This is the AuditNet Standard Risk Control Audit Matix which incorporates formats used by many audit organizations

in their documentation working papers. There are format templates for risk control, audit procedures, questionnaires and checklists. There is a blank workpaper and a report summary that can in used by audit organizations. AuditNet has prepared a monograph for guidance on preparing and developing audit work programs, checklists, questionnaires and matrices. The monograph is available to AuditNet subscribers. For more information go to www.auditnet.org

This is an analytic-enabled audit program, providing an example of how analytics can be used throughout the audit process. Partnering with AuditNet, ACL has taken this audit program, provided by AuditNet, and simply integrated some example audit analytics into the appropriate program steps. As your organization's testing needs may dictate changes to the audit program, so too might your needs for different or additional analytics. This workbook's tab titled "Analytic Procedures" introduces the data sources that most organizations would need, but your needs may be different. The tab titled "ACL Steps" introduces the procedures that a user could execute to perform the analytic in ACL. To learn more about the imporance of implementing analytics within audit programs, please contact ACL.

Audit Program Area: Accounts Payable CONTROL OBJECTIVE Proper segregation of duties. AUDIT PROCEDURES 1. Determine whether there is proper division of duties between the following functions: q Preparing creditor payments q Authorizing creditor payments q Preparing creditor reconciliation q Reviewing and approving creditor reconciliation. 2. Document above segregation of duty in terms of persons performing above functions. 3. Conclude on whether proper segregation of duties exist. 1. Obtain and review a detailed listing of trade accounts payable balances by supplier (creditors ledger) 2. Assess the list for completeness of information 3. Inquire from management how liabilities for goods and services received but not yet invoiced are treated ie. Whether these are included in the list and what procedures are in place to ensure that the list is complete. 4. Trace totals per the detailed list to the general ledger and previous audit working papers if applicable. 5. Scan the above-mentioned list and investigate significant unusual items (e.g., debit balances and old unpaid invoices) 6. Test the mathematical accuracy of the detailed listing by casting amounts. 1. Obtain and review company procedures for preparing supplier reconciliation statements 2. Assess the adequacy of these procedures. ANALYTIC SUMMARY Perform a segregation of duties analysis for the Accounts Payable function WP Ref Auditor Initials Time Spent Date Date Checked Expected Finished Remarks By:

1.

2. Obtain and review the detailed listing of trade accounts payable

Perform data integrity testing on the Accounts Payable transaction data

4.
q

Evaluate reconciling items

n/a Review Accounts Payable adjustments and outstanding balances for authorization and accuracy

Ensure that any adjusting entries resulting from reconciliations are properly authorized and posted to control accounts and are not fictitious.

3.

5.
q

Examine support for liabilities Test accuracy of the creditors listing Test accuracy of supporting documentation.

6.

7.

Inquire about unrecorded liabilities.

8. Examine files of unmatched delivery notes or invoices 9. Examine cut-off procedures to ensure that these are appropriate.

Examine selected reconciliations and perform the following: q take special note of all reconciling items. q Be alert for audit risks contained in the accounts for example, the existence of old unpaid invoices or uncleared debit advices which may indicate disputes with suppliers or the inclusion of invalid invoices. q Examine support for any significant adjustments made by the division in reconciling supplier records with control accounts in the general ledger. q Determine whether the adjusting entries resulting from the reconciliations are properly authorized. 1. Trace selected recorded liabilities on the listing to supporting documentation (e.g., invoices, receiving reports, purchase orders, supplier statements) to determine accuracy of the values contained in the listing. 1. Choose a sample of 5 liabilities from the listing. 2. Test the extensions and postings on the supporting documentation. 3. If invoices have not been received, the liability may be determined by comparison with priced purchase orders, supplier price lists etc. 1. Inquire about potential sources of unrecorded liabilities. 2. Judge responses to the above in the light of knowledge of the companys operations. 3. Obtain files of supplier statements and perform the following: q Choose a random sample of 8 supplier invoices or delivery notes. q Trace these back to the creditors ledger by agreeing supplier details, amounts, dates. q Conclude on existence of unrecorded liabilities. 1. Examine files of unmatched delivery notes or unmatched or unpaid vendor invoices. 2. Investigate or obtain explanations for long outstanding items. 1. Obtain a sample of 5 delivery notes and invoices for goods/services received in the first week of January 2001. q Trace back to December 2000 creditors listing and ensure these delivery notes/invoices are not included on the listing. 2. Obtain a sample of 5 delivery notes and invoices for goods/services received in the last week December 2000. q Trace back to December 2000 creditors listing and ensure these delivery notes/invoices are included on the listing.

