WRITING AUDIT REPORTS

Virtual Community Event

September 18, 2024
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 I’m your host today
TODAY!
10 years at Deloitte

13 years running Aufinia

CISA, CFE, ACL Certified Data Analyst, SAP data

expert

Author: Data Analytics Secrets: SAP data audit:

YOUR POCKET GUIDE
Auditopia Team Member
Managing Director Likes to run marathons
Aufinia Interested in bio-hacking
Claire WORLEDGE
Lives in Danang
cjw@aufinia.com

https://bit.ly/asap-tool
Our Session Today

Ice Breaker

Top-down approach

Quick P2P example

Avoiding errors

Wrap Up
ICE BREAKER
 Ice Breaker
Auditopia Community Meet & Greet

Where are you from?

Please share
your answer in
the chat with
the community!
(Make sure to select
“To: Everyone”)
 Poll 1: Do you present data in audit reports?

We’ll be using the polling feature. Select your answer to these questions. Votes are anonymous!

Do you already use Python in your organization?

Yes No Sometimes
 Poll 2: What do you think mostly prevents auditors from
using data in audit reports
We’ll be using the polling feature. Select your answer to these questions. Votes are anonymous!

What do you think mostly prevents auditors from using data in audit
reports?

Access to the Undesrtandi Lack of Lack of time

data ng of the confidence
data in the data
 Top-down
presentation approach
 Before we start

First start with some totals

● Once we have got the data to be analyzed, the first thing that we would normally do is compare it to
the Financial Statements. Or do some consistency checks:
If this value is not 0,
then probably there is a Check that debit is equal
problem with the data to credit, and so that the
obtained. total net movements is
0.

There may be differences between total Compare net movements

movements in the general ledger compared to between the General Ledger
the trial balance, but there should not be any and the Trial Balance, per
difference in net per account account
 Before we start

Compare the net per account

Here we have a
difference in Movements
but the same net – so
● Example comparing net per account this is ok

Account TB Debit TB Credit TB Net GL Debit GL Credit GL Net Difference in

net
100001 2500 400 +2100 3500 1400 +2100 0

100002 2500 400 +2100 2500 500 +2000 100

…
Here we have a
difference in Net
 Before we start

Understand differences – only some accounts?

● We would want to understand which

accounts are showing differences, and
double-check that any differences are due
to document splitting:

Differences between the net per

account in the Trial Balance to that in
the General Ledger, might be due to
specific accounts. These might typically
be suspense accounts that could have
been adjusted post closing – or it could
be that you are including items on the
special ledger in your analysis, items
that are pre-posting, etc.
 Before we start

Understand differences – only some periods?

● Check if the differences are occurring

overtime, or if it is an isolated occurrence:

Differences that are isolated mostly in

around fiscal year-end could indicate
post-closing adjustments posted to
prior-years, if you are sure that it is not
due to special ledger, alternative ledger,
pre-posting, etc. in this case, an
analysis of the input date versus the
posting date could be interesting in
order to get more clues.
 Before we start

Check against financial reports – balances though

● We can also compare the balance against the financial statements:

Accounts Receivable Accounts Payable

balance – should be balance – should be
positive and greater than negative and less than Check your AR and AP numbers
AP balance! AP balance! against the balance sheet for N
and N-1. This will give you
confidence that the data is good
 Before we start

Walk backwards on the process finance to AP ledger

● Once we have confidence that our general ledger matches our trial balance, then we check that our
Accounts Payable/ Accounts receivable matches our general ledger:
 Before we start

Walk backwards to the invoices, payments…

● If we are sure that our Accounts Payable values are correct, then we want to compare them to the
purchase-to-pay process to see if our purchase order values and goods receipt values match those in
the Accounts Payable ledger.

● However, if we are using SAP, it is not all as easy as that!

● We first have to divide our Accounts Payable ledger up into different document types: invoices,
cancellations, payments, payment cancellations, etc.

