Data Analytics Software

Corporate Reporting Explanatory Guidance

Notes

2024

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CONTENTS
1. INTRODUCTION ..................................................................................................................................... 3
1.1 Using the Explanatory Guidance Notes ......................................................................................... 3
1.2 Skills and professional scepticism ................................................................................................. 3
1.3 Exercises and Practice Activities.................................................................................................... 4
1.4 Exam technique – using the data analytics software .................................................................... 4
1.5 Audit management tool ................................................................................................................ 5
1.6 Terminology used in the data analytics software ......................................................................... 5
1.7 Background to the data analytics software................................................................................... 5
1.8 Using the data analytics software for the Corporate Reporting exam ......................................... 6
1.9 Accessing the data analytics software .......................................................................................... 7
1.10 Using the Explanatory Guidance Notes......................................................................................... 7
1.11 The data – Elephant ...................................................................................................................... 8
2. NAVIGATING THE DASHBOARD ............................................................................................................. 9
2.1 The Dashboard .............................................................................................................................. 9
2.2 The nine modules – an overview ................................................................................................ 10
3. THE EXPLORE MODULE (LEVEL 1)........................................................................................................ 15
3.1 Introduction ................................................................................................................................ 15
3.2 Navigating Explore functions ...................................................................................................... 16
3.3 Searching and interrogating accounting records ........................................................................ 21
3.4 The Four Visualisation Tools........................................................................................................ 37
3.5 Account Numbering .................................................................................................................... 61
4. THE METRICS MODULE (LEVEL 2) ........................................................................................................ 67
5. THE REVENUE CASCADE MODULE (LEVEL 3) ....................................................................................... 73
6. THE DETECT MODULE – (LEVEL 2)...................................................................................................... 78
7. THE COLLABORATE MODULE (LEVEL 3) ............................................................................................... 98
8. THE INGEST MODULE (LEVEL 3)........................................................................................................... 98
9. THE FLUX MODULE (LEVEL 3) .............................................................................................................. 98
10. THE SELECT MODULE (LEVEL 3) ....................................................................................................... 99
11. THE REPORTS MODULE (LEVEL 3).................................................................................................... 99
APPENDIX A – ANSWERS TO EXERCISES .................................................................................................... 100
APPENDIX B – SKILLS GRID ........................................................................................................................ 108

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 1. INTRODUCTION
1.1 Using the Explanatory Guidance Notes

These Explanatory Guidance Notes explain how to use the key elements of the data analytics
software that will be a part of the Corporate Reporting exam.

The data analytics software referred to in these Explanatory Guidance Notes will be the same
as that used in the exam. However, in the exam, the data downloaded into the data analytics
software will relate to a different company, from a different industry and with different attributes
and risks. The company used for the purpose of these Explanatory Guidance Notes is Elephant
Company (Elephant).

The data analytics software is commercial software used in practice by many audit firms. It is
not educational software. The data used is also that of a real company and can contain many
thousands of real transactions.

These Explanatory Guidance Notes only cover a limited number of possible applications of the
data analytics software tools, functions and modules. They primarily consider the functions
necessary for use in the Corporate Reporting exam, rather than all those that might be used in
practice. However, it is important for you to have a general awareness of all the modules in the
data analytics software to gain an understanding of the context of the data analysis and
functions. Understanding the source and nature of the data and appreciating how the data
analytics software functions would apply in professional practice is essential to this context.

You are advised to read these Explanatory Guidance Notes and complete Practice Questions
One and Two (found in the Corporate Reporting Question Bank). As well as these guidance
notes and Practice Questions, ICAEW has also produced a walkthrough guide (found in the
Corporate Reporting Workbook) which explains how you should use the Advance Information to
prepare for your exam.

1.2 Skills and professional scepticism

The application of the data analytics software tools to the data may require using key skills
including data assimilation, structuring of data, exercising judgement and applying professional
scepticism.
These skills may be needed, for example, to identify and investigate unusual patterns and
trends from visualisations produced by the data analytics software. Alternatively, they might be
needed to identify and investigate a notable, and potentially high risk, transaction.

Once an unusual trend or notable transaction has been identified, the nature of the
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 investigations could be to consider the underlying causes and any audit risks. For example,
having found an issue with one transaction, it may be appropriate to use judgement to widen the
search for other similar or related transactions which may exhibit the same risk.

It might not always be possible to clearly identify the nature and rationale of the notable
transaction or trend. However, the data may enable you to devise questions for management as
audit procedures, to obtain information and explanations which would help you to identify and
understand key audit risks.

In using real company data and real-world commercial data analytics software, these skills are
intended to replicate and test the knowledge and understanding used in auditing in the
workplace.

Applying professional scepticism to the data analytics software and to the data is important. For
example, where you have used the data analytics software to analyse data, it is appropriate to
apply professional scepticism to question whether that analysis is appropriate, perhaps using
other information provided in the Corporate Reporting exam question scenario.

1.3 Exercises and Practice Activities

To practise skills, these Explanatory Guidance Notes contain a series of Exercises and
Practice Activities which you can use to familiarise yourself with how the data analytics
software operates. These will give you experience of how the data analytics software may be
used by you in the Corporate Reporting exam to identify audit risks, perform analysis, exercise
judgement and evaluate the data.

1.4 Exam technique – using the data analytics software

These Explanatory Guidance Notes contain help on how to use the data analytics software in
answering Corporate Reporting exam questions which involve interrogating and interpreting the
data. They cannot set out every possible approach to answer exam questions – you will need to
use your own knowledge, understanding and skills to do this.

For each of the main data analytics software modules, there are How to Use tables. These give
indicative guidance of how the data analytics software modules can be used in the Corporate
Reporting exam from a ‘Big Picture’ perspective (eg, for review and risk identification) and from
a ‘Small Picture’ perspective (eg, for looking at details and investigating by drilling down to
individual transactions at a more granular level). These tables are examples rather than
comprehensive lists, but they should provide ideas of how you can use the data analytics
software to analyse the data.

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 There are also Exam Approach sections which give advice on ways to use the data analytics
software to search and investigate the data in the context of the Corporate Reporting exam.

Familiarity with the data analytics software is essential, but these data analytics skills are
intended to enhance and extend, rather than replace, the knowledge and skills gained in all
other aspects of the Corporate Reporting learning outcomes and learning materials -
[Link]
reporting-module-study-resources.

1.5 Audit management tool

The data analytics software is an audit management tool as well as a data analytics tool. The
Corporate Reporting exam may require you to consider internal notes in the data analytics
software from other members of the audit team. Discussion notes may also be included in the
data analytics software which have been sent to, or received from, the client. You should be
aware of these audit management features as part of the information available from
management in the scenario. However, any notes or discussion added by you to the data
analytics software will not be marked as part of your script in the Corporate Reporting exam.

1.6 Terminology used in the data analytics software

The data analytics software may not always use IFRS terminology. For example, ‘income’ may
be used rather than ‘revenue’. Other non-IFRS terms may also be used.

1.7 Background to the data analytics software

In practice, the client company’s nominal ledger is uploaded into the data analytics software,
which can then provide analysis and run analytics tests, producing visual and analytical results.
This enables the auditor to identify and evaluate risks, including outliers. It also acts as an audit
management tool, facilitating communications within the audit team and with the client.
The raw data uploaded is essentially management accounting information and may be before
final adjustments for financial reporting purposes. It is therefore important to be aware that the
data provided may not have applied appropriate financial reporting adjustments. For example:
• Depreciation for the year
• Accruals and prepayments
• Deferred or accrued revenue
• Impairments
• Provisions
• Adjustments to inventory values

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 • Finance charges
• Fair value adjustments
• Current tax or deferred tax
• Lease rentals.

It is therefore important to understand both the double entry from your earlier studies and the
financial reporting treatment arising from these types of transactions.

1.8 Using the data analytics software for the Corporate Reporting exam

The data analytics software in the Corporate Reporting exam will form part of one question only.

Advance Information will be issued four weeks before the exam. The Advance Information
comprises of two elements:

• 11 months data for a company in the data analytics software; and

• An Advance Information document with scenario and background information

In the exam, candidates will be given access to the data in the data analytics software for the
same company for the full 12 months. There will be no changes to the 11 months’ data which
you will have already had an opportunity to examine in the Advance Information.

Typically, there will be a total of 15-20 marks in the Corporate Reporting exam for the direct use
of the data analytics software that cannot be obtained without using it.

The data analytics software contains a series of visualisations which you may be required to
interrogate, analyse and interpret. However, you will not be able to copy visualisations (or
any other information) from the data analytics software into the word processing area
for your script. It is therefore important that you demonstrate communication skills in your
exam answer to convey your understanding and analysis of the visualisations and data.

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 1.9 Accessing the data analytics software

When you register as an ACA student, you will automatically be able to access the data
analytics data analytics software.

You can also access the dataset used in these guidance notes here:

Access data analytics software

Having arrived at the dataset dashboard, the initial screen will show the dashboard for the
company Elephant Company.

When you register for the Corporate Reporting exam, your student number will be passed to the
data analytics software provider. When you click on the link to the dataset within an exam, your
student number will be recognised and you will be taken to the correct dataset. Once logged
into the exam environment you will not have to log in again to access the data analytics
software; you will just click on the link to arrive at the dataset dashboard.

Notes:

The data analytics software works on most browsers. However, it is recommended that you do
not use Safari. If you use a laptop, some visualisations may appear slightly more compressed
than shown in these guidance notes or may not show the full screen. It is recommended that
you do not use an iPad or other tablet or smartphone to access the data analytics software.

It is important that you logout of the data analytics software each time you use it. You
should do this by clicking on the icon at the top right-hand side of the screen. Ensure
you always confirm that you wish to logout. Further guidance on logging out can be found
at [Link]/das.

1.10 Using the Explanatory Guidance Notes

These Explanatory Guidance Notes and the data analytics software will use the 12-month
Elephant data.

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 IMPORTANT
When using these Explanatory Guidance Notes, it is important that you have the data analytics
software open and have access to the 12-month Elephant data. Use the data analytics software
as you go through these Explanatory Guidance Notes to replicate, repeat and practise each of
the tasks or steps being described.

It is only by using the data analytics software yourself that you will become familiar with it and
learn how to apply the tools and modules to answer the requirements in the Corporate
Reporting exam. Practice with the data analytics software is therefore essential.

1.11 The data – Elephant

Elephant is a real company which provides marketing services, mainly to digital businesses
based in the UK (domestic) and the rest of Europe (overseas). Customers sign a contract with
Elephant for the provision of a specific project. Each project is short term.

Customers are invoiced, and revenue is recognised, when the customer signs to confirm
acceptance of a completed project. Overseas customers are sometimes invoiced in their
local currency.

A typical marketing contract will comprise a price for concept, design, artwork and brand
development. In addition, the contract will specify the selling price for promotional products such
as banners, posters and marketing gifts (eg, pens, key rings etc.). The price for promotional
products is calculated based on the quantity ordered by the customer.

Costs are incurred by Elephant for each contract, including payroll and cost of sales for
promotional products. Also, a large element of cost of sales is in respect of travel,
accommodation, motor vehicle costs and consumables. Travel and accommodation mainly
relate to expense claims from Elephant staff arising from visiting clients.

Elephant’s accounting year end in the data analytics software is 31 December 2018.

In the Corporate Reporting exam, background details of the company in the scenario will be
provided within the Advance Information document. Further information about the company may
be provided in the exam.

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 2. NAVIGATING THE DASHBOARD
2.1 The Dashboard

Having clicked on your link, the initial screen will show the data analytics
software’s main overview dashboard for Elephant.

The data analytics software will open up in the overview dashboard for the
engagement, as below:

There are two functions circled in the top left corner.

The blue highlighting in the top left-hand corner shows that AUDIT (circled) is
currently selected. No other options will be visible to you.

