Audit Software: Efficient and Effective Use
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Audit Software: Efficient and Effective Use

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Audit Software: Efficient and Effective Use Audit Software: Efficient and Effective Use Presentation Transcript

  • Open Source Audit Software
    • IIA District Conference
    • Durham, NC
    • 2/27/2009
    • Track 1 – Internal Audit
    • Mike Blakley, EZ-R Stats, LLC
  • Objectives
    • Open source audit software – advantages / disadvantages
    • Audit software functionality of four major software packages
    • SQLite - application in various audit areas
  • Objectives (cont’d)
    • RAT-STATS - random sampling
    • "R" system and its applications
    • Cephes - basic functionality
    • Excel   open source software
  • What is open source software?
    • Source and binaries
    • Languages
    • Maintained by various persons
    • Support / development - volunteer basis
    • Licensing - GPL, Public Domain, etc.
  • Advantages
    • Transparency
    • Portability
    • Lower cost
  • Disadvantages
    • May require additional expertise
    • No slick front-end
    • Plain packaging
    • Support?
  • Objectives
    • Open source software -, advantages/disadvantages
    • Next topic: Four Major Packages
  • Four major packages
    • SQLite - database system
    • RAT-STATS - random sampling system
    • R - library of statistical and plotting routines
    • Cephes - mathematical and statistical routines
  • How Excel fits in
    • Audit tests on data in SQLite
    • RAT-STATS  -  Excel workbooks
    • R has an Excel interface
    • Run R scripts from Excel
    • Cephes routines can be called directly from Excel
  • Recap of objectives
    • 1. Open source software -, advantages/disadvantages
    • 2. Four major software packages
    • Next topic is SQLite
  • Overview
    • Developed in North Carolina!
    • Largest number of database installations
    • Public domain
    • Standards compliant - SQL92
    • Very fast, written in “C”
    • Zero installation
    SQLite
  • Example Audit uses
    • Sample planning
    • Population statistics
    • Identification of duplicates
    • Match/merge
    • Benford's Law
    • Same, same, different
    • Data stratification
  • Advantages
    • Cost effective - fast database
    • No license cost
    • Simple to install
    • Portable
    • Standards compliant
  • Disadvantages
    • Doesn't have every "bell and whistle"
    • Doesn't support every functionality
    • Basic system is “command line”
  • SQLite Front Ends
    • Excel
    • SQLite browser
    • Others
  • Specific audit applications
    • White paper available which explains many of the topics
    • Article in EDPACS, June 2008
  • How to load data
    • Load using manual "scripts"
    • Load with free software
    • Import from Excel, Access, text files
  • Target audience
    • Auditors
    • Audit Managers
    • Business Analysts
    • Researchers
    • Anyone working with large data volumes
  • Screen Shots of SQLiteBrowser
    • 1. Identification of duplicates
    • 2. “Drill down” (using where clause)
    • Population subtotals and basic statistics
    • Public domain
    SQLite Database Browser
  • Identification of Duplicates
  • “ Drill down” with where clause
  • Population Statistics
  • More information
    • SQLite site – http://sqlite.org
    • EZ-R Stats – http://ezrstats.com
    • SQLite browser
    • http://sqlitebrowser.sourceforge.net/
  • Wrap up Objective 3
    • What is SQLite?
    • What audit areas can it be used?
    • Data import
    • Next topic is Random Sampling
  • RAT-STATS
    • Federal HHS in San Francisco, with assistance from several universities
    • Comprehensive
    • Widely used in the health care industry
    • Has withstood court challenges
    • Are others, such as EZ-Quant (DOD)
  • Major functional areas
    • 1. Random number generation
    • 2. Sample size determination
    • 3. Attribute sampling
    • 4. Variable sampling
    • 5. Types of sampling
      • stratified
      • unrestricted
      • other
  • How it works
    • Windows based (no Mac or Linux)
    • Simple to install
    • Some documentation
    • Works with Excel, Access and text files
  • Advantages
    • Comprehensive
    • Withstood court challenges as to validity
    • Does all the computations
    • Provides basic documentation for work-papers
    • Easy to install
    • No license cost
  • Disadvantages
    • Only certain confidence levels
    • Little transparency (FOIA)
    • Support?
  • Screen Shots
    • Random numbers
    • Variable sampling
  • Random numbers
  • Variable sampling
  • Wrap up Objective 4
    • What is RAT-STATS?
