Using MS Excel In Your Next Audit - Top Basic &
Intermediate Techniques
(2 CPE Credits) April 24, 2014
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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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Introductions
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Richard B. Lanza, CPA, CFE, CGMA
• Over two decades of ACL and Excel software usage• Has written and spoken on the use of audit data analytics for
over 20 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
Use Excel as audit software, able to mimic practically all data analytic commands found normally in more expensive tools.
Request, extract, import data into Excel, and validate data prior to analysis.
Get started with and quickly maximize Pivot Tables, turning them into effective data mining tools able to unearth almost any audit finding.
Use different approaches to sampling with Excel and low-cost add-ins.
Create all types of graphs to pinpoint changes over time and/or other chart dimensions.
Turn a series of Excel functions into a macro so that data import and audit testing techniques can be automated.
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Malpractice without Analytics?
http://www.nysscpa.org/trustedprof/107/tp11.htm
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How to Use Excel As An Audit Tool
Free whitepaper on Excel:
http://auditsoftware.net/documents/excel-audit-software.pdf
ActiveData for Excel Link – Discounted $199 software purchase link -http://www.informationactive.com/asv
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Types of Analytical Tests (Substantive Test)
1. Trend Analysis
2. Ratio Analysis
3. Reasonableness Tests
4. Regression Analysis
“Analytical Procedures – Audit Guide”, AICPA, March 2012
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How To Use Excel As Audit Software – Free Whitepaper
Data Management Tests
Append / Merge
Calculated Fields
Cross Tabulate
Duplicates
Extract/Filter
Export
Gaps
Index / Sort
Join / Relate
Sample
Summarize
Analytical Tests Analytical Tests Horizontal Analysis Vertical Analysis Ratios Trend Analysis Performance Measures Statistics Stratifications Aging Benford’s Law Regression Monte Carlo Simulation
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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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Pivot Tables and Charts> The Basics Explained
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Getting Started:Pivot to New Sheet
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Getting Around The Pivot-
Right click on the amount fields (data part) to see field list and edit various Pivot Table options
Select from the Top Ribbon Menu the Options and Design menus for Pivot Tables (Excel creates them when a Pivot Table is created) –best and easiest way to make changes
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Change Number Format and Type
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Graphing the Data
With your mouse pointer anywhere in the Pivot, select the Pivot Chart button
Whatever is in the Pivot will be added to the Chart
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Grouping Date Ranges
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Polling Question #2
Where do you change your value formats in a PivotTable?Grouping
Value Field Settings
Pivot Chart
Active Field Format
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Stratifying Data and Dynamically Grabbing All Data in a Pivot Table
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Stratify Your Data
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=IF(B4>1000,“3. Over $1000",IF(B4>100,“2. Over $100 to $1,000",IF(B4<=100,“1. Up to $100")))
This will create three strata:1. Up to $1002. Over $100 to $1,0003. Over $1,000
Start from highest to lowest – Excel picks the first matching item
Capturing All Data Named Range Formula
If PivotData is where you have your data:
=OFFSET(PivotData!$A$1,0,0,COUNTA(PivotData!$A:$A),COUNTA(PivotData!$1:$1))
…will ensure the entire sheet is mapped for pivoting and graphing.
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Polling Question #3
What function is Used to Obtain All Parts of a PivotTable?Min
Over
More
Offset
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Specific Accounts Payable Tests
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Query Viewpoints
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Specific Accounts Payable Tests
(What) Summarize activity on the amount field (absolute value of debit or credit) to identify the top occurring amounts. Then summarize activity by vendor and the amount identified for the top 25 appearing.
(What) Extract payables that equate to round multiples of 10,000, 100,000, and 1,000,000.
(When) Extract transactions posted on weekends and holidays.
(When) Summarize activity by day, month, and year.
(Who) Summarize activity by user and month
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Other Useful Graphing Techniques The Scatter
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Scatter Graph
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Scatter Graph Explanation
1 – high dollar change and low count (outliers)
2 – charges that make sense
3 – changes that don’t make sense
4 – inefficiency that is developing
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Polling Question #4
What function is used to determine if a cell is a round number?OFFSET
MOD
MID
ROUND
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Sampling in Excel and ActiveData for Excel
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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 %
Excel Macros Demonstration
Preparing Excel for
Macro Development
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Key Macro Uses
Formatting Data
Adding Totals and Formulas to Columns
Importing Data Files
Adding Tickmarks
Moving Data Around
….Anything You Repetitively Do As an Auditor
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Polling Question #5
What keys can you select to quickly open the Visual Basic Editor:Ctrl-X
Ctrl-Z
Ctrl-F9
Alt-F11
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Added Bonuses
Files Used in the Class
Using Excel as an Audit Software
ActiveData for Excel Link – Discounted $199 software purchase link - http://www.informationactive.com/asv
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Questions?
Any Questions?Don’t be Shy!
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In the Queue
Getting Started Using ACL in Your Next Audit (ACL Basic) – May 1
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
Thank You!
Jim KaplanAuditNet® LLC
1-800-385-1625Email:[email protected]://www.auditnet.org
Richard B. Lanza, CPA, CFE, CGMACash Recovery Partners, LLC
Phone: 973-729-3944Cell: 201-650-4150Fax: 973-270-2428
Email: [email protected]://www.richlanza.com
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