5 Do’s and Don’ts of Audit Management Automation

1. 5 Do’s and Don’ts of Audit Management Automation Presented by: Michael Awad, CPA President and Founder Audit Leverage Software IAD Solutions, Inc. Philadelphia, PA Tel: 215-713-0378 E-mail: info@AuditLeverage.com IIA NJ Audit Software Expo April 19, 2005

2. Your system requirements for Audit Management Software. The point: use functionality if you need it, not just because it’s there. 2

3. Risk Assessment Audit Planning & Budgeting Scheduling & Staffing Timekeeping Workpapers Audit Findings & Recommendations Reporting Audit Follow-up Covering what? 1. SOX compliance - AlineTM: web-based system 2. Audit management automation 3

4. Do’s and Don’ts 1. DO digitize and centralize your data. 2. DON’T automate a flawed audit process. 3. DO standardize the use of software among your staff. 4. DON’T duplicate data. 5. DO put your data to work. 4

5. Audit Leverage’s modules are integrated, but not interdependent. In other words, they talk to each other, but you don’t have to use them all. Overview of Audit Leverage functionality 5

6. Architecture of Audit Leverage Based in Microsoft Access or SQL Server/MSDE. -  All data is in one big database (on the network) for easy reporting. - Replication (also called synchronization): full or partial. (Only new or changed data goes across the phone or network line.) 6

7. DO digitize and centralize the internal audit department’s information in a database….. not stand-alone documents. Database-driven approach: “Document without documents” To the extent that you’re relying on attachments, it’s re-work. Why use a database? 100% availability of data : o Self-serve (cuts down on unnecessary e-mails, phone calls, and meetings) o 24/7 access o Access from anywhere o No out-of-date hard copies or soft copies o Shared file on network, not hidden on the hard drive of someone who called in sick. 7

8. GIGO Automating an inefficient audit process can make it even worse. The implementation of an audit management software system is the perfect time to re-evaluate your audit process. 2. DON’T automate a flawed audit process. 8

9. 3. DO standardize the use of software tools among your audit staff. • For example: • Audit Leverage allows you to sign off at several different levels: • Audit project • Audit program • Audit step • Attachment • Finding • So all staff should be on the same page about which ones of those levels the department has decided to use. 9

10. Each piece of data should appear in only one place. Otherwise, you’ll face: - Redundant data entry - Version control problems 4. DON’T duplicate your data. 10

11. o Audit issues, management action plans - Audit report (in MS Word) vs. follow-up database or spreadsheet. Auditor timesheets - Each auditor’s spreadsheet, vs. dept.- or project-level summary spreadsheet. Risk assessment - Spreadsheets vs. questionnaires. Workpapers - Original documents vs. the copies e-mailed to the audit manager Staff assignments - Wall chart (or Outlook calendar) vs. project tracking spreadsheet Staff lists - Assignments list, phone list, birthday list, etc. Examples of data duplication(All of these are resolved with Audit Leverage.) 11

12. Audit report generated by the Audit Leverage database(This is only 1 of the 50 report formats available.) 12

13. Project budget-to-actual time summary 13

14. Visual Scheduling of Staff 14

15. Performance metrics for: i.Strength of the controls enforced by the businesses “Search Your Database” screen ii.The internal audit department’s efficiency “Project Status” screen iii.The internal audit department’s effectiveness You can’t improve what you don’t measure! Tracking of Audit Milestone Dates Analysis of Bottlenecks “Milestone Dates” screen 5. DO put your audit data to work for you 15

16. Ad-hoc searches of findings database (slide 1 of 2).Example: Show me a statistical summary of all the purchasing-related findings from the past 18 months in the North American Region. 16

17. Ad-hoc searches of findings database(slide 2 of 2). Example: Summary of purchasing-related findings, subtotaled by control issue for number of findings, average risk severity, and dollar savings. 17

18. Statistical summary of workpaper binder status 18

19. Project Milestone Date Tracking andAnalysis of Bottlenecks 19

20. Can I tell what audit projects were postponed or canceled in the last year? What audit projects need to be done because of a management request? Over the last year, what are the audit findings with the highest risk? What’s the current status of all projects? What's causing projects to exceed their time budgets? What findings have an impact on the whole company not just one department? How can I be proactive in reporting all the past high risk issues to Division Managers so we can help prevent findings or issues from even occurring in the future? Typical Auditor Questions Answered by Audit Leverage 20

21. Which audit steps are ready for review? Which ones haven’t been started? Who is available to work on a project? What audit steps do I need to complete first? How can I write up a finding that was done previously? What review notes have been written up for me? What is causing delays? What’s the average risk severity for all the “Depreciation" findings in the Northeast region? Which divisions have had the most trouble with travel expense controls? Typical Audit questions for Audit Leverage, cont. 21

22. Questions? Visit us at www.AuditLeverage.com to watch a 20-minute demo movie about the software. 22