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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About AuditNet® LLC

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Introductions

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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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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:info@auditnet.orghttp://www.auditnet.org

Richard B. Lanza, CPA, CFE, CGMACash Recovery Partners, LLC

Phone: 973-729-3944Cell: 201-650-4150Fax: 973-270-2428

Email: rich@richlanza.comhttp://www.richlanza.com

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