Also circled in the top left-hand corner is the icon. Clicking on this icon shows
the organisations to which you will have access. This will be Elephant for the
purposes of the

Corporate Reporting exam practice. There will be a different company for the Corporate
Reporting exam (including Advance Information).

At the top of the dashboard, on the right-hand side you can see drop-down menus with the
company's year end (only 31/12/2018 is available in the case) and audit stage where different

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 versions of the datasets have been imported into the software (Planning/Fieldwork/Completion).
The Corporate reporting exam will use the Fieldwork stage (circled) so always check that this is
the stage selected in the drop-down menu.

At the top of the dashboard, towards the right-hand side, is the Module Selection section
(circled), showing symbols below for all the modules. Each module is a specific process in an
audit engagement.

2.2 The nine modules – an overview

To navigate into other modules from the dashboard, click on the required module symbol in the
Module Selection section (circled above) and it will open a dashboard for the selected module.

The following sections of these Explanatory Guidance Notes consider each module in the level
of detail appropriate for Corporate Reporting exams.

The following is an overview diagram of the nine modules, showing their relative importance for
the Corporate Reporting exam:

The levels of knowledge required of each module in the Corporate Reporting exam are:

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 Level 1 – Detailed knowledge required – likely to appear in most CR exams
Level 2 – Good working knowledge required
Level 3 – General awareness only (background context)

To gain an initial overview, a brief summary of the modules is set out in the table below. The
modules appear in the order in which they would be used chronologically in a real audit.

Module name Knowledge Outline description

level needed

Level 3 The Collaborate Module is an audit management tool. It

enables secure communication between the auditor and
the client. It also enables confidential communications
between members of the audit team, with or without client
access.
Examples of applications of the Collaborate Module
include:

• File collaboration and effective workflow management

with clients.
• Requesting and receiving documents and other
evidence from clients.
• Tracking and monitoring outstanding requests in real
time.

Level 3 The Ingest Module enables the client to upload and import
its trial balance and nominal ledger into the data analytics
software.
Automated validation checks are then carried out by the
audit team to verify and cleanse the data.
In practice, the Ingest Module is normally used to set the
materiality level and can be used to set performance
materiality.
You will not have access to this module in the
Corporate Reporting exam.

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 Module name Knowledge Outline description
level needed

Level 1 The Explore Module is a data analytics tool.

It enables accounting information to be analysed at
various levels of aggregation from financial statement level
down to the double entry for individual transactions.
Explore has two alternative ways of viewing the data.
These are called ‘Views’ and are:

• ‘Financial Statement’ view

• ‘Account’ view

Explore uses datasets to assess expectations and thereby

enable risk assessment and risk assignment.
It also enables analysis of trends in the data and
identification of notable transactions, through four main
visual tools:
• Stacked Bar Charts
• Bump Chart
• Heat Map
• Tree Map

The Detect Module enables the running of audit tests

(routines).
Level 2
There are 24 routines which compare against pre-defined
criteria to help detect exceptions.
Functions include:

• Identifying unusual characteristics

• Identifying indicators of fraud, management override
and unusual behaviour
• Visualisations to identify trends

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 Module name Knowledge Outline description
level needed

The ‘Revenue Cascade’ Module is a tool to visualise and

interrogate relationships in the revenue/receivables cycle
Level 2 to highlight transactions diverging from expectations.
It takes 100% of the revenue cycle transactions that were
uploaded and maps them to the expected business cycle,
visualising and stratifying the data population.
It identifies notable or unusual transactions to assess risk
and evaluate the impact on earnings quality. It can be
used to reduce or replace techniques such as sampling.

The Select Module automates sample selection from a

population of transactions. It is designed to complement
Level 3 other audit practices, procedures and processes and
enable a collaborative approach to testing with the client’s
management.

The Metrics Module automatically prepares metrics, ratios,

key performance indicators (KPIs), and financial
Level 2 performance indicators from the uploaded nominal ledger
data. Additional information can also be uploaded to
enable further metrics to be determined.
The metrics can be benchmarked against other
organisations and against industry specific standards.

The Reports Module combines testing results and visuals

into a final report with supporting content.
Level 3
The report relates to the audited entity and is designed to
add value for the client.

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 Module name Knowledge Outline description
level needed

The Flux Module allows analytical procedures to be

applied to trial balance data ingested at the planning,
Level 3 fieldwork or completion stages of the audit.

The auditor can set expectations of monetary and/or

percentage changes versus comparative figures or
at an individual account/category of accounts level

Unusual movements are then flagged or further audit

investigation. Clients can be invited to comment on
the specific flagged movements withing the Flux
module.

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 3. THE EXPLORE MODULE (LEVEL 1)

3.1 Introduction

The Explore Module is a data analytics tool. It can be used for a variety of audit procedures
including: risk assessment; analytical procedures; and detailed testing.

The Explore Module also enables an analysis of trends in the data and identification of notable
transactions, through four main visualisation tools.

For the Corporate Reporting exam, the Explore Module is by far the most important of all the
modules available.

This following is an overview diagram of the Explore Module:

This section examines the various tools and functions available in the Explore Module and
shows how to navigate through its main dashboard.

This section will show you how to:

• Navigate through the functions of the Explore Module, using the available icons (section
3.2).

• Search and investigate the accounting records (section 3.3). This section will illustrate how
to access accounts and drill down to individual transactions using either the:
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 o ‘Financial Statement View’; or
o ‘Account View’.

• Use the four main visualisation analysis tools (section 3.4):

o Stacked Bar Charts
o Bump Chart
o Heat Map
o Tree Map

3.2 Navigating Explore functions

3.2.1 The Explore Dashboard

The Explore dashboard is shown below.

NOTE
The Explore Module (and all other modules) should open in the Fieldwork stage
(circled centre top above). It should always remain in this stage. See below for how to
correct this if not the case.

The following sections (3.2.2 to 3.2.4) look at the icons which are in the top left-
hand and top right-hand corners of the above screen. This will help you navigate
around the dashboard.

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 3.2.2 The Navigation icon

The Navigation icon in the top left-hand corner of the Explore dashboard is
important in switching between: (i) modules; and (ii) stages of the audit.

Clicking on the Navigation icon reveals a drop-down box, in the top left-hand corner of
the screen as follows:

Towards the top right-hand corner of the above drop-down box, the green circling of the Explore
Module symbol indicates that you are currently operating in the Explore Module. To switch
modules, just click on one of the other module symbols and this will take you to the main initial
dashboard of that module.

At the bottom of the above screen, the three stages of the audit available in the data analytics
software are shown as:
• Planning
• Fieldwork
• Completion

The green circling of the Fieldwork stage indicates that the module is currently operating within
this stage. Click on the Fieldwork button if the data analytics software default is not already in
Fieldwork.

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 IMPORTANT The Fieldwork stage is the only one that will be used for the Corporate Reporting
exam.

You will not need The Planning stage in the Corporate Reporting exam.

The Completion stage will not be populated with data for the Corporate
Reporting exam, so you should not use this facility.

WARNING: Always check that you are working in the Fieldwork stage.

3.2.3 The Cog icon

The cog icon is shown in the top right-hand corner of the screen. If you click on the cog icon,
a drop-down menu will appear in the top right-hand corner of the screen, as follows:

You do not need the Configure or Release Dashboard To Client functions (nor subheadings:
Show Notes; or Show Discussions).

The bottom item in the above list, Download Guidance, may be useful in helping you. It
provides additional guidance notes on each module which may help you understand, in more
detail how the functions work and how they might be useful. The ‘Download Guidance’ is
available as a PDF file which you can save.

Each module also has its own Download Guidance (except the Reports Module) to help
understand the functions of that module. These can be found in each module as described
above.

A word of warning. The ‘Download Guidance’ within the data analytics software was written for

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 commercial usage in practice. It was not written for the purposes of the Corporate Reporting
exam. You are not therefore expected to use all the functions in the ‘Download Guidance’ or to
read the Download Guidance in detail. However, it contains explanations that may be a useful
reference source of additional explanation for a particular function that you may be struggling to
understand.

Exam approach

During the exam you will not have time to consult the ‘Download Guidance’ function in
the data analytics software. It is therefore important to practise using the data analytics
software so you are familiar with its functions and routines.

If you click on the Report Download routine at the top of the above screen it shows the
following screen:

The report function is adaptable, but you should not need to change any of the default
selections above.

If you click on the green download button in the bottom right corner, it will download the nominal
ledger balances into a spreadsheet. The tabs along the bottom of the spreadsheet show
balances at the financial statement level and at the financial statement line item level. Within the

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 spreadsheet for each tab, the balances for each individual account are shown, organised by
elements of the financial statements. In an audit context these can be used and adapted as lead
schedules. The previous year balances are also shown.

Having downloaded the spreadsheet for the Advanced Information in Corporate Reporting exam
you can then carry out analysis of this 11-month data using a spreadsheet in preparation for the
exam. It may be helpful for you to analyse the changes between the current year and previous
year.

Exam Note: You will not be able to use this Report Download routine during the exam to
download the 12-month data into a spreadsheet.

3.2.4 The notes icon

The notes icon is located to the left of each category (in ‘Financial Statement View’) and
each account (in ‘Account View’) on the left-hand side of the screen.
As part of the audit management function, the data analytics software has the notes icon to
include an internal note to another member of the audit team. It is used by clicking on the icon
and adding a note. The icon will then show as filled .
Exam approach – recording your answer
In the Corporate Reporting exam any notes you input into the data analytics software are
not part of your answer script and will not be marked, so this icon should not be used by
you to enter your answer or store text. You should not therefore add any text using
these icons (see also the Discussion icon below).

Furthermore, you will not see any notes you make in the 11-month advance information
data in the 12-month real exam data.

3.2.5 The discussion icon

The discussion icon is located to the right of the notes icon.

As part of the audit management function, the data analytics software has the discussion icon to
include notes to/from client staff. It is used by clicking on the icon and adding text. The icon will
then change colour to red: ie,
Again, in the Corporate Reporting exam, anything you input into the discussion box is not part of
your script and will not be marked, so this icon should not be used by you to enter or store text.
You should not therefore add any text using this icon.

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 3.3 Searching and interrogating accounting records
There are two alternative presentations of the Explore dashboard:
• The ‘Financial Statement View’
• The ‘Account View’

The Explore dashboard will initially appear as follows:

The above dashboard shows the ‘Financial Statement View’.

The above Explore dashboard in Financial Statement View alternates between: (i) the Statement
of Profit or Loss and (ii) the Statement of Financial Position.

At the top of the above screen there is the choice of selecting either: (i) Statement of Profit or
Loss; or (ii) Statement of Financial Position. The blue highlighting shows that the Statement of
Profit or Loss (circled) has currently been selected.

Income, Expense and Other P&L are shown as overall totals on the left-hand side of the above
dashboard, which are the basic aggregated totals from the Statement of Profit or Loss. The four
quadrant diagrams (more about them later) on the right-hand side of the screen show different
visualisations of the data relating to the Statement of Profit or Loss.

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 The down arrow indicates that further detail is available. Clicking anywhere on
that line (except on the notes, discussion or tick box icons) expands each
category further. An example for Expenses is as follows:

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 Alternative presentation of the Explore dashboard – the ‘Account View’

Each of the alternative presentations of the Explore dashboard can be selected by clicking on
the switching icon in the top right-hand corner (circled). Clicking on the icon switches in
and out of the ‘Financial Statement View’ to show the following alternative dashboard – the
‘Account View’:

Instead of all accounts being divided into the two financial statements (Statement of Profit or
Loss; and Statement of Financial Position) there are now six account groupings across the top:
Asset, Liability, Equity, Income, Expense, Other P&L.

The Account View currently shows Assets (circled in the top left-hand corner above). The four
quadrants on the right visualise these asset accounts.

Exam approach – Which ‘View’ to use

The choice of which ‘View’ to use is a question of judgement and is dependent on the nature
of the question. For example, the ‘Financial Statement View’ enables you to scan account
totals and comparatives at the financial statement line item level (eg, PPE or trade payables)
before drilling down further. So, if the question identifies trade payables as a key risk area, it
would be appropriate to start with this trade payables total in the ‘Financial Statement View’.