Match data to verify accuracy of creditor values (unmatched join) Perform data integrity testing by reviewing liabilities for incorrect totals

n/a

Match data to review for unrecognized liabilities (unmatched join) Perform an Accounts Payable transaction cut-off analysis

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Audit Program Area: Accounts Payable Audit Program Step Analytic Summary Prep Preliminary analytic preparation

Control Objective(s) Addressed Analytic Objective n/a n/a

Data Elements Needed to Perform the Analytic**

1 Perform a segregation of duties analysis for the Accounts Payable function

Segregation of Duties Ensure that proper segregation of duties is established

Employee master file AP transaction details file (covering the audit period)

2 Perform data integrity testing on the Accounts Payable transaction data

Completeness, Accuracy, Validity

4 Review Accounts Payable adjustments and outstanding balances for authorization and accuracy

Authorization, Accuracy

Vendor master file with beginning and ending balances for the audit period AP transaction details file (covering the audit period) Confirm reliability and General ledger postings file (covering the audit accuracy of financial period) transactions recorded in sub ledger and control accounts Confirm validity and AP transaction details file (covering the audit integrity of period) transactions created Employee master file as a result of Reconciliations file for audit period reconciliation process Authorized approver table for the AP function Confirm integrity and reliability of Vendor Master details Confirm integrity of unpaid invoices and uncleared debit memos Confirm integrity and accuracy of reported liabilities

Analytic Procedure Acquire the data and prepare it for analysis Insure the data's integrity and completeness before starting analysis For all AP transactions, filter instances where the "entered by" user is the same as the "approved by" ID, or where there is no entry for approver. Compare permissions table information to the users entering and approving transactions, and filter records that are inappropriate. Filter on debit balances Perform a fuzzy name match on all vendors in the Vendor master file Recalculate trade payables aging

WP Ref

Auditor Initials

Time Spent

Date Expected

Date Finished

Remarks

Checked By:

Trace all adjustments from the AP transaction details through to the G/L. Filter instances of adjustments: hitting the G/L but not represented in the AP transaction details, or those represented in the AP transaction details but not hitting the G/L.

5 Match data to verify accuracy of creditor values (unmatched join)

Accuracy

6 Perform data integrity testing by reviewing liabilities for incorrect totals

Accuracy

AP transaction details file (covering the audit period) PO transaction details file (covering the audit period) Receiving transaction details file (covering the audit period) Ensure accuracy and PO transaction details file (covering the audit reliability of supporting period) documentation

8 Match data to review for unrecognized liabilities

Completeness

Confirm validity of unmatched delivery notes, unpaid invoices and unmatched payments

9 Perform an Accounts Payable transaction cut- Completeness, off analysis Validity

Confirm reliability of cut-off procedures

AP transaction details file (covering the audit period) PO transaction details file (covering the audit period) Receiving transaction details file (covering the audit period) Payment details file (if applicable to your system) (covering the audit period) AP transaction details file (covering the audit period plus one additional month past audit period end) Receiving transaction details file (covering the audit period)

Match the AP transaction details table and the PO transactions table and review for invoices with no corresponding PO. Match the AP transaction details table and the receiving transactions table and review for invoices with no receipt. For each PO, recalculate the PO total amount by multiplying the unit price by the unit quantity. Compare the calculated total for each PO to the actual PO total amount. Extract any records where the variance is <> 0. Perform a match of receiving transactions file and the AP transactions file to identify receipts that were not recognized as a liability.

Review the receiving records file for any goods received in the first week following the audit period where the ownership terms are upon shipment (i.e., FOB). Trace these items to the AP subledger and G/L to ensure that all goods shipped before the end of the audit period were recognized as received during the audit period. Review the receiving records file for any goods received in the first week following the audit period where the ownership terms are upon receipt. Trace these items to the AP subledger and G/L to ensure that all goods shipped before the end of the audit period but received after the audit period were not recognized as received during the audit period.

