How Will Continuous Auditing and XBRL-GL Work Together to Provide Improved Business Value?

1. How Will Continuous Auditing and XBRL-GL Work Togetherto Provide Improved Business Value? Nigel J. R. Matthews, BASc, CAACL Services Ltd.

2. XBRL Comes of Age There are many pervasive [information] supply chain problems that exist today due to the lack of an open information standard and proprietary formats….XBRL enhances the work of internal auditors by addressing these information problems and enabling them to do more at a lower cost. Mike Willis PricewaterhouseCoopers Internal Auditor Magazine, October 2007

3. Timeline Audit Software ACL imports simple XML data ACL Imports XBRL reporting schema 2.1 Mainframe based query and reporting tools Introduction of purpose-built Audit technologies (CAATS) Continuous Controls Monitoring Applications Creation of PC spreadsheets Audit AnalyticsServer Solutions Re-emergence of Continuous Auditing ACL ImportsComplex XML 1980s 1990s 2000 XML 1.0 becomes W3C recommendation XBRL-GL Schema 2.1 released XBRL 2.0 Reporting Schema XBRL 1.0 XBRL Reporting Schema 2.1 XBRL

4. Why Continuous Auditing? Provides the ability to: • Notify the organization when errors that impact financial performance have occurred • Ensures adherence to internal policies and external requirements to stakeholders • Determines transaction validity, accuracy and appropriateness on a transaction by transaction basis • The only audit approach that makes sense in the face of massive transaction volumes generated by today’s businesses. The truth is in the transactions

5. Data Analysis, Monitoring andControl Types There are three types of controls within the enterprise: • Manual • Automated • Combination Covered by IT/ System controls monitoring Manual(23%) Automated Application Settings (32%) Combination(45%) Covered by transactionmonitoring Percent of Controls Covered

6. Continuous Monitoring/Auditing Model Test transactional data against established internal control rules (COSO-based) and transactional profiles Historical and statistical transactional profiling Findings Transaction Monitoring Transactions detailed for further analysis Financial & Business Unit Managers & Audit Controls & Compliance Rules Alerts System Controls Immediate notification of critical exposures Management & Audit Action Investigations, recoveries, and improved controls and procedures Data Data Data Transactional Data Greatest Challengeis Data Access

7. ContinuousMonitoring/Auditing Benefits General Ledger XBRL-GL Inventory Receivables Payables Accurate financial reports for Investors, Regulators, and Management

8. The Goal is Effective Controls and Accurate Reporting • Both continuous auditing and monitoring working together in the organization • Testing system controls and financial transactions to ensure effective compliance with regulatory and internal controls • Create assurance that all the data flowing through the systems is accurate before being entered in the financial statements • Where ever possible use XBRL-GL formatted data as the mechanism to reliably consolidate & evaluate business transactions through the general ledger

9. XBRL Supports Continuous Compliance Assessments • Today Continuous Auditing/Monitoring is a reality but there are still challenges in the financial reporting supply chain • These challenges mean that extensive manual audit and reconciliation procedures are required • XBRL-GL can bridge that gap and make the roll-up of auditeddata into the financial statements a faster, more efficient process • Outcomes: less opportunity for errors, lessre-work, improved efficiency

10. XBRL-GL and The Auditor • XBRL-GL allows auditors to pull information from disparate systems in standardized format • Aim is achieve near real-time access to data and immediacy of relevant audited business information • Result is a simplified audit process that allows auditors to review more data in detail, more frequently The auditor should evaluate the data not spend time on conversion issues

11. Continuous Auditing - Examples Early Adopters

12. Case Study: HCA(Hospital Corporation of America) • Recovering from previous high-profileaccounting scandal • Wanted to Continuously Audit transactions fromHR, payroll,suppliers and accounts payable • Found $17 million in duplicate payments inone year • Identified billing errors on 16,000 units of equipment • Reduced SOX 404 compliance costs

13. Success Story: Dollar Thrifty • Continuous Auditing of transactions providedimmediate ROI • Wanted to move beyond random sampling and gain full coverage of its 500,000 monthly transactions • Chose ACL solutions to assess risk and detect fraud saving over 10,000 hours of manual staff labor • Reduced commission expense by $750,000 annually and pinpointed cases of fraud