The ‘Account View’ gives a more detailed list (for example, all the sub-accounts making up
assets, including office equipment, fixtures & fittings, receivables control account etc.). This
will make it easier to drill down to an individual transaction, particularly if you know the sub-
account where it is recorded.

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 ‘Financial Statement View’
Clicking on the switching icon again will return you to the first of the above two presentations,
the ‘Financial Statement View’ (Statement of Profit or Loss and Statement of Financial Position).
If you now click on the Statement of Financial Position at the top of the screen it will switch to
blue (circled below) and show Statement of Financial Position items. The four quadrant
diagrams will also change to reflect visualisations relating to Statement of Financial Position
amounts.

The left-hand side of the screen now shows the totals headed: Asset, Liability and Equity. These
are aggregated totals of many Statement of Financial Position accounts and, on their own, show
little.

However, if you click on Asset, the drop-down on the left-hand side of the screen will now show
the total of each of the main asset accounts (starting with intangible assets) as follows:

Having clicked on Asset, the drop-down box now shows the analysis of assets according to
each class of account (ie, grouping of accounts). Property, Plant & Equipment (circled) has
been selected as one example of a group of accounts that forms part of the total for assets. This
would normally correspond to one financial statement line item (ie, PPE).

For each group of accounts, such as PPE, the left-half of the above dashboard shows: (i) the
prior year figure (ii) the current year figure (Fieldwork); and (iii) the absolute change and %
change (Difference). This is a useful tool for identifying risks arising from changes and seeking
information and explanations from management to gain an understanding of the reasons behind
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 unexpected changes.

Exam approach - professional scepticism

It is important to look at changes from the prior year figure in the context of the information
provided in the Corporate Reporting exam scenario. This may reveal unexpected changes
which have occurred; or conversely expected changes that have not occurred. In this context,
professional scepticism should be applied to both the data in the data analytics software and to
management explanations of changes given in the scenario. It is important to note that the
current year data (in Fieldwork) is management accounting information, which may not include
final adjustments or follow financial reporting regulations.

For PPE, the data in the above table shows a significant change from £71,532 to £251,184,
which is an overall increase of £179,653 or 251% (subject to rounding). Given that the increase
is significantly above the materiality level of £30,000, this is an area of potentially high audit risk
that requires further investigation. As a first step in such an investigation, an analysis of the
accounts making up the PPE total needs to be identified to establish the underlying cause of the
increase.

Clicking on PPE generates a further drop-down box showing the PPE total (£251,184 on the top
line) and, below that, all the separate types of PPE comprising that total. The analysis of PPE
according to each account, is therefore shown as follows:

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 This analysis shows that the largest absolute increase is Land, buildings and improvement
which has risen by £129,126 (or 62%).

However, the largest percentage increase is Motor Vehicles, which has risen by 611%. Whilst
the absolute increase for motor vehicles of £25,415 is below the materiality level, it is sufficiently
close to the materiality threshold of £30,000 to warrant further investigation.

To investigate further, it is necessary to drill down to the individual transactions which have
given rise to these changes. To do this, click on the switching icon in the top right-hand
corner of the screen to obtain the ‘Account View’. Then make sure that Asset is selected in the
top left-hand corner.

This produces the following, in the left half of the screen. This shows all asset accounts at a
more detailed level. So, for instance, there is a separate account for each bank account.

The screenshot above only shows some asset account balances but, if you scroll down, you can
see the remainder and the total for assets is shown at the bottom.

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 Drilling down to individual transactions

In ‘Account View’ there are two methods to identify the individual transactions in the account
selected for investigation:

Method 1

To select the Motor Vehicle 1 account

1. Click the top box (circled) to deselect all ticks (ie unselect all). This makes all the ticks
disappear.

2. Tick the account 11010 for Motor Vehicle 1 box (circled above) to produce the green tick
showing just this one account has been selected.

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 Method 2

In the above screen, click on the icon (circled above) in the top right-hand corner of the
dashboard. Clicking on this icon shows the following screen:

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 Initially all the boxes will be live with green ticks as above. Clicking on the green ticks of all the
accounts that you do not want to investigate deselects them, leaving the remaining accounts
with green ticks that we are interested in. Clicking the top line in a box, removes all ticks in that
box.

This leaves green tick(s) next to the account(s) we are interested in, which will be only Motor
Vehicles in our example as follows:

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 Then click on Confirm (circled) in the bottom right-hand corner.

This will then show as below (in the left half of the screen) only the accounts relating to Motor
Vehicles as follows:

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This shows the Motor Vehicle 1, cost account (11010) and the Motor Vehicle 1 depreciation
account (11015).

A clear concern is that no depreciation charge for motor vehicles has been made for the year.
This may be because final adjustments have not been made and these need to be considered
during audit completion.

However, let us just focus on the Motor Vehicle 1, cost account, rather than depreciation. To do
this we click on the green tick next to ‘Motor Vehicle 1 Depreciation’, which deselects this
account, leaving the Motor Vehicle 1 account as the only account selected with a green tick.

With either Method 1 or Method 2, to identify the individual transactions in the selected account
(Motor Vehicles 1 in this case) click on the transactions icon (circled) in the bottom right-
hand corner of the above screen.

This then shows the following screen for account 11010 Motor Vehicles 1, Asset Transactions:

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 The icons in the top right-hand corner of the above screen, give the ability to Download all
transactions, Select and Filter.
You do not need to use the Select routine for the Corporate Reporting exam.
The green icon in the bottom right corner allows tests to be created. However, you do not
need to use this for the Corporate Reporting exam.

The Filter icon is very useful to isolate and investigate a particular: month of transactions:
document type; or user. If you know all three of these attributes of a transaction, then the filter
routine can apply these simultaneously to funnel down your search. This is important where
there are a large number of transactions in one account.

Clicking on the icon reveals the Download icon .. This can be used to download all
transactions from a selected account(s) into a spreadsheet. If you click on the download icon in
the top right corner of the above screen it will show the screen below.

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 Each of the above filters can then be used to narrow down your search. For example, in the
first row for ‘Accounts’ click on ‘Custom accounts’ (circled) which changes the blue dot from ‘All
accounts’ to ‘Custom accounts’. Then click on the drop-down arrow in the top right corner
(circled). Then scroll down and select the account that you wish to download.

Similar procedures can be used to filter for: Users; Document types; Dates etc.

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 Having made any relevant selections of filters, click on the green NEXT button in
the bottom right corner which reveals the following screen:

Clicking on the Excel button will provide a spreadsheet for downloading. The
spreadsheet will show details of all transactions for the selected account(s),
containing the same details as are available in the data analytics software
transaction screen. You can then analyse the data in the account using the
spreadsheet as appropriate (eg. ordering by size).

Exam Note: You will be able to use this routine when preparing for the real Corporate
reporting exam using the Advance Information 11 month data. However, you will not be
able to use this routine to download 12-month transaction data into a spreadsheet during
the real Corporate Reporting exam.

Returning to the earlier screen (for account 11010 Motor Vehicles 1, ‘Asset Transactions’)
the analysis of transactions reveals a potential audit risk, as a suspense account has been used
for all four transactions in account 11010. They have been entered on four different dates in the
year.

The total of the four entries is £25,415, which reconciles to the year-on-year difference in the
Motor Vehicle 1 account on the earlier screen and, as such, represents the additions to motor
vehicles in the year.

In the Corporate Reporting exam, it may be that the nature of the risk can be understood from
the transactions identified. Alternatively, as in this case, it is not clear why a suspense account
has been used. A Corporate Reporting exam question could therefore require you to set out
relevant questions to obtain information and explanations from management in relation to these
transactions.

To help identify who to ask about these transactions, the above screen shows the User ID
indicating that they were all entered by F Wright.

Before making enquiries of management, however, if you click on a transaction ID in blue

(circled) in the top left-hand corner of the above screen for the first transaction of £5,000, you

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 will see the double entry as follows:

This shows that the credit entry corresponding to the debit entry in the Motor
Vehicles 1 account is in Account number 990, which is the suspense account.
The Motor Vehicle 1 account has only a small number of transactions, but it is
important to be able to investigate accounts with many more transactions.

Exam approach – when to use Method 1 and Method 2

Method 2, using the icon, is normally more appropriate where you
wish to select groupings of accounts (eg, all PPE accounts), rather than
one individual account (eg, Motor Vehicles). Method 1 is more appropriate
when wishing the select specific individual account(s) identified by the
question or which you have identified as relevant.

Exam approach – understanding transaction information

It is important that you are familiar with, and understand, the way that
individual transactions are presented in the data analytics software. Some
key points are:

• It is important that you understand which accounts are being debited

and credited. In the above transaction, if you hover your cursor over
each account code in the data analytics software, it will show that
11010 is ‘Motor Vehicles 1’; and 990 is ‘Suspense Account’.
• The Effective Date is the date that the transaction occurred or relates
to. This should drive the period in which the transaction is recognised.
The Created Date is the date that the transaction was posted.
•
Exam approach – ‘risks and procedures’ questions
In the Corporate Reporting exam, data analytics could be included in a
question asking you to justify key audit risks and describe the related audit
procedures. You would not be expected to interrogate all the balances and
transactions to find all the relevant issues.
However, you may be expected to identify key transactions in an account
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 which give rise to audit risks and also locate any similar or related
transactions to the one initially identified (eg, in the same account or related
to the same risk).

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Exam approach – describing transactions
IMPORTANT – In the Corporate Reporting exam, you will not be able to cut and paste
from the data analytics software into the word processing area of your script. Once you
have identified a transaction, it is therefore important that you describe it in sufficient
detail to demonstrate to the examiner that you have identified the correct transaction and
evidence .

Exercise 1
(a) Using the ‘Account View’, review all the account totals under Administrative Expenses
and identify which of these accounts is a potential audit risk. Explain and justify why
each account identified may be an audit risk.

(b) Review the transactions in the ‘Computer Software’ account 73040 (which is one of the
Administrative Expenses account codes). Identify the transactions which may give rise to
key audit risks and set out suitable questions to seek information and explanations from
management.
The solution is in Appendix A.

3.4 The Four Visualisation Tools

The Explore Module has four main visualisation analysis tools which are shown in four
quadrants in the right half of the main Explore Module dashboard as follows:

These four visualisations are named as follows:

o Stacked Bar Charts (top left)
o Bump Chart (top right)
o Heat Map (bottom left)
o Tree Map (bottom right)

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 In Financial Statement View, the data selected for the visualisation analysis above
is the Income account which is indicated by the green tick (circled) next to Income
and there are currently no other accounts selected.

Each visualisations tool is a different view of the same data. In this case, it is the
Income account. Each of these visualisations is considered in the following
sections.

An overview

Before looking at the detail it is worth taking an overview of the four visualisations.
This is represented by the following diagram:

Selecting the most appropriate visualisation to use in answering a question is a key

judgement. Keep the above overview in mind as you work through the following
sections on the detail of the visualisations in order to keep perspective.

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 WHAT – refers to the transactions. These visualisations focus on what transactions have been
posted.

WHO – refers to the users. These visualisations focus on who has posted the transactions.

WHEN – refers to the month in which the transaction occurred.

HOW - refers to the documents. These visualisations focus on how the postings of transactions
have been made.

The above classification WHAT, WHO, WHEN and HOW is a slight oversimplification and
represents only a starting point for using visualisations, as they all can be used to drill down to
all aspects of transactions. However, it may help when selecting the most appropriate
visualisation based on the issues highlighted in the exam scenario.

Exam Approach – Finding the Exit

Exiting from visualisations

For navigation of the data analytics software. it is important to know how to move
between visualisations. This involves knowing how to exit each visualisation screen
quickly, so time is not wasted in the exam. This is easily done by clicking the CANCEL
button in the bottom left corner of each visualisation screen. (Note: you may need to
scroll down to find it if you are studying on small screen or a laptop screen).