** Your data requirements may vary depending upon your ERP and subledger systems used.

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Audit Program Step Prep A

Analytic Summary Acquire and verify the data

Control Objective(s) Addressed n/a

Data Elements Needed to Perform the Analytic**

Analytic Objective n/a

Obtain data definitions, dictionaries, and mappings.

Steps in ACL

Assumptions / Prerequisites for this Step

Know and understand where the data is and which specific tables and fields you will require. If the data comes from multiple sources/tables, how the sources/tables are related. The database connectivity is available and a user account with proper privileges has been set up (if using ODBC or other direct database connection).

Stage of Completion

ACL Table Name(s)

ACL Engagement

ACL Reference (Location in the Engagement)

Determine method for accessing data Gaining access to a production or reporting database, then connecting to the database via ODBC Open Data Base Connectivity (ODBC) allows you to access ODBC-compliant data such as MS Access, SQL Server or Oracle. You must have the correct ODBC drivers installed on your system before you can access ODBC data from any source. The database table or view is imported into ACL as a flat, fixed length, sequential file. The data in the ACL table is not automatically refreshed to reflect changes in the original database table. Import the entire table, or selectively import data by applying a WHERE clause during the import process. The exact syntax of the WHERE clause is specific to the database you are accessing and you may need to request assistance from your IS department. To import ODBC compliant data, start the Data Definition Wizard and select the ODBC option. One way to start the wizard is to select Data > External Data > ODBC. Request IT/IS team to provide data extracts. Make a request to the IT/IS team to provide flat file extracts of the required files. One format that would work for ACL analysis would be a comma delimited, carriage-return/linefeed terminated, and double quote text-qualified file. Some ERPs allow for users with sufficient privileges to extract their own data. Flat-file formats (as opposed to formats like Excel) are more ideal.

Using the ERP system to extract the data.

Import the data into ACL Using the Data Definition Wizard, define table layouts (if not previously done) for: 1) Employee master file 2) AP transaction details file (covering the audit period) 3) Vendor master file with beginning and ending balances for the audit period 4) AP transaction details file (covering the audit period) 5) AP transaction details file (covering the audit period plus one additional month past audit period end) 6) General ledger postings file (covering the audit period) 7) Reconciliations file for audit period 8) PO transaction details file (covering the audit period) 9) Receiving transaction details file (covering the audit period) 10) Payments details file (if applicable to your system) (covering the audit period) Best practice: When saving the tables, use "SRC" in the table name to indicate that the data is a source file, i.e. save the table name with the prefix SRC_ to indicate that the file is a source file, for example, SRC_Employee_Master.

Verify data against summary report or with the source's owner. Ensure that your ACL table is complete. Select Count Records from the Analyze menu and click OK to obtain the total record count of your ACL table and compare it to the control totals provided by the source. Select Total Fields from the Analyze menu to obtain a summary total for all numeric fields and compare the totals with the control totals provided by the source After confirming that the table is complete, select Verify from the Data menu and apply the command to all fields in your table. Verify tests if the data conforms to the field descriptions specified in the table layout, such as: Only valid characters are stored in character fields, numeric data is stored in numeric fields, and that dates are valid. If errors are reported, the record number, field name, and hexadecimal code for the data will be displayed on a results tab. You can then provide this report to your IS department to investigate these errors by analyzing the hexadecimal code in the report a) Open the AP transaction details table.

1 Perform a segregation of duties analysis for the Accounts Payable function

Segregation of Duties Employee master file AP transaction details file (covering the audit period)

