# Data Analytics for Audit and CAATs
## Definitions
Data Analytics = combination of processes, tools, and techniques used to tap vast amounts of electronic data to obtain meaningful information.
CAATs (Computer Assisted Auditing Techniques) = the tools and techniques that auditors use in applying the principles of data analytics.
## What Auditors Use Data Analytics For
Data analytics is used to perform many audit procedures:
1. Fraud investigation — spot anomalies invisible to manual review.
2. Analysis of journal entries — particularly entries posted at unusual times or by unusual users.
3. Selection of audit samples — random sampling, systematic sampling.
4. Evaluating impact of control deficiencies — quantify what slipped through.
5. Reperformance of mathematical calculations — recompute interest, depreciation, etc.
6. Checking completeness of data and population used in Tests of Controls (TOC) or substantive tests.
7. Re-computation of balances — reconstruction of the trial balance.
## Use of Digital Technology (AI & Data Analytics) in Audit
- Auditors use artificial intelligence and data analytics to better understand business processes.
- Auditors can devote more attention to areas requiring greater focus (higher-risk areas) because routine analysis is automated.
- Digital audit helps auditors better identify risks by leveraging technology.
## Assess & Report Audit Findings
At the conclusion of the audit, the auditor will likely have findings/exceptions in the IT environment and controls. The auditor must consider:
- Are there weaknesses in IT controls?
- What is the impact of these weaknesses on the audit?
- Report deficiencies to management.
- Communicate significant deficiencies to Those Charged With Governance (TCWG).