What are the two types of CAAT?

• A. Audit software, where the auditor uses their own computer programmes, for substantive testing.
• B. Test data, where the auditor uses the client's computer programme, to test controls.
• C. Analytical procedures.
• D. Both audit software and test data.

Answer: (D)

Computer-assisted audit techniques involve using computer tools to carry out audit procedures. There are two main forms: using audit software to interrogate and analyse the client’s data, and applying the test data technique, where the auditor uses the client’s program to process predefined test data to see if it handles it correctly and produces the expected results. This combination covers how computers can be used to perform substantive testing and to validate controls, which is why the two types described are audit software and test data. Analytical procedures are a different kind of technique and not CAATs.