Ensure that proper segregation of duties is established

b) Filter the transaction details table where the "entered by" user ID is equal to the "approved by" user ID. To apply the filter, enter <entered_by_ID> = <approved_by_user_ID> into the Filter box above the table, replacing <entered_by> and <approved_by> with the actual field names (no brackets). Note that both fields must be defined with the same data type. For example, both fields must be character fields. If one field is defined as numeric and the other as character, applying the filter results in a Expression Type Mismatch error. Click Enter to apply the filter expression. c) Extract the resulting SOD violations to a results table. To extract the records, select Extract Data from the Data menu. Select the Record option to extract all matching records in their current format and field order, or select the Fields option to individually select some or all fields in the desired order. Enter a descriptive name into the To box and click OK. Note: Setting the filter and extracting the matching records can be combined into a single step, by specifying the condition <entered_by> = <approved_by> in the IF box within the Extract command. d) Join the <entered_by_ID> on the results table to the <Employee ID> field contained in the employee master file to determine relevant employee names. To join the tables, first confirm that the <entered_by_ID> field and the <employee_ID> field are defined with the same length, data type, and that the alignment of the data within the field is the same (leading vs trailing spaces, leading zeros, etc). If the fields are not defined in an identical manner, you will need to create computed fields first, standardizing the two key fields. Next, open the extracted results table. Select Join Tables from the Data menu. The Join dialog box opens. Under Primary Keys, select the <entered_by_ID> field. Under Primary Fields, select all fields you wish to carry forward to the final table. Under Secondary Table, select the employee master table. Under Secondary Keys, select the <employee ID> field, and under Secondary Fields, select the employee name field, and any other relevant fields from the employee master table. Ensure that Presort Secondary Table is selected, unless the employee master file is already sorted in ascending order on the employee ID field. On the More tab, select Matched Primary Records > Include All Primary Records. This option ensures that any entered_by IDs that cannot be found in the employee master table are carried forward to the final output. If you do not select this option, only those records where the ID is present in both tables are carried forward to the final output. On the Main tab, enter a descriptive name for your final output into the To box and click OK.

e) Perform similar testing for other SOD violations you wish to test.

2 Perform data integrity testing on the Accounts Payable transaction data

Completeness, Accuracy, Validity

Vendor master file with beginning and ending balances for the audit period AP transaction details file (covering the audit period) General ledger postings file (covering the audit period)

Confirm integrity and a) Perform a Summarize command using the date field in the transaction details table as a means for determining the total debits and credits which should be posted to the general ledger each day. Save this summary to a file. reliability of Vendor Master details
Select Summarize from the Analyze menu. Under Summarize On, select the transaction date field. Under Subtotal Fields, select the amount field. Under Other Fields, select any other fields that you need to carry forward to the final table. Note that ACL groups records by unique date and returns a single record for each unique date in the output table. Where there are multiple records with the same date, only the data from the first record will be carried forward for the selected Other Fields. Ensure the Presort option is selected, unless the table is already sorted in ascending order on date. On the Output tab, select the File option and enter a descriptive name into the Name box, then click OK. Note: To obtain separated summarized tables for debit transactions and credit transactions, apply a filter in the IF box on the Main tab - for example <amount_field> >= 0. Then repeat the steps above with the filter <amount_field> < 0. b) Perform a Summarize command using the date field in the general ledger postings table as a means to determine the total debits and credits which were actually posted to the general ledger each day. Save this summary to a file. Select Summarize from the Analyze menu. Under Summarize On, select the transaction date field. Under Subtotal Fields, select the amount field. Under Other Fields, select any other fields that you need to carry forward to the final table. Note that ACL groups records by unique date and returns a single record for each unique date in the output table. Where there are multiple records with the same date, only the data from the first record will be carried forward for the selected Other Fields. Ensure the Presort option is selected, unless the table is already sorted in ascending order on date. On the Output tab, select the File option and enter a descriptive name into the Name box, then click OK. Note: To obtain separated summarized tables for debit transactions and credit transactions, apply a filter in the IF box on the Main tab - for example <amount_field> >= 0. Then repeat the steps above with the filter <amount_field> < 0. Alternatively, if there is a debit / credit indicator field, include this field in Summarize On so that records are grouped if the date is the same and the debit / credit indicator is the same. c) Perform a Join command on both summary tables using the transaction date as the key field. Filter the resulting table for any transaction debits that are not equal to GL debits, or transaction credits that are not equal GL credits.

