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Statistical Data Analytics for Risk Assessment, Fraud, Waste & Quick Response Audits

Date(s): Jan 11, 2017 - Jan 12, 2017
Time: 8:30AM - 5:00PM
Registration Fee: $699.00
Cancellation Date: Jan 04, 2017
Location: SAO COMPUTER TRAINING ROOM
City: Austin
Parking Info:

Parking for SAO, Professional Development courses is in Garage B (1511 San Jacinto Blvd.). The Garage signage may read 1511 San Jacinto or Garage B. The elevator in Garage B is not reliable. If you are unable to walk the stairs, please contact the professionaldevelopment@sao.texas.gov for alternate parking arrangements. Handicapped parking is free at the meters around the downtown area.

A course coordinator will Email you a parking permit prior to the course start date. A permit must be displayed or you will be ticketed.


Course Description

Audit practice, and research, has validated that Advanced Analytical Procedures are 2,000% more efficient & effective than Tests of Controls and 8,000% more than Tests of Details! Yet, as the PCAOB correctly complains, most auditors still trudge along doing Substantive Testing!

 

Additionally, you will develop DATA-DRIVEN Risk Assessments, by letting the data “talk to you” and SHOW YOU the outliers. No more old school risk scores of 1-2-3!.

Advanced analytics allows you to reduce cycle time. Also, you decrease your response time…and lessen your travel time (as you “bring the data to you”). Further, as you audit by exception, you will deploy your resources in a more efficient manner. Finally, Advanced Analytics provides for more robust (and better received) audit findings. Analytics work best with operational data, and thus are highly applicable for:

• Fraud Audits

• Operational/Efficiency Audits

• Program/Policy/Agency/Performance Audits

• Compliance/Statutory Audits

• Financial Audits

• Process Improvement: Directing you towards WORST

PRACTICE and BEST PRACTICE (go there, and save your

company BIG $MONEY)

 

Advanced analytics forms the foundation of Continuous Control Monitoring, the necessary building block (e.g., the “secret sauce”) for AUTOMATION and CONTINUOUS REAL-TIME MEASUREMENT/NOTIFICATION of 1) Entity-Wide Risk Assessment and Management, 2) Corporate Governance), 3) Real-Time Business Intelligence (Balanced Scorecards, Budgeting, Forecasting, Benchmarking, Business Optimization), 4) Fraud/Waste/Abuse and 5) Process Control.

 

Advanced Analytical techniques are supported by Yellow Book, AICPA, ISA and IIA Standards, the Bank Secrecy Act and the Model Audit Rule (insurance), six-sigma, and SOX.

Auditors realize that testing for fraud is very difficult (no audit trail and possible collusion). Regression analysis is the # 1 objective fraud finding technique … court room tested and accepted! The best news of all is we can assign a statistical confidence to our analysis. When was the last time your audit report started with the sentence “I am 95% confident that…”? This is powerful stuff. Think like an engineer: process, process, process: if it isn’t broken … perhaps don’t audit it.

This course will teach auditors how to perform a wide range of analytics. You’ll get proven tools to help you hit the ground running … ramped up … traction!


Potential CPE Credits: 16.0
Govt Hours: This class meets 16.0 hours of the 24-hour requirement for governmental CPE under Government Auditing Standards (yellow book), in most cases.
Technical Hours: This class meets 16.0 CPE credits of technical training in compliance with Texas Admin. Code Rule 523.102.

Instruction Type: Live
Experience Level: INTERMEDIATE
Category: Auditing

Course Objectives

Upon completion of this course, participants will be able to:

 

  • Recognize and apply multiple types of analytics.
  • “See” opportunities to audit quicker.
  • Reduce sample size, and audit costs by performing analytics ($.05 test) versus tests of controls ($1 test) or substantive tests ($4 test).
  • Apply the new SAS 122-124 suite and the revised (2011) Yellow Book.
  • Run, hands-on, the most productive analytic technique (regression analysis) via Excel.
  • Introduce efficiency into the audit process, while not losing effectiveness.
  • Test for Overstatement AND Understatement (the hardest audit test in the world)
  • Locate systematic fraud (harder than smash and grab)
  • Construct a proof-of-concept monitor to PREVENT frauds
  • Provide process improvements: find BEST PRACTICE (and worst practice)

 

Course Outline

 