    • Audit Areas
      • Random numbers
      • Attribute sampling
      • Variable sampling
    • Next topic is R
    • World-wide development
      • Statisticians
      • College Professors
    • Library of statistical routines
    • Extensive plotting and charting capabilities
    • R is `GNU S’
  • Major functional areas
    • 1. Statistical computing
    • 2. Graphics
    • 3. Linear regression and modeling
    • 4. Statistical tests
    • 5. Time series analysis
    • 6. Data Classification
  • How it works
    • Windows, Mac or Linux
    • Relatively simple to install
    • Extensive documentation
    • Works with
      • Excel, Access
      • text files
      • many databases (including SQLite)
  • Audit areas
    • Excellent capabilities for regression
    • Does step-wise regression (quite costly in other packages)
    • Sample planning
    • Population statistics
    • Charting/plotting as part of audit planning
  • Advantages
    • Comprehensive
    • Good charting and plotting capabilities
    • Extensive statistical functions
    • Easy to install
    • No license cost
  • Disadvantages
    • User interface
    • Fairly steep learning curve
    • Support?
  • Screen Shots
    • Stepwise regression
    • Plot - confidence/precision intervals
  • Stepwise regression
  • Confidence Intervals
  • Wrap up Objective 5
    • What is R?
    • What audit areas can it be used to address
    • Next topic is Cephes
  • Cephes
    • Federal Department of Energy at Oak Ridge Laboratories
    • Library of mathematical and statistical routines (400+)
    • Adaptation of earlier versions in FORTRAN
    • Translated into C and Visual Basic
    • Highly reliable and extensively tested
  • Major functional areas
    • 1. Statistical computing
    • 2. Mathematical computations
    • 3. Probability
  • How it works
    • Windows only
    • Relatively simple to install
    • Extensive documentation
    • Works as stand alone routines or can be called from Excel
  • Audit areas
    • Sample calculations
    • Random number generation
    • Sample planning
    • Population statistics
  • Advantages
    • Reliable, extensive testing (IEEE)
    • Extensive statistical functions
    • Easy to install
    • No license cost
  • Disadvantages
    • Support ?
  • Example of probability functions
    • Chi square distribution
    • Complemented Chi square
    • Inverse Chi square
    • Normal distribution
    • Inverse normal distribution
    • Poisson distribution
    • Inverse Poisson distribution
    • Student's t distribution
  • Example of Arithmetic and Algebraic functions
    • Square root
    • Long integer square root
    • Cube root
    • Evaluate polynomial
    • Round to nearest integer value
    • Truncate upward to integer
    • Truncate downward to integer
    • Absolute value
  • Screen shots
    • 1. Calculations with Excel VBA
    • 2. Plot with confidence/precision intervals
  • Calculations with Excel VBA
  • Plot with confidence/precision intervals
  • Wrap up Objective 6
    • What is Cephes?
    • Useful for evaluation of random samples, linear regression, etc.
    • Next topic is Excel as a platform
  • Excel as an audit platform
    • Extensive capabilities, generally underused
    • Can be integrated with open source software
    • ActiveX Data Objects ( ADO )
    • Visual Basic for Applications ( VBA )
    • Calling external routines
    • COM Servers
  • ActiveX Data Objects
    • AuditNet
    • "End User Database Access Using Excel"
    • http://www.auditnet.org/articles/MB200803.htm
    • Example is use of SQLite
  • Visual Basic for Applications
    • Very extensive capabilities
    • Entire applications written in VBA
    • Powerful audit tool
    • Example library
  • Calling external routines
    • Can be used to build scripts
    • Then executed by external applications
    • Excel - Shell command
    • Provides ability to perform a variety of tasks, such as
      • charting and plotting using R
      • running database queries
  • COM Servers
    • Makes routines directly accessible to Excel using " CreateObject "
    • Cephes library is an example
    • Many free com servers available
    • Simplifies Excel by " compartmentalizing " program logic
  • Advantages
    • Already widely used
    • Many "built-in" capabilities
    • Macro language VBA widely understood
  • Disadvantages
    • Learning curve
    • Support?
  • Wrap up Objective 7
    • Excel as an audit platform
    • Uses include:
      • database queries,
      • running R,
      • complex stat calculations
  • Questions?
    • Contact info:
    • 919-715-4791
    [email_address] View this presentation