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Agile Analysis Techniques for the GL


The general ledger is the core of the financial reporting system. Since the GL holds nearly all the financial information used to create the financial statements, it often contains massive amounts of data. There are a few shortcuts you can use to quickly identify anomalies and outliers, and gain a deeper understanding of what has transpired during the year.

The AICPA Center for Audit Quality recommends using Computer Assisted Audit Techniques (CAATs) to run the following queries:

  1. Find journal entries that do not balance
  2. Find gaps in journal entry number sequence
  3. Find high-dollar journal entries
  4. Find possible duplicate account entries
  5. Find round-dollar journal entries
  6. Show journal entry information by employee
  7. Find all entries made by a specific employee
  8. Show values for the "journal entry type" code
  9. Find manual entries
  10. Sample journal entries (random or high dollar)
  11. Find specific journal entries (by month, day or JE#)
  12. Find all entries containing specific account(s)
  13. Find all entries within a range of accounts
  14. Find post-dated entries
  15. Find entries with unusual (non-standard) descriptions
  16. Find entries posted on weekends

 

Data Request Tip:

Request a detailed year-to-date GL report in electronic form, including detailed transactions with user input information.

Testing Tool Speeds

Using the same GL database of approximately 1,700 records, an intermediate-level user measured the amount of time required to generate these queries using three different applications.

Application

Approximate Time to Perform GL Query

Microsoft Excel61 minutes
CaseWare IDEA®29 minutes
Financial App11 minutes

While IDEA outperformed Excel in this test, queries are produced one at a time. The Financial App is a collection of 55+ basic audit tests, data requests and reports. It offers an extensive set of routines for analysis of general ledger, accounts receivable, inventory, fixed asset and accounts payable transactions.

This App enables the user to run multiple queries, including those listed above, simultaneously while significantly reducing potential for human error. It also simplifies the data request process, and provides automatic documentation for the audit objective and results of each test.

 

Excel

IDEA

Financial App

ProsSome reports are straightforward by utilizing "Filter" function in Excel.
Examples:

  • High-dollar JEs
  • Find manual entries
  • JEs by time
  • JEs by accounts
Some reports are straightforward by utilizing "Criteria" or "Direct Extraction"
Examples:

  • High-dollar JEs
  • Find manual entries
  • JEs by time
  • JEs by accounts
  • Enable running multiple reports at the same time
  • Consistent output (standard formats)
  • Simplicity, low risk for human error
Cons
  • High level of complexity, high risk for human error
  • Formulas require manual checks to ensure the accuracy
  • Reports require reformatting
Manually extracting and saving each and every report takes timeSome reports require an extra step to complete
Examples:

  • JEs by specific employee
  • Find Manual Entries

With the App, users may tag fields within the database to rerun the same tests in the next period. For example, if the user runs the same reports each month, it will take approximately 45 minutes. Using the tagging feature in the App, the same report rerun would take less than 10 minutes.

While there are many tools you can use to analyze the general ledger, our comparison tests show the Financial App can help perform the same queries in less time, and with greater accuracy.

The Marketplace: Where to Try & Buy

The IDEA Marketplace is the first online store for audit tests worldwide. It offers convenient access to Apps designed to simplify preparing, importing, testing and analyzing data.

Within IDEA, click on the SmartAnalyzer tab, then find the marketplace icon in the ribbon. Click on “Discover the Marketplace” for a list of available products. Or visit The Marketplace. You will need to create a log-in or account. The Financial App is available to all IDEA users for 30 days.

The Marketplace is a critical component of an auditor’s toolkit. It offers affordable, on-demand access to time-saving technologies.
– Chuck Manganiello, CPA, Founder of AuditSense

Single-User license holders may purchase Apps directly from the Marketplace. For other license types, contact [email protected] for purchasing assistance. Read more about the Financial App.


Areas of Applications , CaseWare IDEA



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