Analyzing Payroll Transactions and Identifying Anomalies

TUTORIAL 1
AP_TRANS
1. Using the TOTAL command, develop a hash control total and an amount control total for AP-TRANS. What
recommendation would you make to develop a field for hash control total?
Ans: @ TOTAL FIELDS INVOICE_AMOUNT
The total of INVOICE_AMOUNT is: 278,641.33
@ TOTAL FIELDS QUANTITY
The total of QUANTITY is: 37,107
@ TOTAL FIELDS UNIT_COST
The total of UNIT_COST is: 1,522.29
I recommend changing Invoice Number to a number field (vs. string) if possible.
2. Run PROFILE on the file, Invoice Amount. Can you determine if there are any negative transactions?
Explain.
Ans: @ PROFILE INVOICE_AMOUNT
Total
Abs. Value
Minimum
278,641.33
278,641.33
14.88
Maximum Name
56,767.20 INVOICE_AMOUNT
There are none because total = absolute total ($278,641.33)

3. Run STATISTICS on each of the four available fields with the Std Dev box checked. Describe your audit
direction to specific invoices based on the results of STATISTICS.
Ans: @ STATISTICS ON INVOICE_AMOUNT STD TO SCREEN NUMBER 5
Field : INVOICE_AMOUNT
Number
Total
Average
Positive : 102
278,641.33
2,731.78
Zeros :
0
Negative :
0
0.00
0.00
Totals : 102
278,641.33
2,731.78
Abs Value:
278,641.33
Range :
56,752.32
Std. Dev.:
6,609.23
Highest : 56,767.20 20,386.19 18,883.34 16,642.56 15,444.80
Lowest : 14.88 21.12 31.68 46.08 49.68
There are no zero or negative invoice, quantity or cost. This minimize the need to look for that kind of
error. One transaction is outlier 56,767.20. this item should be audited thoroughly.
4. Run SAMPLE (Sampling -> Sample) for the AP_TRANS file, using the data from step 3. Sample Invoice
Amount, Interval of $6,609, Begin $14.88 (minimum invoice) and Cutoff $56,767.20. Save results as
AP_Trans_Sample.
Ans: @ SAMPLE ON INVOICE_AMOUNT INTERVAL 6609 FIXED 14.88 CUTOFF 56,767.20 RECORD TO
"ap_trans_sample" OPEN
Sample size = 35 (1 top stratum), out of 102 records sampled
Population: 278,641.33, Top stratum: 56,767.20, Other: 221874.13
The initial selection point was: 14.88
The selection remainder is -2,846.75 for sample reconciliation
Extraction to file ptrnssmp.FIL is complete
Opening file "ap_trans_sample"
7 fields activated
AR
5. Run SEQUENCE on AR, using Invoice Number (Ref_No). Make sure to use only Invoice Type Transactions
(IN); use Expression Builder to filter out other transaction types. What do you notice about the invoice
numbers?
Ans: @ SEQUENCE ON ref ERRORLIMIT 10 TO SCREEN
Page ... 1
03/13/15 10:17:45
Produced with ACL by: Workbook
*** Keys out of sequence at record
Maximum error limit reached
10 data sequence errors detected
7, Key:212297
11, Key:213052
21, Key:213194
22, Key:213184
26, Key:213248
32, Key:213277
35, Key:213264
40, Key:213327
41, Key:213326
42, Key:213325
6. Re-run SEQUENCE on the same file but this time check Duplicates and Gaps (filter Invoice type
transactions only). What information is provided the auditor about testing invoices?
Ans: @ SEQUENCE ON type DUPLICATES GAPS ERRORLIMIT 10 TO SCREEN
Page ... 1
03/13/15 10:20:59
*** Gap detected between 0 and 0
*** Duplicate key fields at record
3, Key:IN
4, Key:IN
6, Key:CN
8, Key:CN
11, Key:IN
12, Key:CN
13, Key:CN
14, Key:CN
15, Key:CN
16, Key:CN
17, Key:CN
18, Key:CN
19, Key:CN
20, Key:CN
22, Key:IN
23, Key:IN
24, Key:IN
25, Key:IN
26, Key:IN
27, Key:CN

29, Key:IN
30, Key:IN
31, Key:IN
32, Key:IN
33, Key:IN
34, Key:IN
35, Key:IN
36, Key:IN
37, Key:IN
38, Key:IN
39, Key:IN
40, Key:IN
41, Key:IN
42, Key:IN
43, Key:IN
44, Key:IN
45, Key:IN
46, Key:IN
47, Key:IN
48, Key:IN
49, Key:IN
50, Key:IN
51, Key:IN
52, Key:IN
53, Key:IN
54, Key:IN
55, Key:IN
Page ... 2
10:20:59
03/13/15

56, Key:IN
57, Key:IN
58, Key:IN
59, Key:IN
60, Key:IN
61, Key:CN
62, Key:CN
63, Key:CN
64, Key:CN

82, Key:IN
83, Key:IN
84, Key:IN
85, Key:IN
86, Key:IN
87, Key:IN
88, Key:IN
89, Key:IN
90, Key:IN
91, Key:IN
92, Key:IN
93, Key:IN
94, Key:CN
95, Key:CN
Page ... 3

