ACL

Tutorial 4

COMMANDS:
CONTROL TOTALS: TOTAL
ANALYZE -> COUNT
ANALYZE -> TOTAL
DATA -> EXTRACT
DATA -> EXPORT
DATA -> SORT
DATA -> INDEX

The tutorials in this folder are supplemental exercises that relate to ACL 9 topics covered in
chapters 8, 9, 10, and 12 in the Hall, IT Auditing, 3rd edition textbook. The tutorials presume that
the student has installed ACL from the CD accompanying the text and has worked through the
ACLStart.pdf document in the ACL Manual folded. The tutorials are not a substitute for this
basic ACL knowledge.

These tutorials use data tables stored in the Sample Project.acl that is automatically installed with
ACL. Open the sample project and click on the appropriate table to perform the tutorial. The
name of the table is indicated in bold type prior to each section in the tutorial (e.g. AP TRANS).

INVENTORY

1. Audit OBJECTIVE: Reconcile inventory amounts with physical inventory counts

{observation of inventory}.

Obtain pre-test batch control totals by running the TOTAL and COUNT commands
before the extraction, using a filter [IF] for records from Location “05”. Create a filter to
choose specific records to EXTRACT [only items in location 05]. Extract the records to
a new input file – Inventory_05. Run the TOTAL and COUNT commands on the new
file to compare with the control totals of the pre-test.

a) What types of control totals would be useful in this situation?

The useful control totals would be the unit total, market value totals, quantity on hand,
the total value. I did select all totals for this exercise but if I were an auditor for this
specific location I would do totals on hand, the perorder totals and unit/sale cost for this
location 05.

Command: COUNT IF Location="05"

Tables: Inventory / PR2JOIN

If Condition: Location="05" (13 records matched)

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 The Count with the [If] option gives us the number of records in Location 05 but does not
identify those records.
What are your control totals values?
1. Command: TOTAL FIELDS UnCst SalePr QtyOH MinQty QtyOO Value MktVal IF
Location="05" Table: Inventory

If Condition: Location="05" (13 records matched)

2.

UnCst 129.83
SalePr 160.04
QtyOH 89,466
MinQty 5,915
QtyOO 80,530
Value 42,479.36
MktVal 52,752.62

a) Use EXTRACT to export the specific records to a new input file Inventory_05 and print the
command log for this operation.
b) Command: TOTAL FIELDS UnCst SalePr QtyOH MinQty QtyOO Value MktVal IF
Location="05"
Table: Inv_05

If Condition: Location="05" (13 records matched)

c)

UnCst 129.83
SalePr 160.04
QtyOH 89,466
MinQty 5,915
QtyOO 80,530
Value 42,479.36
MktVal 52,752.62

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 d) Confirm Control Totals in the new file. Why perform this step?
To make sure no error accurate and extraction is completed correctly and in most systems this is
real life so we converting this data into ACL. Usually, the client personnel do this because
auditors are not allowed to touch “live” systems. The second step is for the auditor to take these
flat files and convert them to ACL files

AR

e) Audit OBJECTIVE: Confirm accounts receivable amounts with customers.

EXTRACT transactions in the AR file that have a due date prior to January 2, 2000.
Create a new input file called AR_02.

a. How many records meet the criterion?

7 of 772 met the test: Due < `20000102`
7 records produced
Extraction to table C:\Users\Baydar\Desktop\ACC 638\Components\AR_02.FIL
is complete
Opening file "AR_02"

b. How does the EXPORT function differ from EXTRACT?

Extract helps isolate certain records and fields in a table and save the information in a new
table or records from a file and store in a new file. ACL allows to extract specific records
from a file in order to isolate unusual items for separate analysis and to work on these
selected records in a smaller file. This differs with extract where we creating a new file (we
could accomplish the same by saving, with a new file name, the filtered view. Also, we can
extract entire records or selected fields. The extract command creates a new file and leaves
the existing file unchanged.

c. For what purpose might an auditor use the EXPORT function?

Whenever the auditor believes certain tasks can be performed on a table more conveniently
in an alternative file format or when the data in the table is to be used by client personnel and
they prefer the information in an alternative file format.

(d) Use the EXPORT command to create an Excel spreadsheet called AR_02 and print
the command log for this operation. Include all the fields from the ACL source file.