Other things,
Supplier reversals,
Invoices Payments
movements (AP accruals,..
ledger)
 Before we start

Walk backwards to the GRs and POs

● Once we have got a list of invoices and payments, then we can compare to the rest of the Accounts
Payable process:
Normally, we would
expect purchase order
value to be less than Here we see that the
invoice value, due to invoice value is closely
Direct Invoices aligned to the other
values in the process

We can also see that

there doesn’t appear to
be normal activity in However, we can
some months immediately see that
there is a problem with
the payment value
 Before we start

The same principle for O2C

● If we are auditing Order-to-cash, we should do the same for the order-to-cash process:

If this was real data –

we would be concerned!
The customers don’t
look like they are paying
and no-one is recording
Goods Issues!
 Before we start

When we are comfortable with our data, we can begin

● We haven’t started our report yet! Actually, we haven’t even started analyzing!

Before we start our analysis – we would have made sure that our data looked reasonable- compared
to the financial statements and compared to the rest of the business process – and if necessary, got
a corrected version of it.

Once we are confident about our starting data set, we can do analysis, and always compare our
results as a percentage of the total
 Audit workpapers

Workpapers are too detailed for presentations

● We could have an audit finding like this, however, we don’t want to put this one in our presentation:

We definitely do not want to

present so much text
 Audit workpapers

The big 4 way – professional but boring!

● Observation 1

● Risk

● Recommendation

We definitely do not want to

● Response from the auditee present so much text
 Audit report

Rather use visualizations

● If we want to present with data, we could show graphs like these:

Here, there is too much

detail and the audience
might get lost
 Audit report

Start with the big picture

We can use a side panel to
remind ourselves of the
● It might be better to zoom in: totals as we go through

237M USD total GR

 Audit report

Then show the zoom in

● Then show the focus on the odd cases, so that we can see the value compared to the total:

237M USD total GR

of which, 650K USD >121 days > PO

Use wording, “of which”

helps to understand that we
are drilling down
 Audit report

Remind about the familiar totals

● Use call-outs to explain the graph/ focus.

237M USD total GR

of which, 650K USD >121 days > PO

There were 237M USD

Goods Receipts during
the period, of which
650K USD (0.18%) were
> 121 days after the PO
date Put numbers in bold.
Always put the currency.
Show the % of the total
 Audit report

Focus on an interesting trend –don’t show all trends

The side-panel keeps
● We can then show the trends in terms of third parties: reminding the audience
where we are

237M USD total GR

of which, 650K USD >121 days > PO
of which, 421K USD for EGS America
Most of the cases relate
to EGS America

Some cases were found

to be FX adjustments
that netted out to 0
impact

If possible, show
the whole name
 Audit report

Focus on a trend that has a business impact

● We can then focus on what is late:

237M USD total GR

of which, 650K USD >121 days > PO
EGS America was
of which, 421K USD for EGS America
found to be late of which, 197K USD for hardware
delivering Motherboards
and Hardware.

By this point, hopefully we have arrived at

some useful information that the business can
use – perhaps the late delivery of these
objects has an impact on production. This is
where we can start to relate the data to the
business real-world. It would be good to then
show some interesting proof of this point.
 Audit report

Story pattern

● In the above, we have led our reader from the total value of items, to some exceptions, to the
trends for those exceptions and then to some patterns for those trends, and finally linked it to a
business impact.

% Business
Totals Trends Patterns
exceptions impact

This is the template of a story. However,

before starting our PPT we need to know
the Business impact that we are leading to.
 Audit report

Start with the business impact in mind – lead towards it

Before we start our PPT, we need to know the business impact that we are leading to.
 Audit report – dashboards to help you get there quicker

Always be reminded/ comparing to the totals

Always remind ourselves of the totals, to get
We need to a perspective.
show overall
and then go
down to some
examples

Be in a position to
see trends/ patterns
quickly

Try to see how those

trends/ patterns
impact the business
 Audit report – dashboards to help you get there quicker

From dashboard to examples

● We may have a detailed dashboard like this one:

We should be
careful about
false positives.

