Getting Started Using ACL in Your Next Audit
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Transcript of Getting Started Using ACL in Your Next Audit
Getting Started with ACL- Top Basic & Intermediate
Techniques
(2 CPE Credits) April 24, 2014
AuditNet and AuditSoftware.NetCollaboration
Brought to you by AuditSoftware.net and AuditNet®, working together to providePractical audit software training
Resource links
Independent analysis
Tools to improve audit software usage
Today focused on providing practical data analysis training
Page 1
About Jim Kaplan, CIA, CFE
President and Founder of AuditNet®, the global resource for auditors (now available on Apple and Android devices)
Auditor, Web Site Guru,
Internet for Auditors Pioneer
Recipient of the IIA’s 2007 Bradford Cadmus Memorial Award.
Author of “The Auditor’s Guide to Internet Resources” 2nd Edition
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About AuditNet® LLC
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Introductions
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Webinar Housekeeping
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This webinar and its material are the property of Cash Recovery Partners. Unauthorized usage or recording of this webinar or any of its material is strictly forbidden. We are recording the webinar and you will be provided with a link to that recording as detailed below. Downloading or otherwise duplicating the webinar recording is expressly prohibited.
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Disclaimers
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The views expressed by the presenters do not necessarily represent the views, positions, or opinions of AuditNet® or the presenters’ respective organizations. These materials, and the oral presentation accompanying them, are for educational purposes only and do not constitute accounting or legal advice or create an accountant‐client relationship.
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AuditNet and AuditSoftware.Net Collaboration
Brought to you by AuditSoftware.net and AuditNet, working together to providePractical audit software training
Resource links
Independent analysis
Tools to improve audit software usage
Today focused on providing practical data analysis training
Page 6
Richard B. Lanza, CPA, CFE, CGMA
• Over two decades of ACL and Excel software usage• Wrote the first practical ACL publication on how to use the
product in 101 ways (101 ACL Applications)• Has written and spoken on the use of audit data analytics for
over 15 years.• Received the Outstanding Achievement in Business Award by
the Association of Certified Fraud Examiners for developing the publication Proactively Detecting Fraud Using Computer Audit Reports as a research project for the IIA
• Recently was a contributing author of:• Global Technology Audit Guide (GTAG #13) Fraud in an
Automated World – Institute of Internal Auditors.• Data Analytics – A Practical Approach - research whitepaper
for the Information System Accountability Control Association.
• Cost Recovery – Turning Your Accounts Payable Department into a Profit Center – Wiley and Sons.
Please see full bio at www.richlanza.com
Learning Objectives
Be able to map audit objectives in accounts payable, as an example audit area, to the specific test scripts to perform the task (sampling of these scripts are provided with the course).
Learn how to request data for your next review that will meet your reporting requirements.
See how to define Fixed field, Variable length, Excel, Delimited, Report files, and more in ACL.
Learn to use Statistics, Count and Total in your reporting results. Be able to utilize the Classify, Stratify, Age, Summarize, and Crosstab function Learn to complete gap and duplicate sequence tests and, more specifically, how
to complete a same, same, different duplication test in ACL. Understand how to Verify and Search databases for information, as well as,
extract needed information to a new file for analysis. Learn to Merge and Relate multiple tables, including steps to fixing data files
prior to merging them together. See how to use the JOIN function including effective many to many JOINs using
key words. Understand how to translate sampling theories to ACL commands. See record sampling in action (Random, Fixed Interval) and how to perform
Monetary Unit and stratified samples in ACL.
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Quick Process to Running Data
1. Know your audit objectives
2. Align reports to the objectives
3. Use past reports to model /refine reports
4. Set data requirements based on reports
5. Obtain, validate, and normalize data
6. Edit scripts for data needs
7. Run reports and document results
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Clear Data Request
Accounts Payable Data Request.doc
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Sample Data Validation – Accounts Payable Other Questions
Validation analysis can be programmed into the data normalization script to answer the below questions:
Statistical analysis should also be completed as part of the validation analysis Agreement to batch totals and sample data are critical
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Polling Question #1
What comes first in the data extraction process?Request data
Set objectives for the audit
Set report objectives
Validate data
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Data Import ExerciseUsing 101 ACL Application Data
Fixed Length File (Best for ACL)
Tab / CSV (Variable)
Excel (Variable)
Report (Multiple Record Fixed)
PDF Files
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Data Field Definition Flowchart for ACL
Is it a
date?
Do you add or
subtract the
field?
Define as a
date format
Define as a
numeric format
Yes
Yes
Define as a
character formatDefine as a
Print format
Are there any
decimal places?