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Audit Program Step Prep A

Analytic Summary Acquire and verify the data

Control Objective(s) Addressed n/a

Data Elements Needed to Perform the Analytic**

Analytic Objective n/a

Steps in ACL
To join the tables, first confirm that the date fields in both tables are defined with the same length, date data type, and that the date format is the same). If the fields are not defined in an identical manner, you will need to create computed fields first, standardizing the two key fields. Next, open summarized transaction table. Select Join Tables from the Data menu. The Join dialog box opens. Under Primary Keys, select the date field, and if used in the previous step, select the debit / credit indicator field as well. Under Primary Fields, select the amount field, and any other fields you wish to carry forward to the final table. Under Secondary Table , select the summarized GL table. Under Secondary Keys, select the date field and if applicable, select the debit / credit indicator field. Under Secondary Fields, select the amount field, and any other relevant fields from the summarized GL table. Both tables are already sorted in ascending order on the key field(s), so neither Presort Primary Table nor Presort Secondary Table need to be selected. On the More tab, select Matched Primary Records > Include All Primary Records. d) Perform a Fuzzy Name Match analytic (SP05) and review results for potential duplicate vendor entries in the master file register. To run analytic SP05, right-click this analytic in the Project Navigator panel on the left side of the screen and click Run.

Assumptions / Prerequisites for this Step

Stage of Completion

ACL Table Name(s)

ACL Engagement

ACL Reference (Location in the Engagement)

Confirm reliability and a) Perform a Summarize command using the vendor ID field in the transaction details table, consolidating both debits and credits, as a means to determine the total accuracy of financial adjustment by vendor for the audit period. transactions recorded in sub ledger and control accounts

Select Summarize from the Analyze menu. Under Summarize On, select the vendor ID field. Under Subtotal Fields, select the amount field. Under Other Fields, select any other fields that you need to carry forward to the final table, including the <ending_balance> field. Note that ACL groups records by vendor ID and returns a single record for each unique vendor ID in the output table. Where there are multiple records with the same vendor ID, only the data from the first record will be carried forward for the selected Other Fields. Ensure the Presort option is selected, unless the table is already sorted in ascending order on vendor ID On the Output tab, select the File option and enter a descriptive name into the Name box, then click OK. Note: To calculate a balance of credit vs debits by vendor ID, the amount field must contain positive and negative values. If this is not the case, create a conditional computed field first to multiply either the debits or credits by -1, based on the value in the Credit / Debit indicator field. Then use this computed field under Subtotal Fields.

b) Create a computed field to calculate the vendor beginning balance for the year by subtracting the total adjustments for the period from the ending balance. Save the field. Open the summarized table created above and select Table Layout from the Edit menu. On the Edit Fields / Expressions tab, click the Fx button (Add a new Expression). Enter a descriptive name in the Name box. In the Default Value box, enter the following expression: amount_field - ending_balance (where amount_field is the previously subtotaled field. Ending_balance must be defined as a numeric field) Click the green checkmark and close the Table Layout window to return to the view of the summarized data. To add the new field to the view, right-click anywhere in the view and select Add Columns. Double-click the new computed field so that it appears under Selected Fields and click OK.

c) Perform a Join command between this summarized table and the vendor master table. To join the tables, first confirm that the <vendor_ID> field in both tables is defined with the same length, data type, and that the alignment of the data within the field is the same (leading vs trailing spaces, leading zeros, etc). If the fields are not defined in an identical manner, you will need to create computed fields first, standardizing the two key fields. Next, open the summarized results table. Select Join Tables from the Data menu. The Join dialog box opens. Under Primary Keys, select the <vendor_ID> field. Under Primary Fields, select all fields you wish to carry forward to the final table. Under Secondary Table, select the vendor master table. Under Secondary Keys, select the <vendor ID> field, and under Secondary Fields, select the vendor name field, and any other relevant fields from the vendor master table. Ensure that Presort Secondary Table is selected, unless the vendor master file is already sorted in ascending order on the vendor ID field. On the More tab, select Matched Primary Records > Include All Primary Records. This option ensures that any vendor IDs that cannot be found in the vendor master table are carried forward to the final output. If you do not select this option, only those records where the ID is present in both tables are carried forward to the final output. On the Main tab, enter a descriptive name for your final output into the To box and click OK. d) Filter on all records where beginning (balance + adjustments) <> ending balance. To apply the filter, enter <beginning_balance> + <amount_field> = <ending_balance> into the Filter box above the table, replacing <beginning_balance>, <amount_field>, and <ending_balance> with the actual field names (no brackets). <amount_field> is the previously summarized amount field. Note that all fields must be defined with a numeric data type. If the data types are not numeric for all fields, applying the filter results in a Expression Type Mismatch error. Click Enter to apply the filter expression. e) Extract the resulting exceptions to a results table for further investigation. To extract the records, select Extract Data from the Data menu. Select the Record option to extract all matching records in their current format and field order, or select the Fields option to individually select some or all fields in the desired order. Enter a descriptive name into the To box and click OK. Note: Setting the filter and extracting the matching records can be combined into a single step, by specifying the condition <beginning_balance> + <amount_field> = <ending_balance> in the IF box within the Extract command.

