Audit, Assessment and Testing (AAT)
Audit, Assessment and Testing (AAT) is a formal inspection conducted by qualified independent professionals. During an audit, various tests are performed as part of the assessment process. The different types of AAT are :
- Inquiry: When an audit engagement begins, the company and staff being audited agree to provide auditors with relevant information for preparing financial statements or conducting the audit.
- Observation: In this method, auditors observe processes or activities. Internal auditors can note irregularities that may indicate fraud. Observers do not have direct contact with the subject matter; they rely on their observations for evidence
- Examination or Inspection of Evidence: Auditors examine documents, records, and other evidence. They verify the accuracy and completeness of financial transactions, ensuring that controls are functioning as intended.
- Re-performance: Re-performance involves independently redoing certain procedures or calculations performed by the company’s staff. By doing so, auditors verify the accuracy of reported information.
- Computer-Assisted Audit Techniques (CAAT): CAAT involves using specialized software tools to analyse large volumes of data efficiently. Auditors can perform data extraction, testing, and analysis using these tools.