AP TRANS

a) Sorting is a helpful tool in reviewing and analyzing files. Load the AP Trans file.
a. For what reason might you NOT use the SORT command?

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 We can use ACL to sort a file into an ascending or descending order based on specified
fields. The sort command creates a new file that has been reordered. The existing file
remains unchanged. Auditor will not use sort command when he doesn’t need data to
change.

b. SORT the file by Vendor Number, and name the sorted file SORTVEND. How
many records are there in the sorted file?
102 records produced
Output to C:\Users\Baydar\Desktop\ACC 638\Components\SORTVEND.FIL is
done
Opening file "SORTVEND"

c. How can you verify that the sorted file contains all of the records from the
original file? What function(s) could you perform to increase the reliability of the
data in the sorted file?

Command: TOTAL FIELDS Invoice_Amount

Table: Ap_Trans

Invoice_Amount 278,641.33

We can use total function for both fields to verify accuracy.

Command: TOTAL FIELDS Invoice_Amount

Table: SORTVEND

Invoice_Amount 278,641.33

a. SORT the original AP Trans now to produce a report listing all vendors by
Vendor Number and by Invoice Amount in descending order. The new file will
thus show the largest amount for each vendor displayed first. Name the sorted file
SORTVIP. Move the Invoice Amount column to the right of Vendor Number.
Command: SORT ON Vendor_No Invoice_Amount TO "SORTVIP" OPEN
10025 237936 56,767.20
11475 8753401 20,386.19
10134 74841 18,883.34

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 11922 982756 16,642.56
12130 588782 15,444.80
13440 5518912 11,068.20
12130 589134 10,531.71

BENFORD ANALYSIS

BENFORD’S LAW:
c) Red Flags-Unusual Leading Digits in Amounts: Load AR file. Benford’s Law is based
on the probabilities of the occurrences of each number as a leading digit (or digits). It is a
statistical look at the data to see if it is “NORMAL”, in this respect. Go to ANALYZE ->
Perform Benford Analysis, and run BENFORD on the Amount field. Set the number of
leading digits to “1”. From the More tab select “ALL” and from the Output Tab select
“Screen”.

(a) Explain the results you get.

There are ztest scores were bypassed and not counted in the distribution as this one of
the limitations of the Benfords law. However, auditors have to look at those entries for
possible fraud.
2 zero amounts bypassed
2 zero amounts bypassed
Actual Count Expected Count Zstat Ratio
Leading Digits
1 231 232 0.023
2 75 136 5.685
3 85 96 1.167
4 70 75 0.502
5 82 61 2.740
6 88 52 5.184
7 42 45 0.332
8 51 39 1.818
9 46 35 1.771

(b) When would you use BENFORD analysis to look for possibly fraudulent amounts?

When we use digital analysis in an attempt to detect fraud we need to look at what accounts
would provide us with most effective data, the account data that give us distribution, like AR is
the number of items purchased times the price per item. The same with AP and most revenues

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 and expense accounts are expected to confirm. Also, we must consider size, meaning the number
of entries or transactions and we really need to analyzing rather than sampling the data. The
Benfords analysis tests for fraudulent transactions based on whether digits appear in certain
places in numbers in the population. The deviation from expectations occurs under only two
conditions: the person perpetrating the fraud has either added observations or has removed
observations but on a basis that would not conform to Benfords definition.
Other objectives are equally applicable, including analysis of:

 Credit card transactions

 Purchase orders
 Loan data
 Customer balances
 Journal entries
 Stock prices
 Accounts payable transactions
 Inventory prices
 Customer refunds

Benford’s Law should be applied only to large data sets. For IT auditors, that would be data such
as files with hundreds of transactions such as invoices to customers, disbursements, payments
received, inventory items. It is unwise to use Benford’s Law for small-sized data sets, as it would
not be reliable in such cases. Thus, it is recommend data sets of at least 100 records. It is also
true that smaller size meets the other constrains and that size will not affect the reliability of the
results. The orders of magnitude in particular usually take hundreds of transactions. Using fewer
than 1,000 can also lead to too many spikes of interest, too many false positives.
Also, the Benford could be useful for verifying data with the same invoice number and amounts
but different vendor number (name) as well as identifying the same entries like duplicate
payments in accounts payable.

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