Getting Started Using ACL in Your Next Audit

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ACL Software is a powerful product yet many users are concerned it is difficult to start and therefore, may never effectively maximize the product. If you fall into this category or just want to learn from one of the top industry experts in ACL Software (over 20 years experience), this course will provide the key learning blocks to get started quickly auditing three top audit areas for data analytics. Using a live/video training library approach, we help companies of all sizes use audit and assurance software to improve business intelligence, increase efficiencies, identify fraud, test controls, and bottom line savings. AuditNet and Cash Recovery Partners Webinar recording available at and (registration required) Recording free to view. Sample Data Files for All Courses are available for $49 To purchase access to all sample data files, Excel macros and ACL scripts associated with the free training visit AuditSoftwareVideos.

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.Net Collaboration Brought to you by and AuditNet, working together to provide Practical 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 IIAs 2007 Bradford Cadmus Memorial Award. Author of The Auditors Guide to Internet Resources 2nd Edition Page 2 About AuditNet LLC AuditNet, the global resource for auditors, is available on the Web, iPad, iPhone and Android devices and features: Over 2,000 Reusable Templates, Audit Programs, Questionnaires, and Control Matrices Training without Travel Webinars focusing on fraud, audit software (ACL, IDEA, Excel), IT audit, and internal audit Audit guides, manuals, and books on audit basics and using audit technology LinkedIn Networking Groups Monthly Newsletters with Expert Guest Columnists Book Reviews Surveys on timely topics for internal auditors Introductions Page 3
  • Webinar Housekeeping Page 4 Thiswebinaranditsmaterialarethe propertyofCashRecoveryPartners. Unauthorizedusageorrecordingofthis webinaroranyofitsmaterialisstrictly forbidden.Wearerecordingthewebinar andyouwillbeprovidedwithalinktothat recordingasdetailedbelow.Downloadingor otherwiseduplicatingthewebinarrecording isexpresslyprohibited. Webinarrecordinglinkwillbesentviaemail within57businessdays. NASBArulesrequireustoaskpolling questionsduringtheWebinarandCPE certificateswillbesentviaemailtothose whoanswerALLthepollingquestions TheCPEcertificatesandlinktotherecording willbesenttotheemailaddressyou registeredwithinGTW.Wearenot responsiblefordeliveryproblemsdueto spamfilters,attachmentrestrictionsorother controlsinplaceforyouremailclient. Submitquestionsviathechatboxonyour screenandwewillanswerthemeither duringorattheconclusion. AftertheWebinarisoveryouwillhavean opportunitytoprovidefeedback.Please completethefeedbackquestionnairetohelp uscontinuouslyimproveourWebinars IfGTWstopsworkingyoumayneedtoclose andrestart.Youcanalwaysdialinandlisten andfollowalongwiththehandout. Disclaimers 5 Theviewsexpressedbythepresenters donotnecessarilyrepresentthe views,positions,oropinionsofAuditNetorthepresentersrespective organizations.Thesematerials,andtheoralpresentationaccompanyingthem, areforeducationalpurposesonlyanddonotconstituteaccountingorlegal adviceorcreateanaccountantclientrelationship. WhileAuditNetmakeseveryefforttoensureinformationisaccurateand complete,AuditNetmakesnorepresentations,guarantees,orwarrantiesas totheaccuracyorcompletenessoftheinformationprovidedviathis presentation.AuditNetspecificallydisclaimsallliabilityforanyclaimsor damagesthatmayresultfromtheinformationcontainedinthispresentation, includinganywebsitesmaintainedbythirdpartiesandlinkedtotheAuditNet website Anymentionofcommercialproductsisforinformationonly;itdoesnotimply recommendationorendorsementbyAuditNet
  • AuditNet and AuditSoftware.Net Collaboration Brought to you by and AuditNet, working together to provide Practical 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
  • 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. Page 8 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 Page 9
  • Clear Data Request Accounts Payable Data Request.doc Page 10 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 Page 11
  • Polling Question #1 What comes first in the data extraction process? Request data Set objectives for the audit Set report objectives Validate data Page 12 Data Import Exercise Using 101 ACL Application Data Fixed Length File (Best for ACL) Tab / CSV (Variable) Excel (Variable) Report (Multiple Record Fixed) PDF Files Page 13
  • 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 format Define as a Print format Are there any decimal places? Yes No No No Page 14 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 Page 15
  • 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 Page 16 The Basic Analyzers Count Total Statistics Page 17
  • Stratify Types Stratify Stratify Using a Break Stratify to a Table Page 18 Summarizing Data Summarize Use of Presort / Sort Maximizing the Other Fields Page 19
  • Crosstab Data Gain a column perspective Similar to Pivots Use Presort Page 20 Polling Question #3 Which command should be preceded by a Sort or use a Presort command? Statistics Stratify Cross-tab Age Page 21
  • Gaps and Duplicates - Basics Gap ranges and lists Duplicate Use of the Sort/Presort Page 22 The Data Menu Page 23
  • Verify Command Page 24 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 Page 25 Search (LOCATE) Can get to a record number quickly Can search files without them being indexed Known as the LOCATE command in ACLs command language Seek Only works on indexed record sets
  • Extract (Append) and Merge Page 26 Extract IF To obtain a reduced data set Extract Append Combines files Resulting data file will not be sorted Merge Resulting file will be sorted Relate and Join Commands Page 27 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 Page 28 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 Flow Segregation of Duties Test Page 29 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 Page 30 When Items Dont Match Unmatched Join Searches 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 Page 31
  • Ven_Payr Flow Vendor to Employee Match Page 32 Create vendor and employee fields for matching Only address numbers first 30 First 8 characters in address Join files on calculated fields Many to Many Page 33 Primary Join Does Not Stop At First Join Secondary Join Does Not Stop At First Join All records of one table are matched to all records in other table.and vice versa
  • Sampling Theories Translating into ACL Commands Page 34 What is Sampling? Page 35 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 Page 36 1. Set Audit Procedure Objective 2. Define the Attribute for Testing Yes / No Value over / under statement 3. Set the Population 4. Select a Sampling Method 5. Calculate Sample Size 6. Audit the Sample 7. Evaluate the Sample Types of Sampling Page 37 Attribute (Random, Fixed Interval, & Cell) Monetary Unit / PPS Stratified By amount By transactional score
  • Software Input Types Page 38 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 Page 39
  • Sampling Size Example and Expectations Page 40 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 sample size of 134 with 3 errors possible in the population of 4,999 to 500,000 Reducing Sample Sizes Page 41 Increase Upper Error Limits Reduce Confidence Reduce Expected Error Rate / Number Remove items that cant or should not be tested (voids, canceled, no support)
  • Size and Evaluation Page 42 Sampling Books / Links Page 43 ACL User Guide Sampling: A Guide for Internal Auditors Barbara Apostolou, Ph.D., CPA AU Section 350 wnloadableDocuments/AU-0035theiia.org0.pdf NYSSCPA 36.htm
  • Polling Question #5 What is the name of the upper error limit in a monetary unit sample? Population Materiality Upper Error % Confidence Page 44 Record Sampling Random and Fixed interval Sampling Page 45
  • 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 Page 47
  • Questions? Any Questions? Dont be Shy! Page 48 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
  • Videos accessible for FREE subscriptions 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 Kaplan AuditNet LLC 1-800-385-1625 Email:[email protected] Richard B. Lanza, CPA, CFE, CGMA Cash Recovery Partners, LLC Phone: 973-729-3944 Cell: 201-650-4150 Fax: 973-270-2428 Email: [email protected] Page 51