Fakultas Ekonomi dan Bisnis

DATA ANALYTICS FOR AUDITING Universitas Indonesia,

Kuliah Umum Audit 2
(Maret, 2017)
Prepared by: Yulia Hengky Putra
PwC Global Economic Crime Survey
2016
DATA ANALYTICS THE BASIC
Audit data analytics is

the science and art of

discovering and analysing patterns,
identifying anomalies, and
extract other useful information
in data underlying or related subject matter of an audit
through analysis, modelling, and visualization
for the purpose of planning or performing the audit
(Brynes, et.al, 2014)
Audit data analytics is

the science and art of

discovering and analysing patterns,
identifying anomalies, and
extract other useful information
in data underlying or related subject matter of an audit
through analysis, modelling, and visualization
for the purpose of planning or performing the audit
WHY DATA ANALYTICS?
SUBSTANTIVE TESTING
An audit procedure that examines the FS
and supporting documentation to see if they
contain errors.
These tests needed as evidence to support
the assertion that financial records of an
entity are complete, valid and accurate.
THE PROBLEM

File Size Our Capabilities

File Format
Access to Data VS Our Time
Our Effort
THE GOAL

Data integrity
Whole data or Sampling
Accuracy
Fast and reliable
Get more insight (more risks, more analysis)
COMPUTER ASSISTED AUDIT
TOOLS (CAATS)
CAAT
Computer Audit Assisted Tool/Techniques
Type:
1. Audit Software
a) Generalized Audit Software
b) Purposed Written Program
c) Utility programs, e.g. Excel
2. Test Data
GENERALIZED AUDIT SOFTWARE (GAS)
GAS is off-the-shelf package that can provide
means to gain access to and interrogate data
maintained on computer storage media.
GAS consists of a series of computer program
routines that can read computer files, select
desired information, perform repetitive
calculations, and print reports in an auditor-
specific formats.
GAS enables auditors to have direct access to
computerized records and to deal effectively with
large quantities data.
GENERALIZED AUDIT SOFTWARE (GAS)
GAS is off-the-shelf package that can provide
means to gain access to and interrogate data
maintained on computer storage media.
GAS consists of a series of computer program
routines that can read computer files, select
desired information, perform repetitive
calculations, and print reports in an auditor-
specific formats.
GAS enables auditors to have direct access to
computerized records and to deal effectively with
large quantities data.
GAS FEATURES

1. Read Only Access

2. Unlimited Records to Import and Process
3. Enable to import various file formats
4. Pre-defined formula for auditors/analyst
5. Automation
LIMITATION

1. Understanding of the data fields

2. Good/bad source data
3. Access to data
4. Creativity of the auditor
CASEWARE ANALYTICS - IDEA
Interactive Data Extraction and Analysis
Developed since 1984, in Canada
Used by:
- Banking
- Government
- Public Accountant
- Other private sectors:
Oil&Gas, FMCG, Manufacture, Insurance, Telecommunication, etc.
IDEA & AUDIT OBJECTIVES
CREDENTIALS: BANKING
CREDENTIALS: GOVERNMENT &
BUMN
CREDENTIALS: PRIVATE SECTOR
CREDENTIALS: UNIVERSITY
IDEA PROCESS
CHARACTERISTICS
1. Read-only Access to protect data integrity
2. Unlimited Records to Import and Process
3. Import data from any sources and formats
4. Pre-defined formula for auditors/analyst
5. All trails are recorded
6. Automation
IDEA WHAT WILL WE LEARN?
I Profiling
Data
Extracting D
Data

E Irregularities

Multiple A
Database
 48

IDEA PROFILING DATA

Field Statistics
Summarization
Stratification
Pivot Table
 49

IDEA EXTRACTING DATA

Direct Extraction
Top Records Extraction
Key Value Extraction
Indexed Extraction
 50

IDEA IRREGULARITIES

Duplicate Key
Fuzzy Duplicate
Gap Detection
 51

IDEA MULTIPLE DATABASE

Append DB
Join DB
Visual Connector
Compare DB
IDEA & APPLICATIONS
 53
Use of IDEA

01 Validating data accuracy

and data integrity
Increase Data
Coverage 02

03 Displaying Data in
Different Ways
Testing
Validity Items 04

05 Identifying Unusual /
Strange Items
FINANCIAL AUDIT
Account Payable
Summarize invoice by suppliers: to prove
individual balances
Match period payments against period and
balances: to identify unmatched payments
Stratify supplier balances
Test duplicate bank account details
Test gap and duplicate invoice number
FINANCIAL AUDIT
Payroll
Recheck calculation: using append database
and equation editor
Sickness/holiday/leave taken
Pay grade comparison
Match database between payroll transaction
and master employee
FINANCIAL AUDIT
General Ledger
Re-perform account information
Compare previous periods
Test duplicate postings
FINANCIAL AUDIT
Purchase
Recalculate purchase transactions
Summarize cash payments
Produce exception report of large items
FINANCIAL AUDIT
Tax
Calculation of tax
Proof of year and balances
Reconcile financial payments
BENFORDS LAW
Frank Benford:
Physicist at GEs Research Laboratories at 1920s.
Logarithm table books:
First page (logs number with low digits) more
worn..
THE PHENOMENON :
Looking up log number with low digits more
frequently more numbers with low first digits in
the world
BENFORDS LAW
BENFORDS LAW
CHARACTERISTICS DATA SET
Data describes sizes of phenomena
e.g : rupiahs amount, total items purchased,
account payable
Number do not contain in maximum and minimum
value
Not a assigned number (Zip code, account
numbers, etc. )
BENFORDS LAW
BENFORDS LAW
EXAMPLES

Sales Transactions
Account receivable
Travel Expenditures
SALES TRANSACTIONS
1. Profiling Data
2. Red flag/anomaly transactions
3. Recalculate formula
4. Aging
5. Irregularities
6. Match / Relate data
ACCOUNT RECEIVABLES

Audit objectives:
To ensure that AR shown in FS are free from
material misstatement.

Source:
AR data at year-end 31 Mar 2012
Customer Master File
ACCOUNT RECEIVABLE CONTD
ACCOUNT RECEIVABLE CONTD
REFERENCE
http://www.pwc.com/gx/en/economic-crime-survey/pdf/GlobalEconomicCrimeSurvey2016.pdf

www.isaca.org/chapters1/Baton-Rouge/.../Documents/March16_CAAT.ppt

http://opentuition.com/wp-content/blogs.dir/1/files/group-documents/15/1289480671-
COMPUTERASSISTEDAUDITTECHNIQUES.pdf

http://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/Audit%20Evidence%20Techniques.as
px?mode=none

http://www.thecleverest.com/benfords_law.html

Mark Nigrini, Benford Law Application for Forensic Accounting, Auditng and Fraud Detection