Audit programs

	Many audit programs include steps whose objectives require data analysis. Often that analysis will require the application of analytical software using data from the system being audited. Many times a wide range of analytical procedures will be included within a variety of audit steps. Although each audit step describes the audit objectives along with the underlying reasons for accomplishing the objectives, the audit program does not necessarily describe exactly HOW the analytical procedure can be performed. Typically an audit program will be used by many different auditors, each with different levels of computer skills and experience. Historically, audit program steps involving data analysis can require significant time and resources to accomplish.
	Electronic audit programs represent an enhancement to the traditional audit programs. This is because not only do they include the same information as the traditional audit program, but they also provide a means where the audit program step can be performed using pre-established processing instructions for the computer. These instructions can be established by the auditor using specialized audit software.
	As a simple example, suppose that the audit program of payables contains a step to total all payments made by a specified region (state) and sub-total them by supplier. This process involves both data extraction (payments made by region) and summarization (totals by supplier). This can be done using a menu based system with drop down lists such as shown below.
	Step 1 - Select the summarization menu item Step 2 - Display the form and complete all the data elements needed. Step 3 - Once all the data elements have been selected, click the "Run" button Step 4 -See results by clicking the "View Report " button The results can now be viewed in traditional spreadsheet format, as well as written out to a permanent file for retention in the work papers. The spreadsheet format appears as follows:
	Not only does the software perform the procedure, but it also writes out the steps taken to a log file which can then be incorporated into a set of electronic work papers. This is done by copying portions of the log file into the electronic work paper file, both of which are simple text files. The end result is a collection of audit program steps which are now nicely organized and available for sharing or future re-use. Re performing an audit step is as simple as selecting an audit objective, highlighting it and then clicking on the "Run" button as shown below.
	A process using electronic audit programs can be started based upon queries such as this one which were developed during prior audits or other audit testing. This is done by turning on the "logging" facility on to record the processing performed, and then incorporate this audit processing logic into a continuous audit process. This can be done by copying and pasting the commands generated into an audit program file. Once this audit program file has been developed, all the audit tests and procedures included within it can then be run periodically to re perform the tests when the underlying data has been updated.
	Examples of audit program steps for a dozen processes can be seen by clicking on the menu tabs to the left. Each example contains some 20 - 30 example auditing steps. The electronic audit program process is menu driven, starting with the menu option "Query|Parameterized Queries|Queries". Once developed, such a system can be very efficient and effective in supporting the audit process. The starting point for processing a monitoring file which has been developed is shown below: Step 1 Step 2 When the form is opened, all defined monitoring files will be displayed in the upper portion of the form.
	Step 3 Although these monitoring files can be developed manually, generally they are based upon output log files generated during the processing of ad hoc queries (menu driven). Logging of ad hoc queries is controlled by the settings on the "Other|Audit Values" menu option. Step 4 Setting up the name and location of the log file is usually done prior to running or developing queries pertaining to a particular audit or review. Start by specifying the location and name of the logging file and click on the "Log File" button. (Reports and extracts will be written to the audit directory folder specified by clicking on the button "Audit Dir").

Step 5

Once the logging file has been specified, when any query is run, the commands generated to process that query are written to the log file. An example query to perform a simple data stratification is shown below.

Step 6

Output from this procedure is the chart below (also written to the audit folder), as well as a report in text format.

Step 7

 

When the query is run by clicking on the "Run" button, the commands generated to produce the report are also written to the logging file. These commands are shown below.

Step 8

This code can now be cut and pasted into a monitoring file, which will contain this step and many more. Additional comments can be added to explain the purpose of the step. Also, an objective should be specified in order that the process can easily be identified when the monitor control file is opened.

Below are portions of a monitor control file used for trend line analysis for illustration:

Step 9

To run any of the queries contained in monitoring files, the menu option "Query|Parameterized Queries|Queries" is selected, along with the monitoring file to be processed. (The monitoring files can be defined to the system using the menu item "Query|Parameterized Queries|Query Files"

Step 10

Select the monitoring file to be used, in this case "C:\test\inno\TL.ini". This particular monitoring file contains a number of linear regression tests. When the file name is clicked, all the monitoring procedures contained within that file are displayed (note that it may be necessary to scroll to the page that contains the query of interest).

Step 11

Select a particular monitoring query to run, in this case a test of invoice summaries by year, at a 95% confidence level.

Step 12

Click the "Run" button to have the monitoring procedure performed. Additional tests can be performed by selecting other monitoring procedures and clicking the "Run" button. Note that the name of the file where the results are stored is shown on the status bar.

Examples of monitoring files which can be downloaded/viewed are listed below.

File name	Description
FA.ini	Monitoring procedures for fixed assets
TL.ini	Using linear regression in monitoring procedures
PC.ini	Procurement card examples
DI.ini	Testing for duplicate invoices
AP.ini	Accounts Payable
AR.ini	Accounts Receivable
ER.ini	Employee expense reports
GL.ini	General Ledger
IC.ini	Inventory Cycle
PP.ini	Procure to Pay Cycle
PR.ini	Payroll

Test data used in the monitoring procedures is also available for download.

File name	Description
fa.xls	Fixed assets data for testing
EWP.xls	General data for testing
PO.xls	Purchase order data for testing
Invoices.xls	Invoice data for duplicates testing

 

A monitoring guide is also available.