ACCA Audit and Assurance (F8) Practice Exam

What is a function of Computer-Assisted Audit Techniques (CAATs) in auditing?

1. Provide legal advice during audits

2. Help in the collection of overdue accounts

3. Calculate payables days accurately

4. Compile financial statements directly

The correct answer is: Calculate payables days accurately

In the context of auditing, Computer-Assisted Audit Techniques (CAATs) are tools and methodologies that leverage technology to assist auditors in gathering and analyzing data more efficiently and effectively. The function of CAATs includes various tasks, one of which is accurately calculating financial metrics, such as payables days. This calculation involves analyzing accounts payable data against relevant metrics like total purchases or costs, which are often derived from complex datasets. By using CAATs, auditors can streamline the process of achieving accurate calculations, identify anomalies, and assess the company's financial health more thoroughly. These techniques enable auditors to verify data quickly, facilitating more precise audit outcomes and enhancing the quality and reliability of the audit process. The other options do not align with the primary functions of CAATs. Legal advice, for instance, is typically outside the purview of auditing functions and relies on legal professionals. Collection of overdue accounts is a management or operational task rather than an auditing function. Lastly, while CAATs assist in analyzing financial data, they do not compile financial statements directly—this is usually the responsibility of the accounting department before the auditors review those statements.