Continuous auditing and monitoring (“continuous reviews”) has been discussed for decades but implemented in moderation based on recent surveys. It comes down to how much are data analytics integrated into our audit processes initially to then become continuous. If a high degree of integration exists, then there is probably a good amount of continuous reviews happening in the organization already. However, most companies fall into the other camp and have not integrated analytics well enough or considered how to take full advantage of continuous reviews. This course will explain culturally what audit departments must do to embrace continuous reviews and how that can be integrated with ACL Desktop software techniques. Sample files and scripts will be provided to get you started down the road to continuous reviews. As regulatory changes sweep the globe, auditors, risk management, and compliance professionals are using more sophisticated tools, and methods. 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 auditsoftwarevideos.com and AuditNet.tv (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.

1. Building Simple Continuous
Reviews in ACLTM
July 2, 2014
AuditNet and AuditSoftwareVideos.com
Collaboration
Brought to you by AuditSoftwareVideos.com
and AuditNet®, working together to provide:
 Practical audit software training
 Resource links
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 Tools to improve audit software usage
Today focused on providing practical data
analysis training
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2. 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
• 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
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3. Webinar Housekeeping
Page 4
This webinar and its material are the
property of Cash Recovery Partners LLC.
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.
Webinar recording link will be sent via email
within 5‐7 business days.
NASBA rules require us to ask polling
questions during the Webinar and CPE
certificates will be sent via email to those
who answer ALL the polling questions
The CPE certificates and link to the recording
will be sent to the email address you
registered with in GTW. We are not
responsible for delivery problems due to
spam filters, attachment restrictions or other
controls in place for your email client.
Submit questions via the chat box on your
screen and we will answer them either
during or at the conclusion.
After the Webinar is over you will have an
opportunity to provide feedback. Please
complete the feedback questionnaire to help
us continuously improve our Webinars
If GTW stops working you may need to close
and restart. You can always dial in and listen
and follow along with the handout.
Disclaimers
5
The views expressed by the presenters do not necessarily represent the
views, positions, or opinions of AuditNet® or the presenters’ respective
organizations. These materials, and the oral presentation accompanying them,
are for educational purposes only and do not constitute accounting or legal
advice or create an accountant‐client relationship.
While AuditNet® makes every effort to ensure information is accurate and
complete, AuditNet® makes no representations, guarantees, or warranties as
to the accuracy or completeness of the information provided via this
presentation. AuditNet® specifically disclaims all liability for any claims or
damages that may result from the information contained in this presentation,
including any websites maintained by third parties and linked to the AuditNet®
website
Any mention of commercial products is for information only; it does not imply
recommendation or endorsement by AuditNet®

4. 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
Why it is important to development continuous monitoring applications in key
areas of your business to reduce audit time while increase audit quality.
Integrating analytics in all areas of the audit process from audit planning to
follow up.
Outline an effective data request process to ensure complete and accurate
extractions of data every time.
Discuss auto-normalization techniques of data to speed the reporting
process.
See how analytics can maximize the annual audit plan and better ensure
focus is placed on organizational risk.
Understand how to develop Excel / CSV export routines that auto-export
data from ACL at the end of processing.
Pros and cons of specific software tools when implementing data analytics
and continuous reviews.
Understand some common approaches to overcoming obstacles to planning
data analytics based on case studies from companies and survey attendees
themselves.
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5. Continuous Audit / Continuous Monitoring -
Why It’s Important and Audit Software
Integration
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Analytic Command Center
“Auditor in a Can”
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6. Top Audit Software
Implementation Practices
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Audit Analytic Best Practices
Automate the data import and normalization process
 Develop Excel macros to improve client provided data quickly
 Automate the data extraction, file cleansing, and data validation
 Everyone is different with their data – so normalize
Reduce false positives in the final reports
 Prioritize the likelihood of findings
 Use mathematical scoring
Document, save, and possibly videotape your work plan
 Audit logs in software, flowcharts, and documents take minutes to
develop to the hours to later remember what was done
 Video editing (Camtasia) can be used to show how to run applications
for future auditors
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7. Think Prevention vs. Future Detection
 Identify issues earlier in their lifecycle
 Build a aura of deterrence within procure to pay
Build a Continuous Review Process
 Technology
 Minimal staff time / external assistance
Keep Improving the Model
 Model on identified frauds
 Remove false positives to isolate interesting events
Best Practice Approach on Fraud
- Find It Before It Finds You
Data Marts and Server Benefits
Centralized data and backups
Audit knowledge is saved in one place
 Remove the “Learn and Leave” dilemma facing companies
Security and user management
Better data than the business units
Faster processing for large data sets
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8. Data Marts and Server Reality
Most audit areas don’t require it
 Data is only needed once a year or more for some audits
 Data extraction routines can be saved by IT and audit
 Server speed is not needed for majority of audits
Sometimes difficult to explain the ROI to I.T. if
smaller “example” audits are not completed first
 High initial cost of a sledgehammer for hanging a picture
 May turn off management to all data analytics
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Value of ACL Scripting
Useful for routine tasks
 Can be for periodic audit steps
 Also can assist in importing similar data
• For example, OPEN FILE 1, EXTRACT RECORD,
OPEN FILE 2, EXTRACT RECORD, etc.
Build the quality in once
 “Set it and forget it”
Learn how ACL works behind the scenes
 Value of learning ACL for DOS
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9. Making it Continuous
Does not make sense for every audit area
 Makes sense for general ledger in all companies
Find willing business units who want to self-review
Start small, roll out audit applications, and have a
management plan that does NOT include audit except
for business requirement changes
Audit can have access and should periodically “kick
the tires”
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Polling Question 1
Polling Question Displayed during the Webinar