Exiting from modules

To exit from any module, select the icon in the top left corner of the opening screen of
the module that you are currently in. This will then show the icons for all the other modules.
Click on the module that you wish to transfer into.

Exiting – Saving your work

If you make changes to one of the Explore visualisation diagrams (eg, you change a
variable) and then exit to another visualisation within Explore, then the changes will be
saved in the first visualisation when you return to it (if you do not leave Explore).

BUT if you make changes to one of the Explore visualisation diagrams (eg, you change a
variable) and then exit to another module (eg, Metrics), then your changes will NOT be
saved in the visualisation in the Explore module when you return to it.

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 3.4.1 Stacked Bar Charts
To navigate into the Stacked Bar Chart visualisation (still with just income selected in
the ‘Financial Statement View’), just click on the Stacked Bar Chart quadrant in the above
diagram. This then shows the screen below:

The Stacked Bar Chart visualisation shows the transactions selected (income
transactions in this case) occurring in the period according to two variables: (a) the
primary variable; and (b) the secondary variable. These can be accessed and changed
using the drop-down boxes in the top right-hand corner of the above screen.

The primary variable selected in the above diagram is the ‘Effective Period’ (ie the
months of the year); and the secondary variable selected is ‘Users’ (ie the person posting
the transaction).

The Stacked Bar Chart, when set up using these variables, therefore shows the value of
the income transactions entered by each person in each month.

The variables available to be selected (for either the primary or secondary variable) are
the following:
• Effective Period
• Accounts
• Users
• Created Hour
• Created Weekday
• Document Type

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 The variables available to be selected can be identified and accessed from the drop-
down menu by clicking the arrows in the top right-hand corner next to Primary Variable
and Secondary Variable. Click on the relevant variable to select it.

It is possible to select the same variable for primary and secondary variables if you just wish to
concentrate on one aspect (eg Effective Period for monthly sales). Normally, however, the two
variables selected are different.

Which pairs of variables to select is a question of judgement, which is informed by the nature of
the risks that you are trying to identify. However, some ideas are:

Users
A particular employee may be seen as a risk, for example because:
• the types of transactions the user is processing appear inappropriate for their role;
• there are inadequate controls over the user (eg, no segregation of duties);
• there are questions over the person’s competence;
• the person has just joined the company;
• the person is about to leave the company;
• there are questions over the person’s integrity and there may be an identified fraud risk.

Some of these issues may be identified in the scenario of a Corporate Reporting exam question.
For example, the scenario may provide additional information about one or more users (eg their
role, seniority, competence).

The data analytics software then enables the transactions of each user to be identified and
analysed separately.

Created Hour
Transactions occurring outside normal working hours may be considered as higher risk (eg
because not all internal controls may be operating 24 hours a day) or at least subject to
question. In terms of pairing variables, combining ‘Created Hour’ with the ‘Users’ variable shows
who is working outside normal hours most frequently.

Created Weekday
Similarly, transactions occurring outside the normal working week (Monday to Friday for
European entities) may be considered as higher risk or questionable.

Document Type
‘Document Type’ could identify high risk items such as sales credit notes. In terms of pairing,
combining ‘Document Type’ with the ‘Users’ variable shows who is generating credit notes to
the highest value. A small accounts team may mean that some users are completing a wide
range of transactions that should be subject to segregation of duties (eg sales invoices,
receivables, cash receipts, credit notes).

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 The ‘Line Count’ and ‘Net’ slider at the top of the above screenshot is currently set at ‘Net’.
This means the blocks are showing the value of transactions for the pairing of variables
selected. If this is changed to ‘Line Count’ the blocks will show the number of transactions for
the pairing of variables selected.

The transactions to be analysed by the Stacked Bar Chart visualisation can be changed by
selecting and deselecting accounts using the green ticks in the main Explore Module
dashboard.

Exam approach – document references

You should be familiar with the abbreviations for different document types used by the data
analytics software. They are referred to in modules and visualisations. For Elephant they are as
follows:

Abbreviation Document

NOM Nominal journal

PIN Purchase invoice

SIN Sales invoice

PPY Purchase payroll

SRC Sales receipt

PJI Purchase journal invoice

SCR Sales credit record

PCR Purchase credit record

PJC Purchase journal credit

SJI Sales journal invoice

MJ* Manual journal

* Elephant does not have any manual journal entries.

Note: For other companies than Elephant, the above abbreviations for documents may vary

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 slightly and other types of document may be available.

Practice Activity
To familiarise yourself with the Stacked Bar Chart, carry out the following practice
activities.

(1) Select the ‘Financial Statement View’. For ‘Income’, select a variety of different
pairs of Primary Variables and Secondary Variables and:

• note the way the visual information presents changes and consider what the
information means for each pairing.
• reflect on how the various pairings may indicate different audit risks.
• change the slider from ‘Net’ to ‘Line Count’ and evaluate how the nature and
validity of the visual information presented may have changed.

(2) Repeat the practice activities in (1) above for:

• Trade receivables
• Trade payables

Identifying individual transactions

Where a concern has been identified, then clicking the relevant block in the bar chart will show
the individual transactions making up that section of the chart.

For example, in the above screenshot, if an auditor is concerned about cut-off and the amount
of transactions that F Wright has posted in December then click on the December block for F
Wright in the diagram above and the following screen is shown:

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 This is just the first screen of many for December transactions for F Wright, but it enables the
auditor to identify any transactions of concern.

Note: to exit from the above screen use the CANCEL button in the bottom left-hand corner.

Comparing data

The data analytics software has the facility to compare two charts at the same time to enable
comparisons to be made. These comparisons may include the identification of:
• common trends and patterns (eg income and receivables)
• unexpected differences in accounts that would normally be expected to have a
close relationship (eg income and cost of sales)

Navigate to the Explore screen in ‘Account View’ which shows Assets, Liability, Equity, Income,
Expense and Other P&L as in the screenshot below.

It can be seen from the top of the above screen that ‘Income’ (circled) has been
selected.

It can also be seen from the green ticks that not all ‘Income’ accounts have been
selected. This has been achieved by ‘unticking’ the boxes of the accounts you do not
want to include to deselect them. This leaves accounts 51010, 51020 and 54,800 as
ticked.

It is a question of judgement as to which accounts to select to make comparisons and

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 where there are meaningful relationships.

It might be that the auditor wishes to compare the pattern of Income with Trade
Receivables during the year. This might be for example to:
• assess the relationship and recovery period throughout the year rather than
just using the year end receivables balance
• identify any unusual movements
• identify a lack of segregation of duties by users posting sales and receivables entries.

To make the comparison, click on the ‘Add Comparison Grouping’ tab (circled) at the
bottom of the screen above. Then click on the small drop-down arrow at the bottom of
the page, next to where the ‘Add Comparison Grouping’ tab had been located. This
brings up the pop-up menu showing the grouping of accounts available for
comparison. Scroll down a little in the drop-down box and the following screen is then
shown:

Click on Asset > Trade Receivables (circled) which will bring up the receivables
accounts in the bottom left section of the diagram below (circled):

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 You need to review the receivables accounts to make sure that all sub accounts are
relevant to the income accounts previously selected, so you are comparing like-with-like.
Important point: A comparison can now be made using any of the four visualisations in
the four quadrants in the right half of the above screen. You can do this just by clicking
on the visualisation in the desired quadrant.

Comparisons can also be generated in all visualisations using the comparison icon
(see later).
Comparison will be made here using the Stacked Bar Charts quadrant, as this is the
visualisation that we are currently considering in this section.

Clicking on the Stacked Bar Charts quadrant shows the following screen:

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 Variations in the Primary and Secondary variable can be made as previously. The
comparison graph can also be altered by clicking on the wand icon towards the top
right-hand corner of the screen (circled).

To exit from the comparison routine and return to single screen viewing, click on
CANCEL in the bottom left-hand corner. Then click the x next to the heading: Asset >
Trade Receivables (you may need to hover the cursor if the x does not immediately
appear).

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 How to Use

The table below gives indicative guidance of how the Stacked Bar Charts can be used in the
Corporate Reporting exam. The two columns show a ‘Big Picture’ approach (eg, for overall
review and risk identification) and ‘Small Picture’ approach (eg, for looking at details and
selective investigation by drilling down to individual transactions). These are examples, rather
than a comprehensive list.

The ‘Big Picture’ approach The ‘Small Picture’ approach

The Stacked Bar Charts have more variables If a particular user is identified as high risk,
than the other visualisation tools in the then a range of variables about that user can
Explore Module. These variables are useful to be identified:
identify a range of patterns in users, accounts
eg, timing (time of the day or day of the
and documents over the year.
week); nature and amounts of transactions.

Comparisons can be made of frequency, By clicking on the Stacked Bar Chart for a
value and types of postings in the same chart. particular user in a given month, the user’s
transactions appear for that month:
eg, if one user makes postings near the year
end, but does not normally make postings in
that account, then it may be regarded as high
risk – particularly if the transactions are, for
example, large journal entries.

3.4.2 The Bump Chart

The Bump Chart is found in the top right-hand quadrant of the main Explore Module dashboard.

The Bump Chart can be produced for one account or many accounts. In this case, the ‘Financial
Statement View’ has been adopted and all Statement of Profit or Loss accounts have been
selected (with green ticks). This includes all income and expense accounts in the Statement of
Profit or Loss.

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 Clicking on the Bump Chart quadrant presents the following screen:

There are two possible primary variables with the Bump Chart:
• Users
• Document Type

The above screen shot shows that ‘Users’ is the primary variable being applied (top right
corner). It ranks the users in order of who made the most postings in each month.

There is no secondary variable for the Bump Chart visualisation.

Inspection of the above screen shows:

• F Wright posted more transactions than any other user in every month except
February.
• E Davids did not make any postings before April. This user may have
joined the company in April.
• S Thompson (shown on the broken line on row 5) only made one posting, which
was in January. This user may have left the company in February. (Note: it is easy
to miss this user as, due to the fact they left during the year, the S Thompson name
does not appear in the named users on the right-hand side of the above Bump
Chart).

If you hover the cursor over the orange line, it shows the number of transactions posted by
F Wright for each month of the year.

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 If you click on the orange line a drop-down box shows the first screen of the individual
transactions posted by F Wright as follows:

There are 259 screens in all with F Wright’s postings (see bottom right corner in the
above chart).

Change the primary variable from ‘Users’ to ‘Document Type’ (use the small arrow in
the top right corner of the Bump Chart screen). We are still in the ‘Financial Statement
View’ with all Statement of Profit or Loss accounts selected – both income and
expenses. This presents the following screen:

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 This shows the relative frequency ranking of the various types of documents being
posted in respect of Statement of Profit or Loss items.

The icon on the right-hand side enables a comparison graph to be created.

How to Use

The table below gives indicative guidance of how the Bump Chart can be used in the
Corporate Reporting exam. The two columns show a ‘Big Picture’ approach (eg, for
overall review and risk identification) and ‘Small Picture’ approach (eg, for looking at
details and selective investigation by drilling down to individual transactions). These
are examples, rather a than comprehensive list, but they provide ideas of how you
can use the Bump Chart to save time and to avoid missing some key issues or
transactions.

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 The ‘Big Picture’ approach The ‘Small Picture’ approach

Inspect the time series pattern for each user: The question may suggest a user is a
particular risk (eg, lack of independence
• Are there gaps where no transactions are or competence).
entered?
• Does the series start or end during the The Bump Chart is a tool to isolate
period indicating an employee joining or transactions entered by that user to
leaving? investigate.

Inspect cross sectionally considering the The question may suggest a transaction
relative position of users: entered by a user is a particular risk.

• Is one user dominant, indicating a primary The Bump Chart is one tool to narrow the
responsibility? search and find the transactions entered by
• Has one user entered a large number of that user, rather than searching all
postings in only one period, perhaps transactions.
indicating unusual activity or changed
responsibility?