4 Review Accounts Payable adjustments and outstanding balances for authorization and accuracy

Authorization, Accuracy

AP transaction details file (covering the audit period) Employee master file Reconciliations file for audit period Authorized approver table for the AP function

Confirm validity and a) Filter on reconciliations table where approval ID is blank or approval ID = creator ID. integrity of transactions created as a result of reconciliation process
To apply the filter, enter ISBLANK(<approval_ID>) OR <approval ID> = <creator_ID> into the Filter box above the table, replacing <approval_ID> and <creator_ID> with the actual field names (no brackets). Note that all fields must be defined with a character data type. If the data types are not character for all fields, applying the filter results in a Expression Type Mismatch error. Click Enter to apply the filter expression. b) Save exceptions to a results table for further investigation. To extract the records, select Extract Data from the Data menu. Select the Record option to extract all matching records in their current format and field order, or select the Fields option to individually select some or all fields in the desired order. Enter a descriptive name into the To box and click OK. Note: Setting the filter and extracting the matching records can be combined into a single step, by specifying the condition ISBLANK(<approval_ID>) OR <approval ID> = <creator_ID> in the IF box within the Extract command. a) Perform an Aging command on invoices and uncleared debit advices, then follow-up on results greater than an acceptable threshold (threshold determined by the organization).

Confirm integrity of unpaid invoices and uncleared debit memos

To age a date field, select Age from the Analyze menu. Ensure the field to be aged is defined as a date type, and select it from the Age On list. Under Cutoff Date, select a suitable date using the calendar tool. Under Aging Periods, enter the desired date ranges (e.g, 0 to 30 days, etc) or accept the default aging periods. If necessary, select a field in Subtotal Fields. On the Output tab, select Screen and click OK. The results will be displayed on-screen, allowing you drill down into a particular date range and see the underlying transactions in the view. Note: If the cut off date is not a constant date, but rather another date field in your table, follow this process: Apply the following filter in the Filter box or extract records with an IF condition: <cut-off date field> - <invoice_date???> >= X where X is the acceptable threshold, expressed as a number. Note: There may be a need to apply a filter to isolate open / uncleared items in your AP transaction table for this analysis. Within the Age command, enter the corresponding filter into the IF box. If using the filter expression above, use <cut-off date field> - <invoice_date???> >= X AND <uncleared_invoice_filter_expression>

b) Identify invoices that are approved by unauthorized users

Open the AP Transaction Details file. Select Join Tables from the Data menu. The Join dialog box opens. Under Primary Keys, select the <approver id> field. Under Primary Fields, select all fields you wish to carry forward to the final table. Under Secondary Table, select the authorized approver table. Under Secondary Keys, select the <user ID> field, and Ensure that Presort Secondary Table is selected, and also that the unmatched option is selected.

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Audit Program Step Analytic Summary Prep A 5 Acquire andto verify the data of creditor Match data verify accuracy values (unmatched join)

Control Objective(s) Addressed n/a Accuracy

Data Elements Needed to Perform the Analytic** AP transaction details file (covering the audit period) PO transaction details file (covering the audit period) Receiving transaction details file (covering the audit period)

Analytic Objective

Steps in ACL

Assumptions / Prerequisites for this Step

Stage of Completion

ACL Table Name(s)

ACL Engagement

ACL Reference (Location in the Engagement)

n/a Confirm integrity and a) Perform an Unmatched Join between the AP transaction details table and the PO transaction table to identify invoices not associated with a PO. accuracy of reported b) Perform an Unmatched Join between the AP transaction details table and the receiving transactions table to identify invoices not associated with a receipt. liabilities

0 0

a) Open the AP Transaction Details file. Select Join Tables from the Data menu. The Join dialog box opens. Under Primary Keys, select the <Purchase Order Number> field. Under Primary Fields, select all fields you wish to carry forward to the final table. Under Secondary Table, select the <purchase order history> table. Under Secondary Keys, select the <Purchase Order Number> field. Under the IF condition, enter an expression to exclude invoices smaller than a specified amount. Ensure that Presort Secondary Table is selected, and also that the unmatched option is selected.

