Answer
It is a technique better than Integrated Test Data Facility. It involves tagging the client`s input data in such a way that relevant information is displayed at key points. It uses the actual data, and so the question of elimination of special entries test data designed under Integrated Test Data Facility does not arise. The hard copy, so produced is available only to the auditor and may describe such inputs as hours worked in a pay period in excess of 60; or sales orders processed in excess of Rs. 200,000 etc. This enables the auditor to examine transactions at the intermediate steps in processing.
The advantage of tagging and tracing approach lies in the use of actual data and elimination of the need for reversing journal entries. The disadvantage is that the erroneous data will not necessarily be tagged. An effective combination approach may be to use the ITF approach (Integrated Test Facility) for a few hypothetical transactions and the tagging and tracing approach to follow line data through a complex system.