Be sure to have all the

indicators enabling you to
avoid false positives
 Audit report – dashboards to help you get there quicker

From dashboard to examples

This type of information

● We may have a detailed dashboard like this one: might confuse the audience

We have to
explain what
we mean –
assume that
you are talking
to a non-expert

Be able to explain why a

negative stock movement is Be clear about movement
not great! versus balance versus net!
Example for P2P
 Example for P2P

Use correlation to help you find multiple issues

Sometimes we have a bunch of issues, but we don’t know how to string them together,
so we could use Correlation to help us

Correlation helps us to see if a particular 3rd party is found for a number of exception
reports
Example for P2P

Use correlation to help find multiple issues

Avoiding errors in
reports
 Avoid errors

Remember reconciliation

● All roads lead to Rome

 Avoid errors

Example issue – extraction error

1. Missing half of the data set due to a special character in the file
2. Duplicated files in the extract
3. Incremental without considering status change
4. Extract the data based on the wrong date field
5. Extract the data based on the wrong SAP system (quality instead of production)
6. Miss some of the extracted data due to missing one of the extracted files
7. Incorrect data in certain columns due to delimiter in text fields
8. Link to the wrong data file
9. Having a subset of data due to a filter on a document type business area, cost
center, etc
Avoid errors

Example issue – special characters

 Avoid errors

Example issue – Excel errors

1. Incorrect numbers due to incorrect decimal place holder due to Excel language
settings
2. Incorrect formulas
3. Incorrect date information due to auto-conversion language settings in Excel
4. Miss some of the extracted data due to a limit of records in Excel

BSEG_DECIMAL_D BSEG_DECIMAL_C
OTS OMMAS

EXCEL_INTERPRET
ATION
 Avoid errors

Example issue – coding errors

1. Forgetting to sort a data set before doing an accumulated analysis

2. Join two tables together and exclude the unmatched records
3. Join two tables together when the key is duplicated
4. Using the wrong table in the data preparation flow

ACL_REVIEW_CHE ACL_JOINING_SU
CKLIST MMARY_MATHIEU_ASTRUC
 Avoid errors

Business knowledge
1. Use of wrong calculation method: FIFO, LIFO, WAC/ straight-line versus digressive
2. Illogical reasoning: balance versus movements
3. Not considering all records of a journal entry
4. Illogical reasoning: master data versus transactional data
5. Illogical reasons: at-date versus over-time
 Avoid errors

SAP knowledge

• Wrong field:
1. Add up values in different currencies
2. Analyze the data based on the wrong amount field
3. Analyze the data based on the wrong date
4. Analyze the data based on the wrong user field
• Data with history:
5. Taking only the latest exchange rate for highly fluctuating currencies
6. Not considering the master data at the time of the transaction
• Data with record types
7. Include records that are not the right data type (PR versus PO, Quotations vs SO)
8. Document status is only DRAFT (BKPF_BSTAT and REGUH_XVORL)
9. Not considering debit/credit indicator
• Incorrect joins:
10. Using the wrong field to link tables together (BSEG_BUZEI – BSAK_BUZEI)
11. Not considering many-many relationships in the data
• Data structures:
12. Ignoring hierarchical structures in data (organizational, profit/cost centers, user access)
13. Not considering which information is found on which journal entry lines (supplier/ customer)
• Calculations
14. Not considering currency factors and negative exchange rates
15. Not considering standard units of measure and condition units of measure
16. Incorrect understanding of calculations done by SAP (due dates, net prices in base unit of measure,…)
• Data flows:
17. Not being aware of automated interfaces
18. Ignoring data entered through certain process flows (manual journal entries vs payment program)
Avoid errors

Avoid errors – one pager

 Any tips you would like to share for audit reports?
“Seeing” user access management in terms of tables

Let us know in the chat what you think

Any tips you would like to share for audit reports?

 Extra poll question

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Do you require a CPE certificate for joining today?

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Quiz for your certificate.)
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