by one of the Partners of the firm

08

10/01/2012 Agrani Bank Ltd. Agrabad br. Verification of Alternative Cash Assistance Files Client:Knittex Textiles Ltd. L/C No: I222095467830 Bank Id: 45/11

08

11/01/2012 One Bank Ltd. Agrabad br. Verification of Alternative Cash Assistance Files Client: Base Textiles Ltd. L/C No: NLNL1NL45678894 Bank Id: 51/10-11

08

12/01/2012 One Bank Ltd. Agrabad br. Verification of Alternative Cash Assistance Files Client: Base Textiles Ltd. L/C No: 56837452109 Bank Id: 34/11

08

15/01/2012 One Bank Ltd. Agrabad br. Verification of Alternative Cash Assistance Files Client: Base Textiles Ltd. L/C No: 74834590w3490 Bank Id: 38/11

08

16/01/2012 One Bank Ltd. Principal br. Verification of Alternative Cash Assistance Files Client:Knitivo Textiles Ltd L/C No: 8904587N236 Bank Id: 35/10-11

08

17/01/2012 One Bank Ltd. Agrabad br. Verification of Alternative Cash Assistance Files Client: Base Textiles Ltd. L/C No: 34789123NJH78

08

46

Bank Id: 56/11

18/01/2012 One Bank Ltd. Agrabad br. Annual Audit’ 2011 Cash and Cash Equivalence Verification of the limits of Cash in vault, cash In counter, Cash in transit

08

19/01/2012 One Bank Ltd. Agrabad br. Annual Audit’ 2011 Fixed Asset Verification Observation on the various fixed assets of the Organization

08

22/01/2012 One Bank Ltd. Agrabad br. Annual Audit’ 2011 Observation on Deposit opening Procedures Verification of the account opening procedures and requirements

08

23/01/2012 One Bank Ltd. Agrabad br. Annual Audit’ 2011 Verification of Credit and Securities against credit& Exit Meeting Identification of Classified Loans and Unclassified Loans

08

24/01/2012 One Bank Ltd. Khatungonj br. Annual Audit’ 2011 Investment Identifying the portion of Investments in different sectors

08

25/01/2012 One Bank Ltd. Khatungonj br. Annual Audit’ 2011 Interest Suspense Accounts Identifying the Interest Suspense accounts

08

26/01/2012 One Bank Ltd. Khatungonj br. Annual Audit’ 2011 Verification of top 20 accounts and their balances Identifying the top 20 accounts of the bank and confirming their balances

08

29/01/2012 One Bank Ltd. Jessore br. Verification of Alternative Cash Assistance Files Client: Ahad Jute Spinners Ltd. L/C No: P – 085/2011 Bank Id: 91/10-11

08

30/01/2012 One Bank Ltd. Jessore br. Verification of Alternative Cash Assistance Files Client: Ahad Jute Spinners Ltd. L/C No: P – 089/2011 Bank Id: 85/11

08

47

31/01/2012 One Bank Ltd. Gulshan br. Verification of Alternative Cash Assistance Files Client: K.C Print Ltd. L/C No: U4589DS90210 Bank Id: 67/11

08

01/02/2012 One Bank Ltd. Jessore br. Verification of Alternative Cash Assistance Files Client: Ahad Jute Spinners Ltd. L/C No: OSTL/ JY /456/11 Bank Id: 82/11

08

02/02/2012 One Bank Ltd. Gulshan br. Verification of Alternative Cash Assistance Files Client: Florence Fabrics Ltd L/C No: T09E346782343 Bank Id: 73/11

08

06/02/2012 One Bank Ltd. Jessore br. Verification of Alternative Cash Assistance Files Client: Ahad Jute Spinners Ltd. L/C No: ALTEX/4578/2011 Bank Id: 84/11

08

07/02/2012 One Bank Ltd. Jessore br. Verification of Alternative Cash Assistance Files Client: Ahad Jute Spinners Ltd. L/C No: P-89/ 2011 Bank Id: 56/10-11

08

08/02/2012 One Bank Ltd. Jessore br. Verification of Alternative Cash Assistance Files Client: Ahad Jute Spinners Ltd. L/C No: OSTL/JY/3780/2011 Bank Id: 37/11

08

09/02/2012 One Bank Ltd. Principal br. Verification of Alternative Cash Assistance Files Client: Knitivo Ltd. L/C No: 239854129082 Bank Id: 65/11

08

12/02/2012 One Bank Ltd. Gulshan br. Verification of Alternative Cash Assistance Files Client: K.C Print Ltd. L/C No: I5678M903N230 Bank Id: 59/11

08

13/02/2012 One Bank Ltd. Gulshan br. Verification of Alternative Cash Assistance Files

08

48

Client: Florence Fabrics Ltd. L/C No: RS56902T341832 Bank Id: 43/11

14/02/2012 One Bank Ltd. Principal br. Verification of Alternative Cash Assistance Files Client: Knitivo Ltd. L/C No: HJ569834K56 Bank Id: 68/11

08

15/02/2012 One Bank Ltd. Jessore br. Verification of Alternative Cash Assistance Files Client: Ahad Jute Spinners Ltd. L/C No: P – 91/ 2011 Bank Id: 78/11

08

16/02/2012 One Bank Ltd. Jessore br. Verification of Alternative Cash Assistance Files Client: Ahad Jute Spinners Ltd. L/C No: OSTL/4581/2011 Bank Id: 73/11

08

19/02/2012 One Bank Ltd. Jessore br. Verification of Alternative Cash Assistance Files Client: Ahad Jute Spinners Ltd. L/C No: OSTL/ 4530/ 2011 Bank Id: 80/11

08

20/02/2012 One Bank Ltd. Jessore br. Verification of Alternative Cash Assistance Files Client: Ahad Jute Spinners Ltd. L/C No: ALTEX/5672/2010 Bank Id: 340/10-11

08

22/02/2012 One Bank Ltd. Jessore br. Verification of Alternative Cash Assistance Files Client: Ahad Jute Spinners Ltd. L/C No: P-054/2011 Bank Id: 72/11

08