68, Key:IN
69, Key:IN
70, Key:IN
71, Key:IN
72, Key:IN
73, Key:IN
74, Key:IN
75, Key:IN
76, Key:IN
77, Key:CN
78, Key:CN
80, Key:IN
81, Key:IN
66, Key:IN
67, Key:IN
03/13/15 10:20:59
*** Duplicate key fields at record 110, Key:IN

*** Keys out of sequence at record 127, Key:IN
Maximum error limit reached
116 gaps and/or duplicates detect
*** Keys out of sequence at record 97, Key:IN

7.
SORT AR by Invoice Amount in descending order. Use Sort On to specify descending order. Specify TYPE
IN. Use Output File name AR_SortAmount. What sort of anomalies is the auditor looking for?
Ans: @ SORT ON amount D TO "ar_sortamounts" OPEN
772 records produced
Output to rsrtmnts.FIL is done
Opening file "ar_sortamounts"
6 fields activated
While statistical sampling has an important place in audit processes, greater assurance is realized by
analyzing 100 percent of data populations to ensure anomalies, errors and exceptions are identified. We
would trace the previous transactions which led to the increase or decrease in the amounts of the
transaction
TUTORIAL 2
PAYROLL
1. Run DUPLICATES option from the ANALYZE menu bar option. Make sure to check GAPS, PRESORT,
and DUPLICATES in the dialogue box. Click on Employee Number as the column to verify sequence. Go
to the OUTPUT tab and set output to SCREEN. Click OK.
Ans:@ DUPLICATES ON EMPNO GAPS ERRORLIMIT 10 TO SCREEN
Page ... 1
03/13/15 17:34:05

*** Duplicate key fields at record 32, Key:000320
41 gaps and/or duplicates detected
There are many gaps in giving employee number thus, there isnt a proper sequencing of employees. This
kind of system may cause some casualties like double pays to employee or having a so-called ghost
employees.
2. Rerun DUPLICATES command, but this time uncheck GAPS.

a. What would you think of the results as an auditor?
b. What would you do with the results?
c. What other field would you check for DUPLICATES or GAPS? Run the DUPLICATES command again.
Ans:@ DUPLICATES ON EMPNO ERRORLIMIT 10 TO SCREEN
Page ... 1
03/13/15 18:16:12
*** Duplicate key fields at record 32, Key:000320
Pay to employee 000320 was duplicated. That is a fraudulent act because it was evidenced by the check
number which is different from one another.
, I would require EmpNo. 000320 to return the check (or call the bank for the cancelation of one check if
possible) and reverse/adjust the entries affected.
Aside from the EmpNo., I would also check the Cheque No., there might have some error on recording a
same check.
3. Run SORT by Employee Number. Use OUTPUT FILE name PAYROLL-EmpNo. Run DUPLICATES option.
Come up with a selection for the Sequence On side that will detect possible duplicate checks even though the
employee numbers are different (such result would be more likely to be fraud than error, but surely one or the
other). On the List Fields side, choose the first 5 fields in a sequence that will make it easy for you to interpret
the results. Make sure Output Tab has SCREEN option for output results. Click OK.
a. What results do you get?
b. How many duplicates do there appear to be in the file?
c. Run DUPLICATES again, this time check GAPS and SEQUENCE on Check Number.
d. Do you find any patterns in the data that need investigation?
e. Does the report give you some direction for substantive testing?
Ans: . @ SORT ON EMPNO TO "Payroll-EmpNo" OPEN
44 records produced
Output to PyrllmpN.FIL is done
Opening file "Payroll_EmpNo"
8 fields activated
@ DUPLICATES ON EMPNO OTHER CHEQUE_NO GROSS_PAY NET_PAY PAY_DATE TAX_AMOUNT
ERRORLIMIT 50 TO SCREEN
Page ... 1
03/13/15 18:45:31
Employ Chequ
Number Numbe
Gross
Pay
000320 12376
1,662.50
000320 12377
1,662.50
Net Pay
Pay Date
1,330.00 09/15/
1,330.00 09/15/
Taxable
Amount
332.50
332.50
DUPLICATES ON CHEQUE_NO GAPS ERRORLIMIT 10 TO SCREEN

Page ... 1
03/13/15 18:47:49
Checks numbered 12389-12392 seem to be missing and needs further investigation as to
Based on the examination of the file, 2 duplicates appear with regards to the Employee No. having the same
gross pay, net pay, taxable amount and the date the checks are given, but with different check numbers.
These imply that employee No. 000320 receives two different checks on the same day.
4. Use COMMENT to insert a comment into the LOG file that notes your concerns. Instead of using TOOLS>COMMENT, just enter it manually in the text box in the LOG window; start with COMMENT....
Tutorial 3
AP Trans
1. CLASSIFY the data in AP_Trans by Vendor_No and accumulate on Invoice_Amount
use this data in an audit?
. How would an auditor
Ans:@ CLASSIFY ON VENDOR_NO ACCUMULATE INVOICE_AMOUNT TO SCREEN