10. Effective Data Request Process and
Auto-Normalization
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11. 20
There’s Gold In That Data
Taken from the 2007 Buyer’s Guide to Audit, Anti-Fraud, and Assurance Software
Data Request is Sent
Prior…..11/14/12 Webinar
Page 2111/14/12

12. Top 10 Data Import Mistakes
1. Not knowing what is possible within the tool to
import and normalize data
2. Asking for data before understanding reporting
needs
3. Not including knowledgeable system
professionals to assist in or review the extract
4. Forgetting to run statistics on amount/date fields
5. Not summarizing text code fields (including
invoice numbers to find E+ issues)
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Top 10 Data Import Mistakes
6. Lack of hardcopy information for review in
relation to imported data
7. Not validating field totals to batch totals
8. Using report files vs. fixed length system files
9. Getting data in Excel vs. a more raw format
10.Lack of understanding of the various data
types
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13. Clear Data Request
Accounts Payable Data Request.doc
Data Import Module
From Excel
Import Script Code.xlsx

14. Polling Question 2
Polling Question Displayed during the Webinar
Maximize the Audit Plan and Building
an Organizational Viewpoint
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15. Data Analytics in the Audit Plan
AuditNet Nov. 14, 2012
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Process to Report Mapping
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16. Mapping Data and Objectives
30
Query Viewpoints

17. Query T&E Reports
 Unmatched query of cardholders to an active employee
masterfile
 Cards used in multiple states (more than 2) in the same day
 Cards processing in multiple currencies (more than 2) in the
same day
 Identify cards that have not had activity in the last six
months
 Cardholders that have more than one card
 Extract any cash back credits processed through the card
 Extract declined card transactions and determine if they are
frequent for certain cards
Data Mining T&E
- It’s The Trends…Right?
 Trend categories (meals, hotel,
airfare, other)
 Trend by person and title
 Trend departments
 Trend vendors
 Trend in the type of receipts
 Trend under limits (company policy)
33

18. Transactional Score
Benefits
The best sample items (to meet your attributes) are
selected based on the severity given to each attribute.
In other words, errors, as you define them, can be
mathematically calculated.
Instead of selecting samples from reports,
transactions that meet multiple report attributes are
selected (kill more birds with one stone). Therefore a
50 unit sample can efficiently audit:
 38 duplicate payments
 22 round invoices
 18 in sequence invoices
….and they are the best given they are
mathematically the most “severe”.
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Pick Items Rare in
Several Ways
 Don’t choose just ANY weekend invoice
 Choose an UNUSUAL weekend invoice
 Large weekend invoices are the rarest kind
(i.e., only 2 percent of large invoices)
 The odds of finding a recoverable error
go up AND since the invoice is large, the
value recovered goes up too!
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19. Summaries on
Various Perspectives
36
Summarize by
dimensions (and sub
dimension) to pinpoint
within the cube the
crossover between the top
scored location, time, and
place of fraud based on
the combined judgmental
and statistical score
ALL TIES BACK TO THE
ORIGINAL ANALYTIC
APPROACH
Combining the Scores
ACL Code
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20. Obtain data at least once a year for use in the planning exercise
 Basic data may all that is needed from key systems and locations
Run a series of tests across each location’s data
 Consider focusing on general ledger given its broad exposure to the
business
 Consider using risk scoring in a consistent fashion across the
company
Prototype a few local audit toolkits each year
 Most cost effective way to develop and ACL is cheaper than almost
any other development platform for finance/audit professionals
 Identify “low hanging fruit” for cost savings and improvements.
Considerations for Overall Audit
Planning
Normalize and test general ledger data consistently on all locations
 Most internal audit shops obtain general ledger data quarterly for their external
auditors anyway – no excuse
G/L data is the lifeblood of the organization
 Planning will improve as focus can be placed on key accounts, entries,
timeframes, enterers, etc. and will guide future data extracts
 Most systems post in detail (even down to inventory movements) which can
allow detailed review of subledgers….using G/L data
Identify savings, better ideas,…and fraud
 Fraud has been the focus and we should still test for it
 Savings in cost recoveries can now become more of a focus
 Better ideas leveraged through technology
• Efficiency (to help a faster close)
• Revenue and business enhancement
Key Mantras of G/L
Analytic Auditing

