1. Analytical Aspects of Audit Stephen Allen, ACBA

2. Aspects Covered Sample selection from paper lists or multiple sources Simulating applications in MS Excel Presentational power of the ‘If…’ function in MS Excel

3. Sample Selection Methods - advantages & disadvantages ACBA function for random selection –preparation for and use of the function –presentation of results and audit trail Access to ACBA Random Sampling

4. Selection Methods

5. ACBA Random Sampling function Simple to prepare for Automates random sampling methodology Designed to cope with multiple and paper based sources of information Establishes an audit trail to the transactions selected

6. When to use ACBA Random Sampling? Where the total population comes from multiple sources When faced with paper audit trails

7. Preparation - complete the form

8. Preparation Explained Size of sample & test name –decide how many transactions you want to select –how do you want to identify this test? For each source –give it a unique name - one that you can recognise –how many pages are there? –count how many transactions there are on the first page on the inner pages on the last page Click ‘Enter Details’ –you will be asked whether you want to include another source

9. Select the sample Click ‘Yes’ to the above message box unless you have variable numbers of transactions on the inner pages of your list

10. The Results You will be presented with –a list of selected transactions –in ascending order - for ease of locating them –without duplicates –showing the random number which determines the page selected the page number within the source the name of the source the n th transaction selected within that page

11. It will look like

12. ACBA Random Sampling function - availability Available from ACBA web site no charge for single copies anonymous download web site address http://www.acba.co.ukhttp://www.acba.co.uk

13. Simulating Applications Deciding what to simulate Design on a spreadsheet Gathering input –input controls Processing –creating formulae The Results –what do they really mean? Summarising the results

14. What to Simulate Standard system –input & associated control –processing & associated control –output Primary interest is in ‘processing’ –all other elements including the system’s controls can usually be discarded –otherwise you are, in effect, rebuilding the system

15. Design on a spreadsheet Separate permanent data from transaction data Use columns and rows as if you were writing a working paper –left to right then downwards Use different colours or other presentational devices to show the data entered and the associated results Hide columns or rows of formulae in preference to using spreadsheet protection –protection hinders access to useful functionality If possible, keep to a single screen without scrolling

16. Design on a spreadsheet - in practice Permanent data separate Green - to enter data, Red - for result Rows 14 - 18 hidden for protection Spreadsheet - impractical to fit on one screen without scrolling

17. Data input You will need –all the transactional and permanent data necessary to carry out the calculation, and –the results from the original system, so that you can make a comparison Do not allow comparative results to show unless all the necessary data is there

18. Data input - practice 1 Wherever practicable explain the type of input required Validate the type of input if there is serious risk of error

19. Data Input - practice 2 monitor entries as they are made make sure you gather all the data you need Cell ‘J6’ states - if Cell ‘I6’ is a number enter fig 1 otherwise leave blank Cell ‘J9’ states - if all the required entries contain valid data enter fig 3 otherwise leave blank

20. Processing Mimicking the system’s calculations –break the calculations into easy to understand chunks –ensure you process them in the correct and logical order –compare results to system’s output Note, when handling cumulative calculations, the first formula is always different to all subsequent ones

21. Data input and processing- practice 3

22. The Results Literally, that the two approaches do or do not agree –always more likely that the simulation has an error if agreement not achieved –validate simulation independently before assuming system error. Correction of errors in simulation generates a much improved understanding of the main system

23. Summarising the Results Automated summaries should be adopted only where the simulated system has been independently validated Often a good idea to provide for auditor interpretation of results first, even with validated systems

24. The ‘IF’ Statement The classic method of branching in computing Structure –set evaluation criteria –action if criteria are met –action if criteria are not met Syntax in MS Excel –‘=IF(Criteria, True, False)’

25. ‘IF’ - a worked example =IF(D6 <> “”, D6, “”) this translates as, IF –the cell at D6 is not blank <> “” –places the contents of D6 in this cell –otherwise leave this cell blank very useful for avoiding situations where you do not want a calculation to take place before the appropriate data has been put in