Identify and inspect transactions with higher

risk document types, such as credit notes and
identify which users are typically processing
them.

3.4.3 The Heat Map

The ‘Heat Map’ is found in the bottom left quadrant of the main Explore Module dashboard. It is
a visualisation that identifies items that may be elevated (ie, high) risk according to their
positioning on the Heat Map.

The Heat Map is a two-dimensional visualisation where the two variables are:

(1) Monetary impact (measures the impact on profit or loss as a % of the materiality level –
up to a maximum of 300% of materiality).

(2) Occurrence (the number of transactions making up the monetary impact –

up to a maximum of 100 transactions).

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The premise of this visualisation is that infrequent transactions of high monetary impact on profit
or loss are likely to be highest risk. These will be positioned in the red sections of the heat map.

The Heat Map for the Statement of Profit or Loss shows the following:

Each dot shows a single transaction or a grouping of transactions in an account, or a group of

accounts.

The y-axis locates the vertical positioning of each dot according to the number of transactions
included in the account which the dot represents. So, at the very top of the Heat Map diagram
above, there may be only one transaction represented by the dot. Along the bottom of the Heat
Map diagram there are 100 (or more) transactions represented by the dot.

The x-axis locates the horizontal positioning of each dot according to its scale (ie monetary
impact on the statement of profit or loss) measured as a % of the materiality level. In the centre
green section the amount is 0% indicating the transactions are of insignificant size.
All transactions on the left-hand side (ie to the left of 0%) are debit transactions, increasing in
value to 300% of materiality (shown in this graph as -300% of materiality).
To the right of the 0%, the impact is a credit and again the scale goes to +300% of materiality
(materiality is £30,000 for Elephant).

Note: The Heat Map identifies the net impact of a transaction (or group of transactions). It does
not identify large transactions which do not impact on profit or loss (eg two entries that offset
each other; or two entries in the statement of financial position). Instead, you could use, where
appropriate, the Detect Module to identify such large transactions.

The Heat Map is divided into different coloured zones to represent areas of
different risk levels. These are listed in the key in the bottom right of the screen
(circled) which shows the range from, at the top, red (Elevated Risk) to, at the
bottom, dark green (Low Risk).
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 On the Heat Map itself, the transactions of greatest risk are in the top right-hand and top left-
hand areas. This indicates a risk by large one-off (or small number of) transactions which have a
significant monetary impact and are likely to require further investigation. (ie the highest risk is
where a high monetary impact is created by a small number of transactions).

The above Heat Map relates to all transactions in the Statement of Profit or Loss. Alternatively,
the Statement of Financial Position could be selected which has different transactions and
therefore a different Heat Map.

A more tightly focused use of the Heat Map would be to look below financial statement level at a
group of accounts or single account by deselecting the green ticks as demonstrated earlier and
leaving only the transactions with ticks to be examined using the Heat Map visualisation.

The icon on the right-hand side enables a comparison graph to be created to enable different
groupings of accounts selected to be compared.

Drilling down to individual transactions

By clicking on an individual dot, the colour of that dot changes from blue to green. A small call-
out box shows the frequency and monetary impact for each dot when hovering over it.

We can then, for example, select the dot in the top left-hand corner of the above screen (click on
the dot which will turn green) as Elevated Risk (this dot is only one of the Elevated Risk
transactions in the Heat Map, but is used here as an example). We can then drill down to the
transactions that comprise this dot by clicking on the detail icon in the top left-hand corner of
the above screen (circled).

This then shows the underlying transaction as follows:

Given the materiality level is £30,000, we would want to investigate all of these transactions as
they are all greater than the materiality level. Transaction SRC006974 in particular is a notable
transaction given the description and substantial gap between when the sales were accrued in
December 2017 and actually invoiced in September 2018, which could indicate a cut-off issue.
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 These transactions should be investigated further by seeking information and explanations from
management.

The blue icons in the top right-hand corner include 'Filtering'. Filtering may be useful (eg for a
selected month) where there is a large number of transactions.

Alternatively, by clicking on the top red square in the key (Elevated Risk) in the bottom right of
the main Heat Map screen (circled above) all three of the Elevated Risk dots change from blue
to green. These can be seen at the top of the main Heat Map screen in the data analytics
software.

Again, clicking the detail icon in the top right of the screen (circled) it highlights all the
transactions relating to the three elevated risk dots selected shown below:

As an example, one transaction has been selected for investigation (circled above). This
transaction can then be investigated by clicking into the blue ‘Transaction Id’ above, which
produces the following screen showing the double entry:

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The transaction is selected as notable in the Heat Map due to it being three times (or over) the
materiality level.

After it has been identified in the Heat Map, by drilling down to transaction details, the following
additional factors can be set out to justify the transaction as a notable, and potentially high-risk,
item:
• Size – it is a significant amount, which is quantified more precisely in the transaction
details than in the Heat Map.
• It is a round sum amount.
• It is an overseas transaction where controls may differ and there may be foreign currency
translation risks.
• There may be a revenue recognition issue. This is a ‘deposit’ received and so it is
possible that it has been invoiced in advance of the service being delivered. In finding this
one transaction it may be indicative that there are also other similar transactions. It is
therefore possible audit evidence of a common practice and a wider revenue recognition
issue than just this one transaction.

Critical appraisal

Like any other audit tool, it is important to know the limitations of the Heat Map. It is important
to understand what it is trying to achieve and what it is not designed to achieve. It enables
you to search for transactions and groups of transactions with elevated risk on the basis of
two criteria: impact and frequency. It is good at identifying large individual transactions which
impact on profit or loss as potential sources of audit risk. However, there are other
dimensions to audit risk and it is important that these are also considered in using other tools
from the data analytics software to gain a more general awareness of audit risk.

How to Use
The table below gives indicative guidance of how the Heat Map can be used in the Corporate
Reporting exam. The two columns show a ‘Big Picture’ approach (eg, for overall review and
risk identification) and ‘Small Picture’ approach (eg, for looking at details and selective
investigation by drilling down to individual transactions).

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 The ‘Big Picture’ approach The ‘Small Picture’ approach

The Heat Map is applied to a grouping of The selection of individual transactions to

transactions. The selection of this grouping is investigate is important. Consider:
important. It may be:
• The transactions in the red areas are
• given to you in the question (eg, highest risk. However, look wider than
payables as one of the audit areas in a this in case there are notable groups of
‘risks and procedures’ style exam transactions with very high monetary
question). impact, but based on a few transactions
• you need to select the most appropriate (eg in the orange area of elevated risk).
account grouping to apply in the Heat • Once the detail icon is clicked, use
Map. This could be broad (a whole judgement to consider which transactions
financial statement) or narrow (one audit in the list are highest risk (see suggested
area such as payables or receivables). criteria in the example above).

Step back and look at the Heat Map as a It is important to understand the nature of the
whole. Consider: transactions highlighted by the Heat Map.
The large one-off transactions identified by
• Are there a large number of dots in the the Heat Map can often be journal entries
elevated risk areas?
made by management. Consider:
• Are there very few dots in the elevated
risk areas where there is a strong • Are these closing entries around the year
expectation by the examiner that you will end; the half year end; or the quarter
be able to identify a given high-risk (indicated by the transaction date)?
transaction? • Is cut-off an issue for period-end entries?
• Key words like ‘reversal’ may require an
explanation and search for the original
transaction being reversed.
• Is there a risk of management override
with few controls over the journal entry
(who has made the entry may be
significant)?

Compare the left side to the right side: A Corporate Reporting exam question may
suggest a significant transaction may have
• Is the Heat Map unbalanced with more to occurred but may not set out in detail what it
one side than the other? This may is.
suggest that there may be a
management bias to either increase or The Heat Map may help you find the
reduce reported income transaction.
• Is the primary purpose of your test With thousands of transactions in the data, a

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 The ‘Big Picture’ approach The ‘Small Picture’ approach

directional in looking either for single significant transaction may be hard to

overstatement or understatement of discover by random searching.
income? If so, you may wish primarily to The Heat Map is one quick way to search
focus on one side of the Heat Map for, and locate, large one-off transactions
(there are also other ways – such as using
the Detect Module).

3.4.4 The Tree Map

The Tree Map visualisation shows the document types posted by each user.

Select the Explore Module. Then select Statement of Profit or Loss at the top of the main
Explore dashboard. Then click on the Tree Map diagram in the bottom right-hand quadrant of
the four visualisations. The screen below is then shown:

Note: the presentation of the boxes may vary slightly from the above, depending on your screen
size, but the same data is shown.

In the top right-hand corner, you need to select a primary variable and a secondary variable.
There are only two possible variables for each of these with the Tree Map:
• Users
• Document Type

As you can see, the set up in the above diagram has Users as the primary variable and
Document Type as the secondary variable.

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 The red line around the outside represents the total number of transactions posted (in this
case) to the Statement of Profit or Loss.

The orange lines show the number of transactions posted by each user.

The green areas show the number (in brackets) of transactions of each document type posted
by each user, and the size of the area represents the percentage of transactions of each
document type for each user. The size of the green areas therefore gives a relative indication of
which user made most postings.

To see the underlying data, let your cursor hover over each of the lines and green areas. A
small call-out box will appear with the data relating to that line/area.

Practice Activity
Hover your cursor over the square in the section second from the left of the above screen
(circled above) labelled 'NOM (937)'. It will show the total number of transactions posted by
E Davids, which amounts to 1,428. It will also show that 937 of these have been posted via the
nominal journal, which is 66% of the total transactions posted by E Davids.

Hovering the cursor over the orange lines around the area for E Davids also shows the total
number of transactions posted by this user. Clicking on the green area for E Davids shows the
relevant individual transactions posted by this user.

Other data

The above Tree Map relates to all transactions in the Statement of Profit or Loss. Alternatively,
the Statement of Financial Position could be selected, which has different transactions and
therefore a different Tree Map visualisation.

A more tightly focused use of the Tree Map would be to look below the financial statement level
at a group of accounts or single account in ‘Account View’ by deselecting the green ticks (as
demonstrated earlier) and leaving only the transactions with ticks to be examined using the Tree
Map visualisation.

The comparison icon on the right-hand side enables a comparison Tree Map to be created
to enable different groupings of selected accounts to be compared.

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Practice Activity
To familiarise yourself with the Tree Map, carry out the following:

• Select Income in the main Explore screen to focus on sales data only (ie deselect other
Statement of Profit or Loss accounts using the green ticks).
• Click on the Tree Map visualisation in the bottom right-hand quadrant of the Explore
dashboard.
• Select: (i) Document Type as the primary variable; and (ii) User as the secondary
variable
• Click on the icon and select Trade Receivables for the comparison screen from the
drop-down box.
Review the two screens for possible audit risks (eg, consistency of data; internal control risks
from possible lack of segregation of duties).

How to Use
The table below gives indicative guidance of how the Tree Map can be used in the Corporate
Reporting exam.

The ‘Big Picture’ approach The ‘Small Picture’ approach

The Tree Map is applied to groupings of Clicking on one of the green areas enables
transactions. The selection of this grouping all the transactions posted by one user for
is important. It may be: one type of document to be identified.

• given to you in the question (eg, as one So, if a concern has arisen over the sales
of the audit areas in a ‘risks and credit notes posted by one user, all these
procedures’ style exam question). transactions can be identified and reviewed.
• you need to select the most
appropriate grouping to apply the Tree
Map.

The Tree Map considers Users (Who?)

and Document Types (How?)
Step back and look at the Tree Map as
a whole. Consider:

• What is the relative importance of

each user in posting transactions?
Is there a link between Users and
Document Types which may suggest risk
(eg invoices, credit notes, cash received)?

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 The ‘Big Picture’ approach The ‘Small Picture’ approach

Where a ‘risks and procedures’ style

question highlights an audit area (eg
payables) consider reviewing comparative
Tree Maps with linked accounts (eg cost
of sales and trade payables; income and
receivables).

