Case Studies in Auditing

Auditing Case Studies Overview

Mike.Blakley@ezrstats.com — 20 Nov 2006 05:00:00 GMT

A collection of case studies for a variety of common audit tasks such as:

testing for duplicate invoice payments,
identifying journal entries on weekends/holidays,
detecting "curb-stoning" in surveys by using Benford's Law
auditing Telco records
"clustered" payments as evidenced in the Wake County Schools Transportation Fraud

Detecting Duplicate Invoice Payments

Mike.Blakley@ezrstats.com — 20 Nov 2006 05:00:00 GMT

Potential duplicate payments can arise due to a variety of situations, such as invoice number transposition, grouped payments, sequentially numbered invoices from the same vendor, etc. This study takes a practical approach to this fairly complex topic.

Testing for Journal Entries made on weekends and Federal Holidays

Mike.Blakley@ezrstats.com — 20 Nov 2006 05:00:00 GMT

When general ledger or journal entries originate on weekends or Federal Holidays, this can be a red flag. This study takes a practical approach to identification of such transactions. Uses Pareto Charts.

Detection of "Curb Stoning" in Surveys

Mike.Blakley@ezrstats.com — 20 Nov 2006 05:00:00 GMT

Using Benford's Law to identify curb-stoning done in surveys. Output includes charts which facilitates visual review of the results. Besides the chart data, the output also measures differences between expected and actual using Kolmogorv-Smirnov D-statistic, in order to identify the largest difference. Auditors will generally use that difference to focus their review. For example, in a review of procurements, there may be a "clustering" around the lowest procurement value which does not have to be bid. This can be a red flag in a procurement audit.

Wake County Transportation Fraud

Mike.Blakley@ezrstats.com — 20 Nov 2006 05:00:00 GMT

This case study is based on actual fraud committed in Wake County, North Carolina. It focuses on procedures to identify unusual purchasing patterns. Provides an overview of an actual procurement fraud in excess of $5 million, where several of the participants were convicted and are now serving jail time. The case study describes some of the details as to how the fraud was perpetrated, and includes a reference to the audit report. This audit could have been prevented had certain data analysis been performed. The case study uses data which was made up to illustrate the audit procedures described. Uses histograms, Pareto charts.

Commonly used audit tests written in ScriptBasic

Mike.Blakley@ezrstats.com — 20 Nov 2006 05:00:00 GMT

Includes common tests such as ageing, summarization, tests for transactions on weekends and holidays. Although not a case study, this collection of audit procedures, each written in the open source ScriptBasic language, may be of use during audit reviews.

Auditing Telco charges

Mike.Blakley@ezrstats.com — 28 Nov 2006 05:00:00 GMT

Illustrates the use of EZ-R Excel and ScriptBasic in the analytical review process for Telco charges. Based on an actual audit of land line and mobile charges. Includes scripts and commands to identify calls placed/received on weekends and Federal holidays. Shows how EZ-R Excel can be used to perform basic analytical functions such as obtaining population statistics, identifying outlier transactions, preparing histograms, Pareto charts, etc. Audit data for testing is provided, along with DOS commands to extract the weekend and holiday transactions. Includes example output from the audit procedures.