ASSUMPTION: The ERP relates the PO to the Invoice directly at the invoice level (i.e. for each invoice there may be an associated PO Number reference). ASSUMPTION: The ERP does not generate a "dummy" PO when an invoice is entered without reference to a PO. ASSUMPTION: All invoices above a certain amount require a purchase order, and invoices smaller than this amount can be excluded from analysis. ASSUMPTION: The ERP relates the Receipt to the Invoice directly at the invoice level (i.e. for each invoice there may be an associated Receipt Number reference). ASSUMPTION: Invoices for services can be identified easily.

b) Open the AP Transaction Details file. Select Join Tables from the Data menu. The Join dialog box opens. Under Primary Keys, select the <Receipt Number> field. Under Primary Fields, select all fields you wish to carry forward to the final table. Under Secondary Table, select the <Receipts history> table. Under Secondary Keys, select the <Receipt Number> field. Under the IF condition, enter an expression to exclude service invoices. Ensure that Presort Secondary Table is selected, and also that the unmatched option is selected.

6 Perform data integrity testing by reviewing Accuracy liabilities for incorrect totals

AP transaction details file (covering the audit period) PO transaction details file (historical) Receiving transaction details file (historical)

Ensure accuracy and reliability of supporting documentation

a) Summarize the Receiving Transactions by Purchase Order Number to get the total amounts received for each purchase order b) Summarize the Invoice Transactions by Purchase Order Number to get the total amounts invoiced for each purchase order c) Summarize the PO Transactions by Purchase Order Number to get the total quantities and amounts for each purchase order d) Perform a Join from the AP transactions table to the PO table and the receiving table using the PO number field as the key field. e) Filter on instances where: 1) Item quantity <> PO quantity OR 2) Item quantity <> receiving quantity OR 3) Invoice amount <> PO amount OR 4) item quantity * item price <> total amount. f) Join the resulting exceptions back to the receipts and invoices to identify all the transactions associated with the exceptions

ASSUMPTION: The ERP relates the PO to the Invoice directly at the invoice level (i.e. for each invoice there may be an associated PO Number reference). ASSUMPTION: The ERP does not generate a "dummy" PO when an invoice is entered without reference to a PO. ASSUMPTION: All invoices above a certain amount require a purchase order, and invoices smaller than this amount can be excluded from analysis. ASSUMPTION: The ERP relates the Receipt to the Purchase Order directly at the receipt level (i.e. for each receipt there may be an associated Purchase Order Number reference). ASSUMPTION: Invoices for services can be identified easily ASSUMPTION: Quantities and amounts on the PO, Receipts, and Invoices can be directly compared to each other ASSUMPTION: Our AP transaction details file does not contain cancelled/reversed invoices.

a) Open the AP transaction details table. Select Summarize from the Analyze menu. The summarize dialog box opens. Under the On fields, select the <Purchase Order Number> field. Under the Subtotal fields, select invoice amount. Store this table as the "AP Amounts By PO" table b) Open the Receiving transaction details table. Select Summarize from the Analyze menu. The summarize dialog box opens. Under the On fields, select the <Purchase Order Number> field. Under the Subtotal fields, select the quantity field. Store this table as the "Receipt Quantities By PO" table c) Open the PO transaction details table. Select Summarize from the Analyze menu. The summarize dialog box opens. Under the On fields, select the <Purchase Order Number> field. Under the Subtotal fields, select the quantity and amount fields. Store this table as the "PO Summary" table d) Open the AP Amounts By PO file (from step a). Select Join Tables from the Data menu. The Join dialog box opens. Under Primary Keys, select the <Purchase Order Number> field. Under Primary Fields, select all fields you wish to carry forward to the final table. Under Secondary Table, select the <Receipt Quantities By PO> table (from step b). Under Secondary Keys, select the <Purchase Order Number> field. Ensure that Presort Secondary Table is selected, and also that the include all primary option is selected. Open the newly joined table. Select Join Tables from the Data menu. The Join dialog box opens. Under Primary Keys, select the <Purchase Order Number> field. Under Primary Fields, select all fields you wish to carry forward to the final table. Under Secondary Table, select the <PO Summary> table (from step c). Under Secondary Keys, select the <Purchase Order Number> field. Ensure that Presort Secondary Table is selected, and also that the all primary option is selected. e) Open the fully joined table in (d). Create the expressions for the filters described, as well as filters for excluding transactions that are not applicable (such as service invoices, and invoices less than a certain amount), and extract the exceptions to a resulting table, "Exceptions By PO" f) Open the AP transaction details table. Select Join Tables from the Data menu. The Join dialog box opens. Under Primary Keys, select the <Purchase Order Number> field. Under Primary Fields, select all fields you wish to carry forward to the final table. Under Secondary Table, select the <Exceptions By PO> table (from step e). Under Secondary Keys, select the <Purchase Order Number> field. Ensure that Presort Secondary Table is selected, and also that the matched primary option is selected. The resulting table will contain the invoice transactions that led to the exceptions. Repeat similar steps for the Receipt and PO detail transaction tables to identify the transactions that led to the exceptions.

