Computer Aided Audit Technology for Continuous Audit A

Computer Aided Audit Technology for Continuous Audit A. Nutz e University of Augsburg – Germany Continuous Audit Analysis and Reporting System 4 th world continuous auditing and reporting symposium A. Nutz, E / University of Augsburg. University of Salford, April 18 th 2002

Content • Trends / Reasons for the project • CAARS/AIS – the concept • Pilots within E • Next steps Continuous Audit Analysis and Reporting System 4 th world continuous auditing and reporting symposium A. Nutz, E / University of Augsburg. University of Salford, April 18 th 2002

Current Trends / Audit Language • Ongoing discussion on corporate governance • XBRL as a catalyst for standard (audit) routines • Implications of Internet based reporting / risks by inadequate use of web trust seals • Legal and contractual obligations intensify the consideration of: - Risk management systems - Monitoring and alert systems • The move from financial reporting to business reporting triggers the development from financial audit to business audit Continuous Audit Analysis and Reporting System 4 th world continuous auditing and reporting symposium A. Nutz, E / University of Augsburg. University of Salford, April 18 th 2002

Consequences * Escalating scope of audits require an information system with adequate data basis („width“ and „depth“) * Increasing audit complexity requires innovative analysis techniques such as Data Mining, OLAPtechnologies and monitoring And as general precondition: The audit software has to be used on reliable, quality controlled data. Continuous Audit Analysis and Reporting System 4 th world continuous auditing and reporting symposium A. Nutz, E / University of Augsburg. University of Salford, April 18 th 2002

Insufficiencies within the use of flat file based CAATS 1 Feedback on Audit Results Auditor Client EDP-Employee EY/IT-Employee Performs audit and Assessment Performs Download of Client OLTP-System 2 Data Capture at due date Data Analysis 3 t = single event 4 uses 5 Financial Accounting Data as flat file SAP Fin. Acc. Data Toolbox of CAATS Results Aging ® R/3 6 Continuous Audit Analysis and Reporting System 4 th world continuous auditing and reporting symposium A. Nutz, E / University of Augsburg. University of Salford, April 18 th 2002

Improvements by data warehouse / mart based CAATS (Development of Continuous Audit Analysis & Reporting Software CAARS / AIS EY TP nt OL Clie 1 Client EY/IT-Employee AR S 7 2 Import (ETL) 3 5 CAARS Engagement Mart Flat file RDBMS ® R/3 External Sources (Gartner etc. ) MDDBMS Main Coc kpit OL AP Qu Im ery Be por t nf or d g in rt g po rin Re nito Mo ata g D nin Mi 4 SAP CA EY + client user Host Excel, ASCII, etc. Integration into EY-Methodology Continuous Audit Analysis and Reporting System 4 th world continuous auditing and reporting symposium A. Nutz, E / University of Augsburg. University of Salford, April 18 th 2002 6

Pilot Engagements / Findings & Results • Piloting took place in six European engagements (F, GER, CH, UK) • Different size of engagements • Different evaluation focus (audit efficiency respectively cooperation with third party users) • Different scope and location of data mart • Some of the pilot findings are: • Within half of the pilots third party users joined the project • Within these pilots no data capture had to be performed by the audit team as it was completely automated • By providing modules of different complexity (query, OLAP, cockpits) more auditors with less technical skills are using analytics. • Engagement teams were regarded as “the audit teams that are doing the better audit” Continuous Audit Analysis and Reporting System 4 th world continuous auditing and reporting symposium A. Nutz, E / University of Augsburg. University of Salford, April 18 th 2002

Pilot Engagements / Findings & Results • Pilot findings (cont. ): • Time savings were achieved by improved integration of modules. • With standard audit routines time savings for analytic procedures are estimated to approx. 15 to 30 % of time spent for the current ad hoc approach. • With standard audit routines integrated, AIS will be ‘THE SOLUTION’ and a competitive advantage. • Especially the use of the OLAP-module improved the image as auditor. Continuous Audit Analysis and Reporting System 4 th world continuous auditing and reporting symposium A. Nutz, E / University of Augsburg. University of Salford, April 18 th 2002

CAARS – Next Steps CAARS Improved ad hoc capabilities Data Warehouse Approach Improvement of data capture capabilities (mapping facility) • • Integration of further modules: • Regression analysis • Trend analysis • Fuzzy logic component • • STANDARD ROUTINES • • Enhancement of scalability Enhancements on fully automated data capture Further development on cockpit and monitoring versions PROCESS MEASUREMENT (KPI) Audit methodology enhancements Continuous Audit Analysis and Reporting System 4 th world continuous auditing and reporting symposium A. Nutz, E / University of Augsburg. University of Salford, April 18 th 2002

Audit Standards • Development of audit standards and business applications Continuous Audit Analysis and Reporting System 4 th world continuous auditing and reporting symposium A. Nutz, E / University of Augsburg. University of Salford, April 18 th 2002

Questions? • If you have any questions please do not hesitate to contact me: • Andreas. nutz@ernst-young. de • 0049 / 711 988 5676 Continuous Audit Analysis and Reporting System 4 th world continuous auditing and reporting symposium A. Nutz, E / University of Augsburg. University of Salford, April 18 th 2002