3.5 Account Numbering

In ‘Account View’ each account has a number. So, for Elephant, account 11010 is the account
number for Motor Vehicle 1, which is the top item on the listing we looked at earlier in section
3.3.

In navigating between accounts and recognising the nature of transactions, it is important that
you can find specific accounts from their numbers. Thus, for Elephant:

• accounts beginning with 1 or 2 are assets

• accounts beginning with 3 are liabilities
• accounts beginning with 5 are income
• accounts beginning with 6 or 7 are expenses
• accounts beginning with 9 are equity (except 990 which is the suspense account, which
is shown under 'other P&L' in this case)

NB. The Corporate Reporting exam will use a different company with a different account
numbering system. Corporate Reporting exam questions may guide you, where
relevant, by providing some key account numbers. However, you cannot rely on all
relevant account numbers being provided in the question, so you need to be able to
search for an account. To find any of the other account numbers, go into the ‘Account
View’, select the type of account you are looking for (Asset, Liability, Income, Expense,
Equity), and you will find the account numbers displayed in numerical order next to the
individual account descriptions. If you are looking at an individual transaction showing
the double entry, then hovering your cursor over each account code will show the
account name.

Exam approach – investigating an account or transaction

Having looked at all four quadrants it should be clear that some tasks, some
types of review, and some types of inquiry can be carried out in a number of
different ways. A possible task at the lowest granular level, is to find a
transaction in the data analytics software, from information provided, so further
investigations can take place.

A Corporate Reporting exam question may highlight a particular account,

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 transaction, or type of transaction, that has been identified as notable or potentially
high audit risk. You may be required to:
• Investigate that account to justify why it has high risk of misstatement (you
would not necessarily be expected to interrogate all of the transactions in
the account to find the relevant issues).
• Justify why a transaction(s) given in the scenario may generate a
risk of misstatement.

For example, you may be asked to find the following transaction:

NOM059325 ‘BPA transfer’ £48,364 Nominal Journal (Accounts 20010, 20014) posted
by T Potts (effective date 3/1/2018).

Finding one transaction amongst many thousands may seem daunting. However,
using the tools in the modules, there are a number of different ways to do this.

In particular, we know several facts about this transaction:

• it was posted by T Potts
• it had an effective date in January 2018
• it was a nominal journal document type
• it was posted to accounts 20010 and 20014
• it has a Transaction Id of

NOM059325

Start in the Explore screen below:

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 Steps:

(1) We know that, for this company, accounts starting with the number 2 are asset accounts,
so click on ASSET at the top of the page (circled).

(2) Go to the Explore Module to isolate account 20010 for further searching by clicking the
top box (circled above) to deselect all ticks.

(3) Tick the account 20010 box (circled above) to select it.

(4) Click on the icon (circled above) to show all 20010 transactions.

(5) Then to filter down these transactions, click on the filter Icon in the top right-hand
corner and select: Effective Period 'Jan 2018'; Document Type 'NOM - Nominal Journal';
and User 'TPOTTS', to show the following:

(6) We can now see there are still 3 pages of transactions for T Potts in January made in the
nominal ledger. We can visually scan through these to locate the transaction which
appears on the first page (circled).

However, there may be many more than 3 pages for some transaction types, despite
filtering. In this case, we have further clues in the specific day of posting and the
Transaction ID number. The Transaction ID numbers are in numerical order, so it is easy
to skip through the pages (using the page numbers in the bottom right-hand corner) until
the ID is found with the correct transaction.

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Clicking on the blue ID number for the circled transaction selected,
produces the detailed entries as follows for you to investigate.

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Exercise 2

Locate the following transaction and show the detailed entries:

SCR001232 '57307 - Retrieve existing 2 x Ads and update as briefed' £160 Sales credit
(Account 51010), posted by F Wright (effective date 30/11/2018).

The solution is in Appendix A.

Exam approach – search for related transactions

Having found a transaction in the data analytics software that has been identified in the exam, it is
important to think laterally and not assume that the transaction can be considered in isolation. Ask
yourself why the examiner has highlighted this transaction as a risk and whether related
transactions may have similar risks. For example:

The Key Risk How to respond

Is the user the key risk? (Who) Search for similar transactions by the same
user (using the Bump Chart)
Is the type of transaction the risk? (What) Search the account where the original
transaction is located for related transactions.
eg,

• Repeated transactions of the same

type
• Reversal of the original transaction by
the same user
• Reversal of the original transaction by
a different user

Is the time period the risk? (When) Search for similar transactions in the same
month (eg, perhaps cut-off is the issue)

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 4. THE METRICS MODULE (LEVEL 2)

When you use the Metrics Module for the first time you may be asked to enter some information
about the company. If this is the case, you should enter n/a for all questions.

On entering the Module, the following screen is shown:

The above screen shows that the Metrics Module prepares two types of metrics:

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 • Financial ratios – showing the relationship between two or more accounts (expressed as a
ratio).
• Financial information – showing amounts taken from the accounts (expressed as an
absolute amount). The metrics can be benchmarked against other organisations and
against industry specific standards. The validity of this benchmark comparison can be
challenged, so it should not be heavily relied upon. The benchmark data can be changed in
the data analytics software to be more focused (eg, for a particular geographical or industry
group) but this is not required for the Corporate Reporting exam.

Exam Approach – which ratios and financial information to use

The Metrics Module can typically be used where a Corporate Reporting exam question
asks for analytical procedures. These can be:
• Preliminary analytical procedures – at the beginning of the audit when planning
• Substantive analytical procedures – during the audit as evidence gathering
• Review analytical procedures – towards the end of the audit during audit completion.

To identify risks, it would be difficult to perform analytical procedures using all the
available metrics in the data analytics software. You will be guided in the question and/or
the requirements to select only a small number of relevant metrics.

NB All three types of analytical procedures should be accessed through the

Fieldwork facility of the data analytics software. You do not need to change to
Planning or Completion.

Financial Ratios

Clicking on the arrow to the left-hand side of one of the items under Financial Ratios or
Financial Information produces the following drop-down box, giving the options shown:

The ‘Client Notes’ enable the audit team to leave notes within the data analytics software for the
client.

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NB ‘Graphs’ are not available for Financial Ratios, only Financial Information (see below).

The sole focus for Financial Ratios is therefore Metrics, which can be accessed using the drop
down or by clicking on the required ratio, shown in blue. For Liquidity this shows the following set
of metrics:

The Metrics visualisation above gives a number of Key Performance Indicators (expressed as
ratios) relating to liquidity.

Each metric is shown on a dial. The green area of the dial shows the metric is low risk and the
red area on the dial shows it is high risk. For some metrics, a high figure means high risk (eg,
credit period or receivables days). For other metrics, a low figure means high risk (eg, current
ratio).

Hovering over the green or red arrows underneath the dial shows the prior year figure for
comparison. Arrows pointing down mean the amount has fallen since last year. Arrows pointing
up mean the amount has risen since last year. Either could be a good or bad indication,

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 depending on the ratio.

Red arrows mean an adverse movement since last year. Green arrows mean a favourable
movement since last year. Either could be an increase or a decrease.

If you hover your cursor over one of the arrows, the ratio for the prior year is shown.

Clicking on the icon shows how the metric was calculated.

Thus, for the average payment period (ie, payables days) clicking on the icon shows a drop-
down calculation.

The above calculation shows how the average payment period (ie, payables days) was
calculated for the current period.
It also compares this figure with benchmark figures. At 62.9 days, it is higher than the
upper quartile of the benchmark group at 41.9 days. Hence, it is high risk as indicated by
the dial in the previous screen which is well into the red area.

Financial Information

The use of the dials is the same for the Financial Information items as it is for Financial Ratios.
A key difference is however that Graphs are available for Financial Information.

Clicking on the Income and Receivables item under Financial Information the following screen in

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 shown with a set of metrics:

Clicking on the switching icon in the top right-hand corner (circled) and then clicking on
Graphs from the drop-down menu shows the following bar chart for receivables:

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The primary variable in the top right-hand corner (circled) is the effective period so the bar chart
shows the debit and credit entries for each month in the receivables account.

Hovering the cursor over the black dots shows the amounts of the debits and credits for
each month and the number of transactions.

The variable can be changed by clicking on the small arrow next to the existing
variable in the top right-hand corner of the screen above (circled). The following
drop-down box appears showing the choices of alternative variables.

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Practice Activity

Review each of the four types of Financial Ratios and each of the seven types of Financial
Information.
• Familiarise yourself with the information available
• Identify key audit risks

Exam Approach – Which metrics to use

The Corporate Reporting exam would normally give some guidance on which Financial
Ratios and which sections of Financial Information to use, but judgement is also needed.
You will not need to use them all in any one Corporate Reporting exam.

It is important to link the sets of metrics identified to discern patterns or identify risks, rather
than considering each metric, or set of metrics, in isolation.

5. THE REVENUE CASCADE MODULE (LEVEL 3)

The Revenue Cascade Module is a tool to visualise and interrogate relationships in the
revenue/receivable cycle to highlight transactions diverging from expectations.

It takes 100% of the revenue cycle transactions and maps them to the expected business cycle,
visualising and stratifying the data population.

It identifies notable transactions to assess risk and evaluate the impact on quality of earnings. It
can be used to reduce or replace alternative techniques, such as sampling.

Navigating into the Revenue Cascade Module

When you open the Revenue Cascade module for the first time, a pop-up box may appear directly
inviting you to use InfloHI (Hybrid intelligence) to map the accounts:

You should click CONFIRM.

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If you do not do this (or enter the module again at a later stage without having saved the
mapping), you will see the following screen. (Note: The positioning of the grey circles may vary).

Using the cog icon in the top right-hand corner (circled) and then click ('Hybrid Intelligence')
Map Accounts, in the drop-down menu. A pop-up box will appear inviting you to use Hybrid
intelligence to map the accounts and then click CONFIRM to generate the following screen:

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Note: The positioning of the grey circles, having clicked Map Accounts, may vary each time
the screen is reconfigured. So, the grey circles in your screen may be in different positions to
those above. You will need to map the accounts each time you enter the Revenue Cascade
module unless you click the Save button to save your mapping. You can reset the mapping
at any time using the Reset Mappings tool on drop-down menu on the cog.

The Map Accounts tool maps the accounts that relate to the revenue-receivables-cash cycle
automatically applying labels ('Revenue', 'Sales Tax', 'Receivables', 'Cash', 'Other Related') under
the 'Type' column (circled). Accounts that are not related to the revenue- receivables-cash cycle
simply remain labelled as 'Other'. You may need to manually adjust this
– for example, the 'Overseas receivable' account may need to be labelled as 'Receivables'
manually using the drop-down arrow if the Map Accounts tool does not do it automatically.

NB Circles – the remaining circles (after clicking the button) now

represent the accounts which contain transactions that do not fit in with
the expectations of the normal revenue/receivables cycle.
Lines between the circles are links with the other side of the transaction.

The expected cycle is that revenue transactions will generate postings in the receivables
account and sales tax account (other than any cash sales). On settlement, the receivables will
then become cash receipts. Transactions falling into this normal cycle are lower risk, as this is
what is expected to occur.

In contrast, revenue transactions that do not ultimately generate cash are higher risk, eg an
irrecoverable receivable (ie, a bad debt write off).
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 In the top left-hand corner of the above screen (circled) the Revenue in cycle % and
Receivables in cycle % shows the percentage of revenue and receivable transactions that fall
within the expected cycle. For example, it can be seen that 97.5% of Revenue and Sales Tax
transactions flowed through to Receivables, while 89.6% of Receivables flowed through to Cash
or Other Related.

The accounts that fall outside the expected cycle may be of higher risk and may need to be
investigated. These have been identified by the Revenue Cascade Module. They are
represented by the grey circles in the middle section of the above diagram.