8 Match data to review for unrecognized liabilities (unmatched join)

Completeness

AP transaction details file (historical) Receiving transaction details file (covering the audit period)

a) Perform an Unmatched Join function between the receiving transactions file and the AP transactions file to identify receipts that were not recognized as a liability. Confirm validity of unmatched delivery notes, unpaid invoices and unmatched payments Open the Receiving Transaction Details file. Select Join Tables from the Data menu. The Join dialog box opens. Under Primary Keys, select the <Receipt Number> field. Under Primary Fields, select all fields you wish to carry forward to the final table. Under Secondary Table, select the <AP Transactions history> table. Under Secondary Keys, select the <Receipt Number> field. Ensure that Presort Secondary Table is selected, and also that the unmatched option is selected.

ASSUMPTION: The ERP relates the Receipt to the Invoice directly at the invoice level (i.e. for each invoice there may be an associated Receipt Number reference).

9 Perform an Accounts Payable transaction Completeness, cut-off analysis Validity

AP transaction details file (covering the audit period plus one additional month past audit period end) Receiving transaction details file (covering the audit period)

Confirm reliability of cut-off procedures

Open the Receiving Transactions file. Join matched all primary with the AP Transaction Details file based on "Receiving Number" Extract records where Ownership_Type = "On Receipt" AND BETWEEN(Receiving_Date `20090701` `20090731`) AND NOT BETWEEN("Invoice Posting Date" `20090701` `20090731`) to a result table for further analysis Extract records where Ownership_Type = "On Shipment" AND BETWEEN(Shipment_Date `20090701` `20090731`) AND NOT BETWEEN("Invoice Posting Date" `20090701` `20090731`) to a result table for further analysis

ASSUMPTION: There is a field, Ownership_Type, in the Receiving Transactions Table that is defined as "On Receipt" or "On Shipment", depending on whether the goods' titles are transferred upon receipt or shipment, respectively. ASSUMPTION: Accounting Periods are defined as calendar months. For our example we are using 20090701 and 20090731 as our accounting period cut-off. ASSUMPTION: The Receiving_Date field in the Receiving Transactions Table represents the date that the goods were received in the warehouse. ASSUMPTION: The ERP relates the Receipt to the Invoice directly at the invoice level (i.e. for each invoice there may be an associated Receipt Number reference). ASSUMPTION: The Receiving transaction file contains only records where either the receiving_date or the shipping_date is within the accounting period. ASSUMPTION: The AP Transaction details file contains only records where the posting_date is within the accounting period. ASSUMPTION: The AP Transaction details file can be related directly to the Receiving file based on a "Receiving Number" field in the AP Transaction details file

** Your data requirements may vary depending upon your ERP and subledger systems used.

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Client Name Internal Control Framework Date Completed: Completed By: Reviewed By: Question Yes No* Comments /Description
Employee Responsible for Task

To the best of my knowledge, the answers and comments noted above are accurate and reflect the current

Name and Title of Person Completing Form (please print)

Name and Title of Department Director (please print)

Signature of Person Completing Form

Signature of Department Director

2/18/2014
Date Form Completed Date of Department Director's Signature

* For a No answer, cross-reference to either a compensating control Questionnaire or to audit work which has been performed or is to be performed.

Finding Ref #

Control Testing

Finding

Management Response & Treatment