Yes
No
No No
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Data Definition Wizard
It is not always right but can be easily fixed
Defining field lengths with a reasonable length
Defining overlapping fields
Set Date options
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Polling Question #2
What data table type is the easiest to define and use in ACL? Fixed length
Tab / CSV / Other Delimited
Excel
Access
Other
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The Basic Analyzers
Count
Total
Statistics
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Stratify Types
Stratify
Stratify Using a Break
Stratify to a Table
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Summarizing Data
Summarize
Use of Presort / Sort
Maximizing the
Other Fields
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Crosstab Data
Gain a column perspective
Similar to Pivots
Use Presort
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Polling Question #3
Which command should be preceded by a Sort or use a Presort command?Statistics
Stratify
Cross-tab
Age
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Gaps and Duplicates - Basics
Gap ranges and lists
DuplicateUse of the Sort/Presort
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The Data Menu
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Verify Command
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• Checks for data validity errors between the data type and the actual data in the table
• Useful to quickly identify data format issues
• Will consider blank spaces in dates to be issues
Search (Locate) and Seek
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• Search (LOCATE)• Can get to a record number quickly
• Can search files without them being indexed
• Known as the LOCATE command in ACL’s command language
• Seek• Only works on indexed record sets
Extract (Append) and Merge
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• Extract IF • To obtain a reduced data set
• Extract Append• Combines files
• Resulting data file will not be sorted
• MergeResulting file will be sorted
Relate and Join Commands
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• Relate (DEFINE RELATION)• Fast to produce / Slower for later commands
• Great to quickly organize various tables into a data model
• 18 tables can be related at once
• Join• Produces a physically sorted/joined table
• Quick for later commands to execute on joined table
Primary and Secondary Joins
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• Join This to Last Year Summarized Tables
• Use Primary AND Secondary
• Calculate the new Vendor Number Field using the Primary and Secondary table results
Seg_Duty FlowSegregation of Duties Test
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1. Join paid table to vendor table on vendor number Obtain the vendor create user name
2. Extract if vendor create user name is the same as the invoice create user name
Polling Question #4
Which file technique leads to a physical file that is sorted? INDEX
RELATE
STRATIFY
JOIN
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When Items Don’t Match
Unmatched JoinSearches tables for unmatched situations
Primary records NOT in secondary table are exported
Useful to test for employees not on payroll or vendors not in payables tables
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Ven_Payr Flow –Vendor to Employee Match
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Create vendor and employee fields for matchingOnly address numbers – first 30 First 8 characters in address
Join files on calculated fields
Many to Many
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Primary Join Does Not Stop At First JoinSecondary Join Does Not Stop At First Join
All records of one table are matched to all records in other table….and vice versa
Sampling TheoriesTranslating into ACL Commands
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What is Sampling?
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The practice of selecting individual items from a population to estimate
properties of that population…. given confidence levels around top error patterns and expected errors.
This is statistical sampling vs. judgmental (nonstatistical)
Steps in Sampling
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1. Set Audit Procedure Objective2. Define the Attribute for TestingYes / NoValue over / under statement
3. Set the Population4. Select a Sampling Method5. Calculate Sample Size6. Audit the Sample7. Evaluate the Sample
Types of Sampling
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Attribute (Random, Fixed Interval, & Cell)
Monetary Unit / PPS
StratifiedBy amountBy transactional score
Software Input Types
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Term Record / Attribute MUS / PPS
Population Number of Records Dollars in a Field
Confidence Confidence %Inverse is beta risk or risk of
incorrect acceptance
Confidence %Inverse is beta risk or risk of incorrect acceptance
Upper Error Limit Upper Error Rate % Tolerable Deviation Rate
Materiality / Tolerable Misstatement
Expected Total Errors
Error Rate % Error Value
Interval Record Interval Dollar Interval
Tolerable Errors # of Errors Maximum Tainting %
Inputs in ACL
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Sampling Size Example and Expectations
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We are 90% confident that the population error rate does not exceed the upper error limit of 5% with an expected error rate of 2%.
We need a samplesize of 134 with 3errors possible in the population of 4,999 to 500,000
Reducing Sample Sizes
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Increase Upper Error Limits
Reduce Confidence
Reduce Expected Error Rate / Number
Remove items that can’t or should not be tested (voids, canceled, no support)
Size and Evaluation
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Sampling Books / Links
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ACL User Guide
Sampling: A Guide for Internal Auditors Barbara Apostolou, Ph.D., CPA
AU Section 350 http://www.aicpa.org/Research/Standards/AuditAttest/DownloadableDocuments/AU-0035theiia.org0.pdf
NYSSCPAhttp://www.nysscpa.org/cpajournal/2005/505/essentials/p36.htm
Polling Question #5
What is the name of the upper error limit in a monetary unit sample?Population
Materiality
Upper Error %
Confidence
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Record SamplingRandom and Fixed interval Sampling
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ACL Random Sampling Thoughts
Cell is the combination of fixed interval and random sampling
Best to extract data prior to sampling to ensure population is properly set prior to sampling
Page 46
Polling Question #6
What sampling technique combines random and interval testing?Cell
Fixed Interval
Random
Portioned
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Questions?
Any Questions?Don’t be Shy!
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In the Queue
Using ACL Scripting in Your Next Audit (Basic/Intermediate Techniques) – May 15
Excel Pivot Tables and Graphing for Auditors – June 25
Building Simple Continuous Monitoring in ACL – July 2
AuditSoftwareVideos.com
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Repeat video and text instruction as much as you need
Sample files, scripts, and macros in ACL™, Excel™, etc. available for purchase
Bite-size video format (3 to 10 minutes)
Page 50
>> Professionally produced videos by instructors with over 20 years experience in ACL™, Excel™ , and more
Thank You!
Jim KaplanAuditNet LLC®1-800-385-1625Email:[email protected]://www.auditnet.org
Richard B. Lanza, CPA, CFE, CGMACash Recovery Partners, LLCPhone: 973-729-3944Cell: 201-650-4150Fax: 973-270-2428Email: [email protected]://www.richlanza.com
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