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QUESTION 4 (20 marks) (a) Computer-Assisted Audit Techniques (CAATS) are used to assist an auditor in the collection of audit evidence from computerised systems. YOU ARE REQUIRED TO: List and briefly explain four advantages of CAATS. (4) (b) Porthos Ltd, a limited company, is a reseller of sports equipment, specialising in racquet sports such as tennis, squash and badminton. The company purchases equipment from a variety of different suppliers and then resells them using the Internet as the only selling media. The company has over 150 different types of racquets available in inventory, each identified via a unique product code. Customers place their orders directly on the Internet site. Most orders are for one or two racquets only. The ordering/sales software automatically verifies the order details, customer address and credit card information prior to orders being verified and goods being despatched. The integrity of the ordering system is checked regularly by ArcherWeb, an independent Internet service company. You are the audit manager working for the external auditors of Porthos Ltd, and you have just started planning the audit of the sales system of the company. You have decided to use test data to check the input of details into the sales system. This will involve entering dummy orders into the Porthos Ltd system from an online terminal. YOU ARE REQUIRED TO: List the test data you will use in your audit of the financial statements of Porthos Ltd to confirm the completeness and accuracy of input into the sales system, clearly explaining the reason for each item of data. (c) You are also considering using audit software as part of your substantive testing of the data files in the sales and inventory systems of Porthos Ltd. (6) YOU ARE REQUIRED TO: 6) List and briefly explain some of the difficulties of using audit software. (4) (ii) List the audit tests that you can program into your audit software for the sales and inventory system in Porthos, explaining the reason for each test. (6)

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