How do you choose the most appropriate IT audit testing type for your objectives?

An IT Audit includes controls-based testing and concluding the overall IT Environment, including testing IT configuration. On the contrary, Substantive testing is opted for when there is no possibility of concluding audits around the overall system or IT Environment via configuration testing. In such situations, substantive testing is preferred, whereas samples are picked up and tested for a final audit conclusion. In other words, Substantive testing obtains the conclusion of the whole population based on sample data.

Happy to read 2 viewpoints above , especially chintan dhalwani. The wholistic approach is aimed at generating confidence in the minds of Board of Directors. We shut our doors and windows tight but keep one rathole open, it is an opportunity for the perpetrators to breach your privacy and data security.

When considering objectives, it's crucial to align IT audit testing types effectively. Factors such as the nature of systems, risks involved, and desired assurance levels should guide your selection process. Evaluating the scope, depth, and efficiency of various testing methodologies is essential in ensuring comprehensive coverage while optimizing resource utilization. Additionally, staying abreast of industry trends and regulatory requirements can further enhance the relevance and effectiveness of your chosen testing approach.

When selecting the appropriate IT audit testing type to meet your objectives, it is crucial to take into account factors such as the nature and extent of your audit, the level of assurance required, the dependability and availability of data and controls, and the expenses and benefits associated with each testing type. However, a common mistake is to jump straight into substantive testing without first obtaining a comprehensive understanding of the existing controls.

Substantive testing digs into the details to see if your transactions and data are accurate and legit. It's like checking your bank statement to make sure every charge is right. You might look at samples of purchase orders, payment records, or system logs. Use substantive testing when you need to be sure the numbers add up correctly and there's no funny business going on.

Compliance testing is simply a type of IT audit in which testing is performed for various IT processes, systems, IT infrastructure, etc., because of necessitated statutory requirements. It's an audit performed to test whether the mandates of rules, laws, and obligations have been followed, implemented or not.

Compliance testing is generally considered to be “check-the-box” testing. As an IT Auditor, avoid compliance testing at all costs. If you are limiting yourself to the “applicable laws, regulations, standards, or policies”, you’ve already lost. Do you think a malicious person will follow the rules? Instead, why not be proactive. Execute scenario based testing, or simulation testing. Find the exploitable gaps before the bad guys do.

Compliance testing checks if you're following the rules – whether it's company policies, industry regulations, or laws. Think of it like your tech version of the IRS. You'll review things like access controls, security settings, and change management procedures. Use compliance testing to prove you're doing things the way you're supposed to and to avoid getting in trouble.

Analytical testing looks for patterns and trends in your data. It's like comparing this year's budget to last year's, looking for weird spikes or dips. You can use it to spot potential problems, like unauthorized activity or inefficient processes. Use analytical testing to get a big-picture view of your systems and to predict things that could go wrong in the future.

Analytical procedures in auditing involve the analysis of financial information and other relevant data to identify unusual trends, fluctuations, or relationships that may indicate potential risks or errors in the financial statements. These procedures help auditors gain a better understanding of the client's business, assess the reasonableness of financial information, and identify areas that require further investigation.for example Through revenue recognition analysis, the auditor gains insights into the reasonableness of reported revenue and identifies areas that may require further examination.

As mentioned above in the Substantive testing section, substantive testing is the testing of samples of transactions or system postings to conclude the effectiveness of the whole population. As such, it is not control-based testing. Control-based testing is performed on respective controls created against the relevant risks of organisational IT processes and systems. The testing approach and scope will only depend upon the actual control. Dual-purpose testing type will include testing of samples as per substantive testing as well as controls testing will also be performed. This can multiply the reliability of audits and saves time.

Stick to single-use compliance or substantive testing and you might later encounter a dual-purpose test; don't "cleverly" look for the latter as your first step.

Dual-purpose testing gives you a two-for-one deal. You design tests that check both the accuracy of your data and compliance with the rules. This saves time if you need to prove both things. It's like checking your purchase orders to make sure both the amounts and the approval signatures are accurate.

Start with your goals – what exactly are you trying to figure out? Are you worried about hackers, fraud, or the company wasting money? Match your testing to those risks. Think about how much evidence you need – a quick spot check or a super deep dive? Finally, don't forget about resources. Some tests take way more time and expertise than others.

It’s important to keep in mind the level of assurance needed. Most cases it will boils down to reasonable assurance and not absolute assurance. Meaning due to data or information limitations auditors cannot assure or guarantee 100% that that control is designed and operating effectively. Auditors are successful in meeting audit objective by performing substantive testing. Let’s say we don’t have access to how fees calculations are made by external parties. But we might have estimates built in house that aligns with the calculations. If auditors can find reasonable assurance that our in house estimates is accurate historically then we find reasonable assurance over the external calculations is fair and according to established contracts.

Depending on the control activities, there could be one to several test actions to perform, which could range from performing inquiries with control owners to complex substantive testing. Certain methodologies may require multiple types of testing to support the passing of each control. The degree of testing required for each control may consider the risk assessment, the audit objectives, and the project’s budget.

Certainly! Let’s embark on an interstellar journey through the cosmic audit universe, where nebulous risks and celestial controls collide. ???? Choosing the Right IT Audit Testing Type: A Cosmic Odyssey Substantive Testing: 1] The Quantum Leap 2] Compliance Testing: The Cosmic Code Check. 3] Analytical Testing: The Nebula Navigator. 4] Dual-Purpose Testing: The Quantum Entanglement Tips for Choosing Your Cosmic Audit Path: ?? Align with Mission Objectives: Know your mission—financial accuracy, compliance, or cosmic enlightenment. ?? Assess Risk Gravity: Identify high-risk areas. ?? Balance Yin and Yang: Combine substantive and compliance tests. ??? Use Cosmic Tools: Leverage AI, data analytics.