Nike Corporate Audit’sNike Corporate Audit’s

Data Data ProgramProgram

Data Enthusiast:Data Enthusiast:Julia Read-LaBelle : Data Mining Julia Read-LaBelle : Data Mining ManagerManager

AgendaAgenda

The JourneyThe Journey The Player’s CredentialsThe Player’s Credentials The Coach’s Box & TrainingThe Coach’s Box & Training iAudit iAudit Challenges and LearningsChallenges and Learnings

The JourneyThe Journey

The BeginningThe Beginning

Sr. IT Data Mining Specialist position Sr. IT Data Mining Specialist position was created and filled in the spring of was created and filled in the spring of 2002. Data was hard to obtain during 2002. Data was hard to obtain during the implementation of SAP. the implementation of SAP.

Skill sets included:Skill sets included: Knowledge of Nike data sourcesKnowledge of Nike data sources Knowledge of relational databases Knowledge of relational databases

and toolsand tools

ObjectivesObjectives

Results in audits are more concrete and Results in audits are more concrete and fact-basedfact-based

Independent data pulls and analysis Independent data pulls and analysis Gain better understanding of business Gain better understanding of business

through analysisthrough analysis Discover abnormalities due to Discover abnormalities due to

inconsistent processes or fraudinconsistent processes or fraud Development of audit staff analytical Development of audit staff analytical

skillsskills Cost savingsCost savings

The JourneyThe Journey

Expansion of TeamExpansion of Team Data Mining Manager position Data Mining Manager position

created in 2005 to bring data created in 2005 to bring data function to the management level. function to the management level.

Added staff by filling Sr. IT Data Added staff by filling Sr. IT Data Mining Specialist position in 2005. Mining Specialist position in 2005. Supported all internal audits Supported all internal audits requiring data analytics.requiring data analytics.

Support of Audit WorkSupport of Audit WorkPlanning PhasePlanning Phase

PlanningE

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Discuss with Audit team known risks/concerns in addition to normal risk areas.

Determine with Audit team data and analysis per previous report issue.

Discuss risks/processes with Audit team. Brainstorm on potential analysis.

Data Mining Team pulls from various

data sources, aggregates

information into MS Access

database(s), and completes

preliminary data analysis.

Pre-planning Packets

completed.

Report Issue Analysis Packet

completed.

Analysis Packets

completed.

Additional data and/or analysis

work is requested by the Audit team. Further detailed

analysis conducted by Audit team.

AutoAudit orBurned to

CD

AutoAudit orBurned to

CD

AutoAudit orBurned to

CD

Risk Assessments,

Planning meetings,

Checklist of risk areas

Prior Audit Report and

Work papers

Risk Assessment,

Planning Meetings, Business Experts

Entity Data AnalysisEntity Data AnalysisAccounts PayableAccounts Payable Data ProfileData Profile Number Frequency FactorNumber Frequency Factor Duplicate PaymentsDuplicate Payments Largest SubsetsLargest Subsets Comparisons of DatesComparisons of Dates Summary by Document TypeSummary by Document Type

Travel and ExpensesTravel and Expenses Check % of T&E compared to RevenueCheck % of T&E compared to Revenue Largest SubsetsLargest Subsets

Vendor MasterVendor Master Missing Vendor InformationMissing Vendor Information Vendor Usage Information (vendors not used Vendor Usage Information (vendors not used

or only used once)or only used once) Summary by Created BySummary by Created By Summary by Deletion Flag/Posting BlockSummary by Deletion Flag/Posting Block Duplicate Vendor NamesDuplicate Vendor Names

Accounts ReceivableAccounts Receivable Potential Customer Write-offsPotential Customer Write-offs

* Bolded tests specific to fraud* Bolded tests specific to fraud

Customer MasterCustomer Master Missing Customer InformationMissing Customer Information Credit Limits- Account Balance comparisonCredit Limits- Account Balance comparison Summary by Created BySummary by Created By Summary by Credit LimitSummary by Credit Limit Summary by Next Internal Review DateSummary by Next Internal Review Date Summary by Risk CategorySummary by Risk Category Summary by Order BlockSummary by Order Block Duplicate Customer NamesDuplicate Customer Names

InventoryInventory Inventory Snapshot including quantity and Inventory Snapshot including quantity and

moving average cost moving average cost

Returns/ClaimsReturns/Claims Trend Analysis of Claims by Reason CodesTrend Analysis of Claims by Reason Codes Summary of Claims by Reason CodeSummary of Claims by Reason Code Analysis of Returns for Source Reference Analysis of Returns for Source Reference

DocumentsDocuments Scatter Plot of Claims by Creation DateScatter Plot of Claims by Creation Date

Manual Journal EntriesManual Journal Entries Summary by Created BySummary by Created By Summary by GL AccountSummary by GL Account Summary by JE Debit AmountSummary by JE Debit Amount Listing of JEs posted Post-close in the Listing of JEs posted Post-close in the

Prior PeriodPrior Period

Support of Audit WorkSupport of Audit WorkFieldwork and ReportingFieldwork and Reporting

Fieldwork

Reporting

Attend weekly status meetings to: A) Suggest methods to validate potential issueB) Gather new data requestsC) Update status of current requests

Work with Audit Team to:A) Perform complex analysisB) Pull new informationC) Answer system/business questions

Documentation of all data sources used in

audit work.