Where transactions fall outside the expected cycle, the accounts which contain these
transactions are listed on the left-hand side of the above screen. The totals for each for these
accounts is also shown. For example, in the list on the left (circled above), the office equipment
account total is shown as £286,101.

Hover your cursor over the grey circle showing the transaction (or transactions) relating to the
Office Equipment account (you will need to find the correct grey circle). The line from this grey
circle shows that it is linked to receivables and to the photography account. Clicking on the grey
circle, it shows a transaction amount of £95,000 in the left-hand box. Clicking on Receivables in
this box, reveals the double entry transaction. The audit risk is that this transaction is not part of
the normal receivables cycle and it therefore requires further investigation.

Clicking on another grey circle in the centre section to indicate it is a bad debt. (circled below –
but remember your screen may differ slightly in terms of the positioning of the grey circles, so
you will need to find the correct circle by making the cursor hover over a few grey circles until
you find the correct one).

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 This shows on the left-hand side as having a value of £9,875 (circled). We can drill down
further by clicking on Receivables on the left-hand side, which will show the double entry and
transaction details as follows:

Follow up audit procedures can then seek evidence on the detail of the transaction, establish
why it occurred, who authorised the bad debt write off; and identify any internal control
deficiencies.

Practice activity

5.1 Follow the above routines to identify and establish the nature of all
the other transactions in the central grey area on the Revenue
Cascade diagram.
5.2 For each transaction in (a), make sure you understand why it has fallen outside the
expected revenue-receivables-cash cycle.

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 5.3 Set out the audit procedures you would carry out for the transactions that you regard as
high risk.

6. THE DETECT MODULE – (LEVEL 2)

When you open the Detect module for the first time, you may be asked to confirm the data. If this
happens, click on the green ‘CONFIRM’ button at the bottom right of the screen below.

When returning to the Detect module in the future, you will not see this initial confirmation screen
again (unless you need to add new keywords, which is covered later).

For the Corporate Reporting exam, you will need a good working knowledge of the key functions
of the Detect module. This section of the Explanatory Guidance Notes will address the
examinable functions only.

The Detect module enables the running of audit tests (routines).

There are 24 routines which test against pre-defined criteria to detect exceptions. Each routine
relates to ISA 240 guidance for fraud and risk testing.
Functions include:

• Setting risk ratings

• Identifying unusual characteristics
• Identifying indicators of fraud, management override and unusual behaviour
• Visualisations to identify trends.
On navigating into the Detect Module, you will be taken to the following dashboard (you may
need to scroll down to see the full screen):

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 This screen shows the 24 tests (routines) plus Custom Routines. For the purposes of
the Corporate Reporting exam some of the most useful (circled) are:
• Large Value (most important)
• Leavers
• Starters
• Post Year End
• Round Sum Value
• Large Value Versus Average
• Keywords

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 • Forward Posted
• Back Dated
• Transaction Profit Impact
• Suspense Accounts
• Unusual Posters
• Outside Working Hours

The information icon to the right of the test description gives information on the nature of the
test parameters. So, for example, hovering over the next to Large Value will indicate that this
routine identifies large transactions where the gross value exceeds the materiality level
(£30,000 for Elephant).

The percentage number of transactions that fall into the category are shown on the right-hand
side of the test description and are represented by the green bar. Hovering on the green bar with
your cursor gives the total number of transactions overall and the number of transactions that fall
within the criteria of the test. So, for example, for the Large Value routine, there are 167
transactions that exceed the materiality level – which is approximately 2% of transactions as
indicated by the green bar.

Using the graphs function to identify and investigate transactions

Each of the routines operates in the same way: clicking on the small grey arrow to the left of a
test description, such as Large Value, gives the following drop-down box:

Clicking on ‘Visualise’ produces a range of graphs relating to the routine concerned. eg, for
‘Large Value’ as follows:

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Each of the six graphs analyses the transactions identified by the routine in the different ways that
we have met previously. The way we investigate depends on the nature of our concerns.

In the case of the ‘Transaction Profit Impact’ routine (only), clicking on Visualise shows a Heat
Map rather than the 6 graphs (similar to the one seen in the Explore module):

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However, the 6 graphs can still be accessed by clicking the cog icon (circled above), and selecting
‘Graphs’ from the dropdown menu:

This reveals the following graphs for the ‘Transaction Profit Impact’ routine:

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The six graphs

The way we use the six graphs to investigate depends on the nature of the audit risks. Let us
consider each graph in turn.

Users - this enables allows transactions identified by a particular routine to viewed by the
user that posted them.

For example, returning to the ‘Large Value’ routine, click CANCEL (circled above) on the
‘Transaction Profit Impact’ graph and select the ‘Large Value’ routine graph using the method
explained above), if E Davids is a junior employee, we may be concerned that this user should not
be posting large transactions. We can click on the green block for E Davids (circled below) in the

Users graph for the ‘Large Value’ routine.

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This shows the large transactions (ie, in excess of materiality of £30,000) posted by this user, as
follows:

As previously, these transactions can be investigated further by clicking on the blue Transaction Id
numbers on the left-hand side.

Effective Period - this enables transactions identified by a routine with an effective date in
a particular month to be identified, as illustrated by the following diagram for the ‘Large
Value’ routine:

It might be that an audit risk is cut-off. For example, using the ‘Large Value’ routine, this
visualisation could be used to identify material transactions in December. The auditor might also
be particularly interested in December as it has the greatest number of large transactions.

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 Clicking on the green column for December shows the following screen on page 2.

This shows the detail of all large transactions (above materiality of £30,000 for this engagement)
occurring in December. There are only two pages so we could review all of these. For example,
if reviewing for cut-off, the effective dates versus the created dates could be inspected.

Created Weekday and Created Hour – this function shows transactions identified by a routine
classified by day of the week (Created Weekday routine) or allocated to the hour in which the
transaction was created (Created Hour routine). Similar to the Heat Map function (which shows
created weekday), this can be used to investigate transactions, identified by a routine, which are
posted at unusual days and times. The Created Hour routine only shows the hourly blocks for
which there are transactions identified by the routine.

For example, using the ‘Large Value’ routine to identify material transactions, clicking on
the green ‘Sat’ (Saturday) bar (circled) of the ‘Created Weekday’ visualisation reveals 5
transactions above materiality posted on a Saturday:

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 Clicking on transaction SRC006972 ‘Website dev’ shows the following detail:

Hovering over the number in the ‘Account Code’ column for each line reveals the name of
each account code, eg, account code 13020 is ‘Office equipment’, account code 61060 is
‘Photography’ and account code 21010 is ‘Receivables Control Account’:

This transaction merits further investigation as it is material, a round sum figure which
suggests an estimate, was posted on Saturday (outside the normal working week) and
appears to reclassify photography expense and a trade receivable as office equipment,
which is then labelled as ‘Website development’ (which ordinarily would be an intangible
asset rather than office equipment).

Document Type - this enables transactions identified by the selected routine of a particular
document type to be investigated, as illustrated in the following diagram for the ‘Large Value’
routine:

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 In this case, most of the large transactions are posted in the nominal ledger. Clicking the
different segments allows those transactions to be viewed. An area of audit risk could be large
manual journals put through by management. These might be part of management override and
sit outside normal control systems for many companies. In many companies this could be an
area where professional scepticism and management challenge is appropriate. In the case of
Elephant there are no large manual journals identified which provides some comfort.

GL Account – this function shows transactions identified by a routine, classified by general

ledger account. For example, looking at the GL Account visualisation for ‘Large Value’ routine
shows the following:

The account numbers indicate which of accounts contain transactions that meet the routine
criteria (ie, in this case those in excess of materiality of £30,000). The size of the green segment
indicates how many such transactions there are in each account. Not all general ledger
accounts will contain a ‘large value’ item.

If, for example, we click on the green segment for account 31800 (Other Loans), the following
list of transactions is shown:

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 In this case, there are three pages transactions which meet the routine’s criteria which can be
scanned for items indicating an audit risk. Alternatively, the filter function can be used (circled
top right) to further refine the search by ‘Effective Period’, ‘Document Type’ or ‘User’.

For example, we could filter transactions by ‘Document Type’: Nominal Journal to identify
transactions entered outside of the standard processes (although that would be all of them in
this case!) or posted by a particular ‘User’, eg, A BLOGGS, which identifies two transactions as
follows:

Filters can be cleared by click ‘x Clear Filters’ menu (circled above) on the Filters drop-
down menu.

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 Transaction detail

If you simply want to view all transactions identified by a routine, clicking on the small grey
arrow to the left of the routine name, gives a ‘Detail’ option in the drop-down box:

For example, for the ‘Large Value’ routine, clicking on the ‘Detail’ option reveals the following list of
transactions:

Use of the example routines

The routines to be used by candidates in the Corporate Reporting exam is a question of

judgement. There are often different routines that can be used to obtain the same
information. The following list covers examples of some routines with a description of the
types of transaction they identify.

As mentioned above, each of the routines produces the same 6 graphs so the approach
(with the exception of Keywords, covered in more detail below) is the same for all the
routines.

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 Examinable routine Description in Inflo
(hovering over )

Transaction Profit Impact Transactions are assigned a score based on the

number of occurrences of that identical transaction
during the year as follows:
• Transaction occurs less than once per quarter = 3
• Transaction occurs between once per quarter and
once per month = 2
• Transaction occurs between once per month and
once per week = 1.
Large Value Versus Average Transactions which have an impact on any general
ledger account of 10 times the average value of
transactions impacting the same general ledger
account during the year.
Round Sum Value Transactions which contain individual lines within the
transaction which are for a round sum value, or 0.01
less than a round sum value.
Large Value Transactions where the gross value exceeds
materiality.
Keywords Transactions where the description fields or general
ledger accounts contain keywords.
Starters Transactions entered by users who posted no
transactions in the first 3 months of the year.
Leavers Transactions entered by a user who posted no
transactions in the final 3 months of the year.
Forward Posted Transactions entered more than 30 days before their
effective date.
Back Dated Transactions entered more than 30 days after their
effective date.
Post Year End Transactions entered after the year end date.

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 Keywords routine

The ‘Keywords’ routine identifies transactions with particular words in the transaction
description field.

This routine operates in a different way to the other routines as the transactions that the

routine has identified by keyword are accessed by clicking icon (circled) on

the Graphs page for the ‘Keywords’ routine:

(Please note that ‘EDIT KEYWORDS’ is used to view transactions by keyword and add
filters. The method used to add new keywords to be searched for is covered below).

Here, we can see the keywords already included in the routine, and the words they have
matched against in transaction descriptions:

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 Clicking the folder icon reveals the transactions with descriptions that include the
keyword in one or more parts of the double entry. For example, clicking the folder icon for
the Keyword ‘adjust’ and Matched Word ‘adjust’ (circled above) reveals the following
transactions:

The first transaction in particular warrants further investigation as it:

• exceeds materiality of £30,000
• is a manual journal adjustment (Document Type: ‘NOM - Nominal Journal’)
• has a suspicious description (‘Adjust Q3 sales’)
• is posted on 16/11/2018 which is 6 weeks after its effective date of 30/9/2018
• is transferred from account 990 (which is the suspense account).

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 Adding keywords

New keywords can be added by selecting the cog item at the top right of the Detect module
main screen and selecting ‘Configure Settings’:

To add a new keyword, click to the right of existing pre-populated keywords and type the
new keyword, eg, for ‘director’ as a new keyword (circled):

NB: As explained in the text below the keywords above (circled), you must then then press
‘enter/return’ on your keyboard to add the keyword which will then appear as follows:

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 Keywords can be removed by clicking the icon to the right of the keyword.

In both cases you must also click to save the changes.

After you amend the ‘Keywords’ routine, on the Detect module main screen, you may see a
padlock on the routine (instead of the usual grey drop-down arrow) and the following
message if you hover over the padlock:

This is a little misleading and can normally be resolved immediately by navigating to

another module (eg, Explore) and then returning to the Detect module, or by refreshing
your browser.

