IDEA Data Analysis

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IDEA Data Analysis
Paul C. Hoshall
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The Agenda

• The Auditors Challenge
• IDEA
• The IDEA Education Package

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The Auditors Challenge

• Maximize Productivity
• Foster Creativity
• Increase Audit Economy and Efficiency
• Improve Audit Effectiveness
• Enhance Audit Quality
• Add Client Value
• Enhance Image of Auditing

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Maximize Productivity Foster Creativity

• Perform the tests they want, instead of being
  limited to what technical staff can, or will,
  provide
• Dont limit themselves to just predetermined data
  formats and/or relationships
• Create relationships, check calculations and
  perform comparisons
• Examine all records, not just a sample

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Maximize ProductivityIncrease Audit Economy and
Efficiency

• Perform manual, labor-intensive tasks much faster
• Select samples in less time
• Obtain better coverage and assurance

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Maximize ProductivityImprove Audit
Effectiveness - 1

• Plan and conduct many kinds of tests faster and
  more completely
• Join, concatenate and compare different files to
  quantify findings
• Calculate or recalculate numeric values
• Easily document work performed

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Maximize ProductivityImprove Audit
Effectiveness - 2

• Calculate field statistics (totals, high, low and
  average value)
• Use multiple indexes to create summary
  information and highlight possible errors
• Perform detailed analysis
• Total file recalculations statistics
• Stratification, extraction sampling
• Gap and duplicate key detection

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Maximize ProductivityEnhance Audit Quality

• Substantially reduce reliance on client-produced
  printed reports
• Replace sampling by 100 testing (where
  appropriate), in many cases in less time
• Perform new and stronger tests
• More precise analytical procedures
• More in-depth recalculations
• Better identification of unusual transactions or
  anomalies

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Become Value Added

• Provide clients with better business advice
• Provide additional services to new or existing
  customers
• Reduce the client burden from auditors using
  technical resources to access data and generate
  desired reports

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Enhance Image of Auditing - 1

• Prepare reports in a very short time
• Provide innovative solutions to better serve end
  users
• Become a creative problem solver, rather than a
  policeman
• Enhance their reputation and differentiate
  themselves from the competition

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Enhance Image of Auditing - 2

• Focus on areas where the greatest risks are noted
• Generate more specific questions
• Backup findings with detail
• Reduce time spent in the field

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IDEA
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The Agenda

• What IDEA Is
• Stages of Using IDEA
• Importing Data Into IDEA
• Main Areas of IDEA Use
• Use of IDEA in an Accounts Payable Fraud
  Examination
• How IDEA Can Help You Add Value

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What IDEA Is

• PC Based Productivity Tool
• Designed for Auditors, Accountants, Investigators
  and IT Staff
• Allows the User To Display, Analyze, Manipulate,
  Sample or Extract Data From Virtually Any Type of
  File

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Stages of Using IDEA

• Consider Objectives
• Determine If IDEA Is Appropriate
• Specify The Information Required
• Arrange Download/Transfer of Information
• Import Data and Use IDEA
• Review and Housekeeping

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Objectives To Which Using IDEA Can Contribute

• Mechanical Accuracy
• Analytical Review
• Existence and Validity
• Cut-off
• Parameter-based Analyses
• Aging
• Cross-matching
• Duplicates and Gaps

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Determine If IDEA Is Appropriate

• IDEA Generally Used for Substantive Testing
• Volume - The greater the volume and complexity of
  data, the more useful IDEA becomes
• Ease of downloading/transferring data
• Extract Processes
• Transfer Media
• Transfer Format

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Main Areas for IDEA Use

• Identifying Exceptional Items
• Analytical Review
• Checking Calculations
• Cross Matching data between files/systems
• Testing for Completeness Zero Values, Gaps and
  Duplicates
• Sampling

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Step 1 -Specify The Information Required

• Stored Data -
• Files - master, history, transaction
• Records - selecting records, record layout
• Fields/Data element specifications - numbers,
  dates, references, flags and codes, text
• Representations of Stored Data -
• Standard Print Reports
• Custom Print Reports

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Step 2 -Arrange Download/Transfer Of Data

• Format -
• Fixed length - EBCDIC, ASCII
• Delimited - ASCII
• Database - dBASE, ACCESS, SAP/AIS, AS 400, ODBC
• Spreadsheet - Excel, Lotus
• Accounting Packages Quickbooks, Peachtree,
  ACCPAC
• Print Report file
• Other Examiner, Dart, Smart Analyzer
• Transfer Method
• Machine to machine transfer - LapLink, E-mail,
  etc.
• Media - Diskette, CD, Tape

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Step 3 -Import Data Files Into IDEA
Importing data is performed through the Import
Assistant or the Record Definition Editor. The
Import Assistant is the easiest method for
importing the following file types dBASE,
ACCESS, Lotus, Excel ASCII fixed length EBCDIC
fixed length ASCII delimited SAP/AIS Accountin
g Packages XML ODBC
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Step 3 - Importing A Print Report File
Where problems arise in obtaining the raw data,
or an extract of the data either due to technical
problems, lack of IT assistance or time
constraints, a very successful and simple means
of obtaining data is to import via print report
files. A suitable printout is identified or
requested and then printed to a file rather than
a printer. The print report file is then
imported into IDEA via a selection in the Import
Assistant, the Print Report and Adobe PDF
option, and defining a Mask that will filter
and select the data from the various parts of the
report to build the IDEA data table.
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An Accounts Payable Fraud Examination

• Match payments against authorized suppliers list
• Match vendor bank account numbers to employee
  bank account numbers
• Match suppliers against employee surnames
• Match delivery addresses to employee addresses
• Identify large variances from prior year

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An Accounts Payable Fraud Examination

• Test for duplicate invoices
• Test for duplicate payments
• Identify gaps in check sequences
• Examine amounts at or just below break points
• Identify split invoices
• Test for large discounts

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An Accounts Payable Fraud Examination

• Stratify payments and examine all large amounts
• Analyze days to pay and identify suppliers with
  wide variance from average
• Identify Exceptional Transactions
• Extract certain payees
• Extract all round 1000 payments
• Extract payments authorized by a certain
  individual
• Extract all payments on a Saturday or Sunday
• Extract all payments prior to invoice date

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The IDEA Education Package

• IDEA Workbook
• IDEA Education Version CD
• Case Study
• Help Desk Support, Getting Started Webcasts,
  Newsletter
• No Cost to Professor
• Additional Workbooks (with CDs) can be ordered
  for 35 each

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IDEA Can Help you Add Value - The Key is
Planning

• Work more efficiently
• Reduce testing time
• Check totals on any numeric field
• Extract only those records you want to examine
• Spot changes between periods with one process
• Easily import files - data and report

Efficiency Goals
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Audit Software Can Help You Add Value - The Key
Is Planning

• Work more effectively
• Test more transactions in the same time
• Gain a better understanding of data files -
  summarize, stratify, detect gaps and/or
  duplicates
• Statistics increase understanding of volumes and
  amounts
• Automated sampling
• On-line file management

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IDEA Can Help you Add Value - The Key is
Planning

• Improve capability
• Take on new engagements
• Fraud examinations
• Data validation
• Stay up to date
• Provide creative environment

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Contact Information Paul C. Hoshall Hoshall
Associates Representing Audimation Services,
Inc. Fairfax, VA 22031 703-281-2775 E-mail
p.hoshall_at_earthlink.net