Acc 651 - Information Systems Control &

Audit

Presented by: Grant Thornton LLPMike Lane, M. Acc, CA

Lisa Schoenberger, M. Acc, CA

Scott Shannon, M. Acc, CA, CMA, CBV

March 12, 2002

University of Waterloo

J. Efrim Boritz, PhD, FCA

Focus of our Presentation

Brief outline of IDEA features including

Import Assistant Why Grant Thornton uses IDEA Examples of IDEA (audit value &

management value) Data transfer issues Parsim Inc.

IDEA Features Import Assistant

– step by step guide to importing files– RDE (Record Definition Editor)– DataImport for IDEA

Powerful @ Functions (Str, Abs, Mid, Dtodays)

Additional Features Virtual (computed) Fields Sampling Automatic History

Documentation Resource Materials

– manuals in electronic format– Internet site www.caseware-idea.com– on-line help

Why Grant Thornton Uses IDEA June 1996 article by Karla Tays-

Dunphy, CA, CISA (provided by email to Professor Boritz)

increased efficiency and productivity automates manual tasks perform analysis that is difficult to do

manually

Why Grant Thornton Uses IDEA (continued)

audit paperless systems meet client expectations provide general audit staff with the

most productive tools provide value-added tools evaluate the impact of error in the

sample

Examples of IDEA AnalysisAudit Items Export of sample such as A/R

confirmations to a word processor mail merge format

Reperform the aging of A/R Recalculate an inventory listing Extract slow-moving inventory

Additional Examples Match inventory test counts to

physical inventory file and then to final perpetual inventory

Identify and extract related party transactions

Additional Examples Extract loans with unusual interest

rates Recompute accrued interest on all

loans Identify delinquent loans based on

most recent payment or due date extraction

Extract items for cut-off testing

Additional Examples Select high dollar value transactions

for additional review Extract unusual G/L entries Summarize job cost data by job for

gross profit analysis Detailed analysis of payroll (e.g. 25

highest pays, pays with the largest number of overtime hours, etc.)

Additional ExamplesNon-audit items Import the client's trial balance and

then export it in a format that is supported by working paper software

Repair of client data Generate specialized reports for

clients

Current Practice Applications

Credit Union Audit procedures plus a consulting engagement Audit recalculations – complete recalculation of

accrued interest plus testing of loan delinquency Consulting - client paying “patronage” dividends to

its members based on their business with the CU summarize loans and deposits for 12 months,

calculate averages, calculate dividend amount and export to Lotus

Current Practice Applications

Education Savings Plan audit engagement charges to subscribers are based on prospectus

(100%) use of virtual fields and prospectus terms to

identify discrepancies extract items that do not comply with the

prospectus helped client substantially improve program

Data Transfer Issues Data Transfer is an issue that must

be addressed Not as difficult as it was even two

or three years ago Bundling of DataImport for

Windows to import print report files - helps significantly

Popular Transfer Methods Popular ways to transfer data

between microcomputers include:– copying the data to a diskette on the client's

computer and then onto the hard drive of your microcomputer

– If the data file will not fit on one diskette, consider using a compression program such as PKZip or WinZip

Popular Transfer Methods (continued)

– For significant data files( >2 MB), use the Infrared date transfer capabilities or connect the two microcomputers with a cable and then transfer the file

– Determine what export capabilities are available in the accounting software. The best format is dBASE (a record definition is automatically generated)

Popular Transfer Methods (continued)

If the client's software does not have an export capability, it may be possible to print the desired information in a report format to a file. This file may then be imported into IDEA using the DataImport for IDEA

Obtain the layout of the data files so that you can generate a record definition. The software vendor may also create a program to convert the data to a format readable by IDEA

Def’n, design, execution and control • define audit objectives

• what to prove - indicate type of test and test data to be used

• selection of appropriate technique• based on objective, degree of audit

assurance required, techniques that are available, cost/benefit factors

• consider training, support, time constraints

Def’n, design, execution and control • Feasibility Considerations

• significance of audit effort and time required• more efficient?• may be the only way to achieve audit

objective

• availability and sequence of data files• make sure available in readable form, • watch retention policies

Parsim Inc.

Performance of Audit Tests re-calculation of bonus determination of correctness of bonus Dealing predominantly with bonus accrual

Parsim Inc. (continued)

Procedures to Add Value unusual years of seniority no absences (no holidays, no days absent) unusual monthly salaries unusually high absences unusually high premium amounts

Providing information to management to help them run their business (+ audit value)

Questions?

Thank you!