21. Journal Entry Surveillance System
(“J.E.S.S”) Overall Review Objectives
 Model “normal” account behavior
 Identify unusual changes in activity
• Over time
• By account sequence
• In amount
• In value (I/S, B/S, Net effect)
• In enterers behavior or words entered
• Key concern accounts
 Detect unusual journal entries based on past risk
factors and expected schemes
 Monitor unauthorized enterers
 Reconcile GL activity to trial balance figures
(completeness) and financial statements
Profit Opportunities
Outweigh Analytic Costs
Accounts Payable
Audit Fee Benchmarking
Advertising Agency
Document Fleet
Freight
Health Benefits
Lease
Media
Order to Cash
Proactive Fraud
Detection
Project Fraud
Real Estate Depreciation
Sales & Use Tax / VAT /
R&D tax
Strategic Sourcing
Telecom
Travel and Entertainment
Utilities

22. Cost Recovery Opportunity Tests
A/P and G/L Review Factors
 Accounts that are sole sourced
 Accounts that have too many vendors
 Categories that map to the “recovery
list”
 Assess to industry cost category
benchmarks
 Top 100 vendors
 Trend analysis over time
 Trend analysis by vendor (scatter
graph)
Polling Question 3
Polling Question Displayed during the Webinar

23. Auto-Workpaper Export Routines
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Polling Question 4
Polling Question Displayed during the Webinar

24. Pros and Cons of Tools When Implementing
Continuous Analytics & Overcoming Obstacles
Page 46
Most Popular
Audit Software Products
 ACL / AX
 ActiveData for Excel
 Arbutus Software
 IDEA
 Microsoft Access
 Microsoft Excel
 TopCaats

25. Tool Selection
Considerations
 Core processing features
 Advanced features
 Advanced data import
 Scripting
 Ease of use
 Training / Customer Support / User Groups
 Years in business / Company sustainability
 Workpaper system integration
Proposal Decision Analysis
Page 49
http://www.caseware.com/products/idea#_res
earch_reports

26. Use data analytics on almost every audit
 Brainstorm the use data analytics in the audit planning process
 Drop an audit and instead plan 10% for “data fun” across all audits /
Understand the process and benchmark it for future reviews
 Make it part of annual objectives to use the product
Find cost savings to pay for the usage & Track it &
Promote it
 Risk assess the general ledger – stratify by month by account J/E risk
scores
 Search for cost recovery opportunities
 Sell the need for increased software and education
• Also sell the cost/benefit of ACL to other development platforms
(especially for prototyping).
Overcoming Obstacles
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Plan on education and make it routine
 Meet every three weeks on analytics – no matter what
 Build a team of champions to coach the team
 Get everyone else involved…..even if it is with Excel to start
 Make it part of annual objectives to learn the product
Establish data channels to all (material) parts of the
organization
 Have more freedom to extract data as needed
 Obtain quarterly feeds of data
 Obtain data from all locations once a year for audit planning
Overcoming Obstacles
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27. Polling Question #5
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Polling Question Displayed during the Webinar
Questions?
Any Questions?
Don’t be Shy!
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28. In the Queue
Sampling in Excel and Other Simple Add-In
Products – Aug 13
ACL Basic/Intermediate Scripting – Sept
10
Financial Statement Analysis to Journal
Reviews With Excel Tools – Oct 7
AuditSoftwareVideos.com
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)
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>> Professionally
produced videos by
instructors with over 20
years experience in
ACL™, Excel™ , and
more

29. Thank You!
Jim Kaplan
AuditNet® LLC
1-800-385-1625
Email:info@auditnet.org
http://www.auditnet.org
Richard B. Lanza, CPA, CFE, CGMA
Cash Recovery Partners, LLC
Phone: 973-729-3944
Cell: 201-650-4150
Fax: 973-270-2428
Email: rich@richlanza.com
http://www.richlanza.com
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