AUDIT ANALYTICS USING IDEA

IDEA
 IDEA (Interactive Data Extraction and Analysis) is a generalized audit
Software. It is able to import a wide range of different types of data files.
During the import an IDEA file and its field statistics are created.

 IDEA is a computer-based file interrogation tool for use by auditors,

accountants, investigators, and IT staff. It analyzes data in many ways and
allows extraction, sampling, and manipulation of data in order to identify
errors, problems, specific issues, and trends.
The following are some of the main areas
where IDEA can be used:
 Identifying exceptional items;
 Exception testing can be used to identify unusual
items. These may be simply large items or where the
relationship between two pieces of information on
an item do not correlate, such as rate of pay and pay
grade. Many fields of information can also be
checked for allowable values. The tests are
performed using the Extraction task.
 Calculations can be checked by appending a
calculated field (using the Field Manipulation task)
to create a calculation of the item.
 Alternatively,use an exception test of
miscalculations using the Extractions task.
 The accuracy of any management reports may
involve a wider use of functions to achieve the result
of reproducing the report. In these cases running a
series of tasks, such as Join Databases and/or
Summarization, or the Aging task in the case of
aged debt analyses, may be necessary.
 Cross-matching data between systems
 One of the common ways to test the validity of an item
is to cross-check it against some other information. For
example, checking addresses or bank details of
employees against those on Accounts Payable files to
see if employees were also purporting to be suppliers.
 These tests are carried out by importing both files and
then using the Join Databases task. Another effective
test for completeness is to cross-check between a
master file and transactions to see if there are any
items on the master file for which a transaction has not
been recorded.
 Testing for gaps and duplicates
 IDEA can be used to test for completeness including
testing for gaps in a numeric sequence (or missing
items). To test for gaps there must be a sequential
number on source documentation.
 Inventory and sales files can be tested for
completeness of dispatch note numbers and
purchases files for received numbers. It may also be
appropriate to test for gaps on a series of check
numbers and also for completeness of inventory
ticket numbers.
 Datesmay also be tested for gaps, such as days for
which there are no transactions.
  Duplicates testing can be very effective in certain
circumstances such as testing for duplicate payments to
suppliers, identifying double input of ticket numbers
during inventory counts or identifying duplicate names
or addresses on an insurance or benefits claims file.
 Sampling
 Statistical sampling is commonly used to test for validity in
a manner which then allows for evaluation across a
population. The more sophisticated methods such as
Monetary Unit Sampling are difficult to implement
manually. Wherever tests need to refer to physical
documentation or assets rather than computer records then
an appropriate statistical sampling technique should be used.
Advantages of IDEA
 There are many advantages of using IDEA over manual auditing methods.
However the major benefits include:
 Increased or wider scope of investigations, such as conducting tests which
cannot be done manually
 Increased coverage (checking a large number of items and potentially
covering 100 percent of the transactions for a year or more)
 Better information, such as extra analysis or profiling of data save time.
Users of IDEA
 IDEA is designed for both internal and external auditors, although their use
of the software is usually different.
 It is also a valuable tool to fraud investigators, forensic accountants and
management accountants.
 IDEA is versatile tool that is used in many different industries. Here are some
examples:
 The Information Technology industry uses IDEA for auditing computer
security. System level commands are used to create files containing data such
as systems logs, access permissions, and folder structures. These files are
then imported into IDEA. Various tests can then be carried out to determine if
security is adequate.
 The Healthcare industry uses IDEA for analyzing accounts receivables,
accounts payables, patient billing, charges, and materials management.
 School Boards use IDEA for analyzing kickback or conflict-of-interest
schemes, phantom vendor schemes, policy compliance, and asset
management.
 The Retail industry uses IDEA for analyzing gross profit, isolating price
adjustment transactions, cash disbursements, loss prevention, and purchase
order management.
THANK YOU!!!
Prof. Adebayo Paul Adejola, FCNA, FCA, FCCSA, FCTI, PhD.
Managing Consultant, White Knight Consulting-Nigeria;
Regional Representative, Association of Chartered Certified System
Accountants (ACCSA) Global.
Mobile: +234 803 6802529
E-mail: padejole@yahoo.com
Website: www.profadebayopaul.com