Review of data in work papers to:A) Allow repeatabilityB) Data supports findings

Archive supporting files onto CD and delete off

of shared drive.

Overall SupportOverall Support

Retaining business knowledgeRetaining business knowledge Contact listContact list Data sources documentationData sources documentation

Audit Team TrainingAudit Team Training ToolsTools Data analysis techniquesData analysis techniques

Consultant to BusinessConsultant to Business Best practicesBest practices Availability of informationAvailability of information

The JourneyThe Journey

Current StateCurrent State Restructured Corporate Audit in Restructured Corporate Audit in

May 2009. Dedicated staff (3 May 2009. Dedicated staff (3 auditors) to perform iAudits. auditors) to perform iAudits.

Data analytics now responsibility of Data analytics now responsibility of audit teams.audit teams.

Org ChartOrg ChartAudit Committee

Chief Financial Officer

Vice President Executive Assistant

Fin/Ops Audit Manager

Sr. Audit Manager

Data Mining Manager

Sustainable Audit Director

Data MiningProject Lead

Sr. Data Mining Specialist

Data Mining Specialist

Auditor

Auditor

Auditor

Auditor

IT Audit Supervisor

IT Project Lead

Auditor

Auditor

SA Manager

SA Auditor

SA Manager

SA Auditor

Roles and Roles and ResponsibilitiesResponsibilities

From: From:

Support FunctionSupport Function

To: To:

Primary Audit FunctionPrimary Audit Function

The Player’s CredentialsThe Player’s CredentialsTechnical Skills:Technical Skills: Data extraction & analysis tools (MS Access & SQL)Data extraction & analysis tools (MS Access & SQL) Relational Database knowledge Relational Database knowledge ERP applicationsERP applications

Business KnowledgeBusiness Knowledge Nike Systems Nike Systems Nike ProcessesNike Processes

Soft Skills:Soft Skills: Curious & CreativeCurious & Creative Professional skepticismProfessional skepticism Time management and organizational skillsTime management and organizational skills Team PlayerTeam Player Communication skillsCommunication skills Navigation SkillsNavigation Skills

TrainingTraining

To support the transition of auditors To support the transition of auditors performing their own analysis, the performing their own analysis, the following was provided:following was provided:

Formal Training courses:Formal Training courses: ERP system (navigation, common ERP system (navigation, common

transaction codes, reports, etc.)transaction codes, reports, etc.) Tools (MS Access, BW, ECCS, etc.)Tools (MS Access, BW, ECCS, etc.) Data Analytic TechniquesData Analytic Techniques

Reference Material for all of the aboveReference Material for all of the above

Coach’s BoxCoach’s BoxCoach’s Box: “The coaches” can consult, provide Coach’s Box: “The coaches” can consult, provide

game plans (i.e. best practices) and even set up game plans (i.e. best practices) and even set up winning plays, but they are not actually allowed winning plays, but they are not actually allowed to play the game. to play the game.

iAuditiAudit

Nike Corporate Audit Data Analytics ProgramBuilt upon the foundation of a multi-year data analytics program. Transitioned from a

support to a primary audit function.

Nike, Inc.

Initial Entity Areas of ReviewØ General Ledger Ø Procure to PayØ Order to Cash Ø Inventory Management

Holistic ApproachIdentifies themes and

behavior patterns across organizations

Increased CoverageAbility to cover broader

areas of risk

Reduced ResourcesSmaller team of

dedicated resources and reduced travel expenses

iAuditInnovative Auditing

Using data analytics & technology to increase audit coverage with limited resources.

iAudit ResultsiAudit Results

First iAudit focused on Country/Entity First iAudit focused on Country/Entity level risks. The entire process was level risks. The entire process was remote.remote.

Evaluated 5 CountriesEvaluated 5 Countries Concluded on 17 ObjectivesConcluded on 17 Objectives Utilized over 50 data analytic testsUtilized over 50 data analytic tests

Conclusion: Ability to assess Risk Conclusion: Ability to assess Risk Environment for all 5 countriesEnvironment for all 5 countries

Challenges/Lessons Challenges/Lessons LearnedLearned

Auditor’s Ownership of Analytics Work Auditor’s Ownership of Analytics Work Provide training on tools and techniques.Provide training on tools and techniques. Provide success stories around innovative ways to use Provide success stories around innovative ways to use

data.data. Engage with team throughout audit to offer suggestions. Engage with team throughout audit to offer suggestions.

Scope ConsiderationsScope Considerations Tie analysis to business questions to avoid scope creep.Tie analysis to business questions to avoid scope creep. Follow professional standards to review open questions Follow professional standards to review open questions

discovered through analysis. discovered through analysis.

Continuous AuditingContinuous AuditingAudit should not become the control (Business ownership)Audit should not become the control (Business ownership)To be successful, need to have the following:To be successful, need to have the following: Resources to interpret and follow-up on anomaliesResources to interpret and follow-up on anomalies Effective metrics against consistent processes.Effective metrics against consistent processes.

Questions??Questions??