Advantages and disadvantages of Computer assisted audit techniques

Advantages of Computer assisted audit techniques (CAATs):

(1) CAATs facilitate the auditors to test a huge volume of data, or the operation of the controls in a system, precisely and rapidly and are therefore, very cost efficient when operated appropriately.

(2) CAATs lessen the level of human error in testing and facilitate a very high level of audit evidence to be derived.

(3) The application of CAATs frees up expensive human capital that would otherwise be engaged in key areas to concentrate on judgemental areas.

Disadvantages of Computer assisted audit techniques (CAATs):

(1) CAATs are too costly to setup and necessitate the support of the client. It is usually necessary for a
continuing audit relationship to be present before it is worth committing the audit resources.

(2) Major changes in client systems often necessitate major changes in CAATs, which is costly. If the audit fee is based on the assumption that the prior year’s CAATs can be used, and a change is made without warning, the client may have unlikely expectations about the level of service that can be provided for the fee.