After having added a new keyword, the screen is updated for the new
keyword. This is accessed as before using the Visualise menu from the grey dropdown

arrow and selecting .

The updated screen shows transactions where ‘director’, or words including it such as
‘directors’, are the matched words (circled below), in this case on page (circled below):

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 The transactions can be accessed as before by clicking the folder icons on the
‘director’ and ‘directors’ lines. For example, clicking the folder icon for the Matched Word
‘director’ line reveals 6 transactions:

Clicking on the Transaction Id for the first transaction (circled) and hovering the cursor over
account 26561 reveals that this is a car loan:

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 This would need to be disclosed as related party transaction as it is a transaction with key
management personnel.

A word of warning using keywords…

If you click the icon on the screen, the word is added to a ‘whitelist’ which
means that that transactions including that word are excluded from search results. This
can be useful to narrow down a search, but, if not used properly, risks excluding
transactions. For example, if you were to click on the Matched Word ‘director’ line
(circled below) and then click on the ‘Keywords Whitelist’ menu that appears,
the exact word ‘director’ would then be excluded from results

This would leave only the word ‘directors’ as shown below:

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 To undo this, ‘whitelist’ words can be removed by clicking ‘View Whitelist’ (circled above)
on the cog drop-down menu, clicking the by the word (circled below) and then clicking
:

Therefore, the recommendation is to not add ‘whitelist’ words as this will not be necessary
in the Corporate Reporting exam. To add words to be included in keyword searches the
approach outlined above in the ‘Adding keywords’ section (using ‘Configure Settings’ on
the cog menu on the main Detect module main screen) must be followed.

Exercise 3

Use the Detect module to identify all transactions that were back dated and posted on a weekend
day (Saturday or Sunday). Comment on whether these transactions should be investigated further.

The solution is in Appendix A.

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 7. THE COLLABORATE MODULE (LEVEL 3)
NB You do not need to use this module in the Corporate Reporting exam.

For background information, the Collaborate Module is an audit management tool. It enables
secure communication between the auditor and the client. It also enables confidential
communications between members of the audit team, with or without client access.
Examples of applications of the Collaborate Module include:

• File collaboration and effective workflow management with clients

• Requesting and receiving documents and other evidence from clients
• Tracking and monitoring outstanding requests in real time.

8. THE INGEST MODULE (LEVEL 3)

NB You do not need to use this module in the Corporate Reporting exam and it will not be
available to you.
For background information, the Ingest Module enables the client to upload and import its trial
balance and nominal ledger into the data analytics software.
Automated validation checks are then carried out by the audit team to verify and cleanse the
data.
The Ingest Module is also normally used in practice initially to set the materiality level and can
also be used to set performance materiality. However, these tasks are not required in the
Corporate Reporting exam.

9. THE FLUX MODULE (LEVEL 3)

NB Only a general awareness of this module is needed as background context.

The Flux module allows analytical procedures to be applied to trial balance data ingested at the
planning, fieldwork or completion stages of the audit.
Unusual movements based on parameters set by the auditor are flagged for further audit
investigation.
Whilst these tests are within the scope of the Corporate Reporting exam, you will not be
expected to use the Flux module to perform these tests in the exam; this is because the
examiner will not access the data analytics software to examine any comments you make in the
software.

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 10. THE SELECT MODULE (LEVEL 3)
NB Only a general awareness of this module is needed as background context.

The Select Module automates sample selection from a population of transactions. It is designed
to complement other audit practices, procedures and processes and enable a collaborative
approach to testing with the client’s management.
It enables the auditor to import tests into the Select Module from a series of predefined tests.
Whilst these tests are useful in practice, you will not be expected to use these in the Corporate
Reporting exam.

11. THE REPORTS MODULE (LEVEL 3)

NB Only a general awareness of this module is needed as background context.

The Reports Module combines testing results and visuals to present them in a final report, with
supporting content.

The report relates to the audited entity and is designed to add value for the client.

This type of report facility is useful in practice, but you will not be expected to use this in the
Corporate Reporting exam.

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APPENDIX A – ANSWERS TO EXERCISES
Exercise 1 – solution

Select Expense in the ‘Account View’ then select the icon.

This shows the following screen, where you should select only Administrative Expenses
by deleting all other green ticks. This shows the following screen.

Click on the button in the bottom right corner.

This list of accounts making up Administrative Expenses is then shown and can be
reviewed:

Requirement (a)
Reviewing these accounts, a number of areas of potential audit risk arise:
(i) 72000 Rent charge – is material and has increased by £7,622 which is a 10%
increase. Also, it needs to be ascertained that the rent relates to administrative
expenses to ensure it has been attributed the correct account.
(ii) 72030 Rep & Maint - Machinery – although not material in absolute terms,
there has been a 123% increase which needs explanation by management.
Also, it needs to be ascertained that the repairs and maintenance relates to
administrative expenses to ensure it has been attributed the correct account.
Moreover, the nature of the repairs and maintenance transactions needs to be
ascertained to ensure that they are not improvements, in which case they
should be capitalised.

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 (iii) 73040 Computer Software – is material and has increased by £8,889 which is a 39%
increase. As previously, it needs to be ascertained that the computer software relates to
administrative functions to ensure it has been attributed the correct account. Moreover,
the nature of the computer software needs to be ascertained to ensure that they are not
capital items.
(iv) 76010 Bank Charges and Interest – this item is material at £78,023 but more importantly
back interest is not an item that should be presented in Administrative Expenses in the
financial statements. Rather it should be presented as part of Finance Charges.

Requirement (b)
Select account 73040 Computer Software using the green ticks (you may need to scroll down):

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 Click on the transactions icon in the bottom right corner of the above screen (circled).
This reveals the following list of transactions which comprise the first of 7 pages of the
Computer Software account:

The largest transactions now need to be identified and reviewed as, potentially, they have the
highest risk.
On page 1 the most significant transaction (circled) is:

You will not be able to produce the above visualisations and you must describe the
transaction:
The largest transaction is a nominal journal debit for £12,408 and has the Transaction ID NOM
059638 and effective date 01/12/2018 posted by F Wright.
Although large by comparison to the other transactions, it seems low risk as it is described as
a 2017 prepayment reversal.

Drilling down by clicking on the blue Transaction ID shows the detailed double
entries for each of the prepayments.

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 A key audit procedure for this transaction is to agree it to the audited closing entries brought
forward from the prior period.
Moving on to page 4 of the transactions screen above, the most significant transaction is:

The transaction is a purchase invoice for £2,673 and has the Transaction ID PIN028967 and
effective date 26/12/2018 posted by F Wright.

Drilling down again by clicking on the blue Transaction ID shows the detailed double
entries as follows:

The description of this transaction indicates that it relates to a one-year licence fee covering a
period to 31.3.2015, the period that the licence covers is outside of the accounting period and
requires investigation to ensure that it all relates to the current accounting period.
The other accounts in the double entry above are 31010 Payables control and 33020 Sales
input control account and are as expected for this type of transaction. These can be found in the
Accounts View, clicking on Liabilities and searching down for the account codes.
Other audit procedures should be to inspect and verify the nature and validity of the licence
agreement. It should also be verified that the use of the licence relates to administrative
activities.

Exercise 2 – solution
We know several facts about this transaction:
• it was posted by F Wright
• it had an effective date in November 2018
• it was posted to account 51010 (which is the Domestic Income account)
• It is a sales credit note

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 1. Start in the Explore screen by selecting (in the ‘Account View’, using ‘Income’) the
‘Domestic Sales’ account with the green ticks as follows:

Then click on the transactions icon in the bottom right-hand corner (circled above).

2. Click on the filter Icon in the top right-hand corner of the screen below and select in
the menu: Effective Period 'Nov 2018'; Document Type 'SCR - Sales Credit'; User
'FWRIGHT'; to show the following:

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 3.

4. Searching down the blue Transaction ID number (which are in numerical order) the
required transaction is found on the first page (circled above).

5. Clicking on the blue Transaction ID number shows the following double entry:

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Exercise 3 – solution

Click on the ‘Visualise’ option from the drop-down menu from the grey arrow to the left of the ‘Back
Dated’ routine in the Detect module (circled):

This shows the following graphs:

The ‘Created Weekday’ graph shows that backdated transactions were posted on Fridays and
Saturdays.

Clicking on the ‘Sat’ green bar (circled) reveals all backdated transactions posted on a weekend
(as the graph shows that none were posted on Sundays):

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These were all transactions backdated to the quarter ends (31 March 2018, 30 June 2018, 30
September 2018). Clicking on each of the transaction Ids (in blue) and then hovering over the
codes in the Account Codes column to reveal the account names (or simply hovering over the
codes in the Account Codes column on the screen above) shows that in each case, the
transactions involved the suspense account (account 990) and an asset account (13010 Fixtures
and Fittings).

They are also manual journals (‘NOM = Nominal Journal’) rather than part of the normal
accounting processes. These transactions warrant further investigation to determine what the
adjustments relate to and why they are necessary. Clicking the other green bar (‘Fri’ for Friday)
shows that there are similar transactions that arose on Fridays. Cumulatively these adjustments
exceed materiality of £30,000.

It also worth noting that there is no such adjustment for quarter 4 as clicking on the other green bar
(Friday) does not show a quarter 4 adjustment either (which can also be confirmed by looking at
the transactions in account 13010 Fixtures and Fittings via the Explore module). This is something
that could be queried with management, given that these adjustments appear to normally be made
at each quarter end.

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APPENDIX B – SKILLS GRID

The Corporate Reporting exam requires the use of professional skills. These include combining
skills relating to the data analytics software with more traditional auditing skills.

The following is a summary of how key skills can be tested and used in the Corporate Reporting
exam in a question using the data analytics software.

Assimilating and using information

These skills may include, for example, identifying transactions and investigating unusual
patterns and trends from visualisations produced by the data analytics software. Assimilating
data could, for example, involve selecting two charts to analyse and draw meaningful
comparisons of the data trends.

The use of the Metrics Module may also involve assimilating and using a range of ratios to build
up an overall picture in assessing trends, patterns and risks.

Data assimilation could be at the level of an account (such as making comparisons with prior
years or other account balances in the current year), or it could be at the level of identifying and
comparing individual transactions.

In assimilating data, you will need to be selective in identifying the relevant information. It
follows from this that it is also important to identify and exclude non-relevant data from a data
set, as you will not have time to evaluate every available transaction.

Structuring problems and solutions

Using the data analytics software to structure the data is important. A range of variables is
available for a transaction. For example: amount, account, user, timing, document. Using the
data analytics software to structure the data in the most appropriate way is important. For
example, finding high risk transactions using the Heat Map or large transactions using the
Detect module. Solutions in terms of appropriate audit procedures then need to be devised.

Structuring the problem may require drawing together information provided in the scenario with
data and visualisations provided in the data analytics software to ensure they present a
consistent story in developing a solution.

Applying judgement

A Corporate Reporting exam question may require you to apply judgement to data that you
have previously assimilated or structured. This may, for example, be in identifying and justifying
which elements of the data represent highest audit risk.

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 Identifying notable, or high risk, transactions can also be a matter of judgement. For example,
evaluating a combination of attributes that would cause a transaction to be selected as high risk
may involve judging the relative significance of: amount, user, timing, frequency and currency.

The exercise of an appropriate degree of professional scepticism can also be a question of

judgement.

Tasks can often be completed in the data analytics software in a number of different ways.
Judgement is needed to determine the most appropriate way, based on: ease of use, speed and
the form and content of the data ultimately obtained.

Concluding, recommending and communicating

It is important that you demonstrate communication skills which demonstrate your

understanding and analysis of the transactions, visualisations and other data. This should be in
a manner that conveys meaning appropriately and can be understood by the target recipient(s).

Recommendations should be supported by evidence, which may include data and information
from visualisations in the data analytics software, but also information provided in the scenario.

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