(a) Five Factors Determining Auditor’s Choice of Testing Method

1. Practicability of Performing Audit Tests Manually:
   • Certain computer-based accounting systems leave no visible evidence of transactions, making manual methods impractical.
2. Time Availability:
   • Computer-Assisted Audit Techniques (CAATs) are quicker and allow auditors to meet tight reporting timelines, even though manual methods may be more economical.
3. Availability of Computer Facilities:
   • The auditor must ensure that necessary data, computer files, and programs are accessible for effective use of CAATs.
4. Expertise and Experience:
   • A basic understanding of computer processes is required for auditors to utilize CAATs effectively.
5. Reliance on Internal Audit Functions:
   • If the internal audit team uses CAATs effectively, the external auditor can reduce testing levels after assessing the internal audit’s independence and effectiveness

(b) Five Solutions to Loss of Audit Trail

1. Use of Computer-Assisted Audit Techniques (CAATs):
   • Assess the reliability of the system and data through specialized audit techniques.
2. Testing on a Total Basis:
   • Focus on entire datasets rather than individual items to ensure comprehensive data output assessment.
3. Closer Coordination Between Internal and External Auditors:
   • Align internal and external audit strategies to bridge any gaps in compliance testing.
4. Special Printouts:
   • Arrange for detailed printouts of individual data points to recreate transaction trails for audit purposes.
5. Clerical Recreation of Individual Data Items:
   • Recreate specific data items manually for comparison with computer-generated totals​