1.   Introduction and the Evolving Audit Process

      a. Course Objectives

      b. Introductions All Around

      c. The True Cost of Audit Evidence

      d. Evolving Audit Theory(s)

      e. Risk Analysis: The Engine That Drives an Audit

2.   Analytics and Regression

      a. Sources of Analytics Data

      b. Basic and Intermediate ARTs

          i. The PROBLEM with Ratio Analysis

          iii. Metrics (Case Study)

          iv. Reasonableness Tests (Case Study)

          v. Mini-Max Tests (Case Study)

      c. Promulgated Standards

          i. SAS 122

          ii. IIA Practice Advisory 2320

          iii. The Yellow Book 2011

          iv. COSO 2012

      d. Relevant Research

          i. Hylas and Ashton: ARTs as Fraud Finders

          ii. Stringer: Keep Regression Models Simple

      e. Basic Regression Analysis

          i. Terms: R and R2

          ii. R2 versus Adjusted R2

         iii. Causality versus Correlation (Case Study)

         iv. Simple Linear (Case Study)

         v. Minimum Number of Observations (Case Study)

      f. Charting Regression Seeing Is Believing

         i. Plotting Data

         ii. Inserting a Trendline

         iv. Constructing Statistical Confidence Bounds

         v.  Case Study

      g.  Advanced Regression Analysis

          i. Multivariate Linear (Case Study)

          ii. Lagging Data, Dummy Variables (Case Study)

          iii. Nonlinear (Polynomial, Exponential, Logarithmic) (Case Studies)

3.   Regression as the Preferred Forensics Tool

      a. Testing for Overstatement and Understatement

      b. Reconstructing the Audit Trail when it Becomes Vaporor Questionable

      c. Mathematical Proxys to Determine the "Real Numbers"

      d. Find the Truth, Find it Fast and Find it Objectively

4.   Class Presentations

 


Instructors

Dr. Dan Kneer
Dr. Dan Kneer believes in "auditing smarter: not harderTM". He has been blessed to work with several open-minded, forward-looking auditors. From his national award-winning PhD thesis to his recognition for a "Lifetime Contribution in the Innovative Usage of Technology in Auditing", Dan has exhibited a live-long commitment regarding audit efficiency and effectiveness.

He has taught these concepts and provided solutions to 1) Federal and State Agencies/Auditor Offices, 2) Internal Audit shops and 3) all of the Big- 4. His hands-on training and revolutionary audit strategies increase audit efficiency by over 33%, or more, while reducing cycle and travel time. A Fortune 500 Company now saves $300,000,000 per year, via his techniques, while a Federal Agency reported annual savings of $950,000,000 per year! Dan also performs chapter-level training/speeches.

Doc pioneered Continuous Control Monitoring (CCM) at the Application and Process level, (the "secret sauce") of CCM. A Fortune Top 10 CEO says that Dr. Dan "built the Holy Grail".

Dan has been requested to participate/comment on many auditing standards (AICPA, IIA, COSO, ISACA, CobiT, SOX, and the Yellow Book). He was the Director of Research for the ISACA.

The Dean of the Vanderbilt Law School says Dan's audit research "is the type of practical research that we need more of".

Dr. Dan has been voted "the # 1 trainer of auditors" and the # 1 speaker at multiple International Audit Conferences, ranking # 1 at two different IIA Internationals. He has won college-teaching awards in each of the last three decades.

All of Dan's training classes are 100% HANDS-ON: you will walk out with new audit tools, ready to hit the ground running. Dan helps auditors to reduce cycle time, find fraud, reduce travel, improve efficiency and strengthen findings.
Kimberly Kneer
Kimberly Kneer has passed the CPA exam and is now focusing on the CIA exam. She was formally educated in accounting and systems design.

Kim started her career in the health care field as a liaison between IT and hospital management. She was responsible for the financial modules during the mainframe computer software conversion. Kim also assisted the Big-4 external auditors in the annual audit effort.

Her specialty is laptop-based software tools that assist auditors, inspectors and examiners in the review of compliance, performance, operations and financial data. She is also interested in mathematics and the application of process control to auditing.

She has used, and taught, many software tools to assist business folks in "working smarter; not harder", such as 1) ACL, 2) Idea, 3) SQL and VBA, 4) regression analysis, 5) advanced Access, and 6) advanced Excel (excel as a database). Her unique perspective is that of anyone hungry for audit tools, as she constantly asks, "can't we find friendly software to empower the user and make the user better off?"

Additional Information

If you are making travel plans to come to Austin, we recommend making "refundable" air and hotel reservations or waiting until 14 days before the class to actually book your reservations. Courses are occasionally canceled or rescheduled due to low enrollment. We determine whether a course has enough participants 16 days prior to the course date. If we cancel or reschedule, we will email the participant and his or her billing contact no later than 14 days before the original class date.

The course coordinator will contact you with parking information. Handicapped parking is free at the meters around the downtown area.

Vending machines with Coca-Cola products and various snack items are available. There is also a refrigerator and microwave in our coffee bar area. Feel free to bring in your own drinks and food if you prefer.

You might want to bring a light sweater or jacket, as room temperatures vary.

To see answers to our Frequently Asked Questions, visit http://www.sao.texas.gov/training/faq.html.