<<<Graphable Data >>>
Page ... 1
06/14/15 11:27:16
VENDOR_NO COUNT <-- % % -->

Amount
10025
10101
10134
10448
10534
10559
10720
10721
10787
10879
11009
11247
11435
11475
11663
11837
11922
12130
12230
12248
12289
12433
12576
12636
12701
13136
13373
13411
13440
13808
13864
13928
14090
14299
14438
14599
14913
5 4.90% 21.30%
3 2.94% 0.25%
5 4.90% 8.12%
3 2.94% 0.28%
2 1.96% 1.61%
2 1.96% 0.25%
2 1.96% 0.17%
4 3.92% 0.79%
4 3.92% 1.60%
1 0.98% 0.52%
1 0.98% 0.03%
2 1.96% 1.14%
3 2.94% 0.53%
7 6.86% 12.91%
4 3.92% 2.39%
3 2.94% 4.47%
3 2.94% 6.41%
4 3.92% 11.07%
1 0.98% 0.29%
2 1.96% 0.68%
1 0.98% 0.12%
6 5.88% 5.32%
2 1.96% 0.28%
2 1.96% 0.90%
5 4.90% 2.20%
2 1.96% 0.05%
1 0.98% 0.28%
5 4.90% 4.37%
1 0.98% 3.97%
1 0.98% 2.41%
2 1.96% 0.31%
3 2.94% 0.44%
1 0.98% 0.47%
1 0.98% 0.04%
6 5.88% 2.89%
1 0.98% 0.33%
1 0.98% 0.80%
102 100.00% 100.00%
Invoice
59347.59
691.04
22618.62
782.04
4482.60
708.99
471.60
2212.86
4464.90
1440.00
92.16
3162.78
1469.13
35968.34
6666.39
12454.88
17868.84
30858.17
809.20
1885.60
328.60
14835.74
790.72
2501.82
6143.39
127.18
784.40
12176.20
11068.20
6705.12
861.29
1218.89
1312.74
115.74
8052.76
932.40
2230.41
278641.33
The vendor/supplier of the company, and how many times the company transacts business with them, and
the total invoice (payable) to the vendors. These records may help the auditor to verify if the above
transactions actually exist. The result also shows the total invoice amounts or the payable of the company.
2. The SUMMARIZE command generates a record count and accumulates totals of character or date key fields. It
is most effective for large input files, because it can report on a limitless number of unique key fields. Summarize
is similar to Classify except: (1) it requires a sorted file, (2) you can include additional character or numeric fields
that are not accumulated in the summary file, and (3) it can create a comprehensive report.
Summarize AP_TRANS on all numeric fields using Vendor_No., check PRESORT, and save as SUMVEN.
a. How would an auditor use this regarding a fictitious vendor fraud?
b. View the types of the fields in SUMVEN. What type are they?
c. Using the FILTER command eliminate vendors with total invoices below a materiality threshold of $2000.
d. EXPORT the resulting file as an Excel spreadsheet, name it AuditSumVen.
e. Open the AuditSumVen Spreadsheet.
f. REPORT the results in the LOG using the REPORT function. Give the report a heading, and print it to screen (you
will use the LOG to retrieve the REPORT when needed). FILTER the amount at $2,000 using IF (expression) box.
Open LOG and see results.
Ans: @ SUMMARIZE ON VENDOR_NO ACCUMULATE INVOICE_AMOUNT QUANTITY UNIT_COST TO
"SUMVEN" OPEN
101 records produced
Opening file "SUMVEN"
5 fields activated
A fictitious vendor may be traced by summarizing the list of vendors of the company. The result shows
some acquisitions having a huge amount, while analyzing the file, you may see that usual transaction only
has amounts not greater than 5,000.
AP_TRANS
1. STRATIFYING DATA
Before stratifying data, you need to obtain the maximum and minimum limits of the data using
the
PROFILE command.
a. Run the PROFILE command on the Invoice_Amount in preparation of running the STRATIFY command.
b. Run the STRATIFY command on the Invoice_Amount. Accumulate on Quantity and Unit_Cost.
c. Re-run STRATIFY but eliminate the outlier. [HINT: Run STATISTICS first to find value of 2nd highest
invoice amount]
d. How would you use the 2nd highest invoice?
e. View the data as a bar chart.
Ans: PROFILE INVOICE_AMOUNT
Total
Abs. Value
Minimum
278,641.33
278,641.33
14.88
Maximum Name
56,767.20 INVOICE_AMOUNT
@ STRATIFY ON INVOICE_AMOUNT ACCUMULATE QUANTITY UNIT_COST INTERVAL 10 TO SCREEN

Page ... 1
03/14/15 11:44:36
<<< STRATIFY over 14.88-> 56,767.20 >>>

>>> Minimum encountered was 14.88
>>> Maximum encountered was 56,767.20
INVOICE_AMOUNT
14.88 -> 5,690.11
5,690.12 -> 11,365.34
11,365.35 -> 17,040.57
17,040.58 -> 22,715.80
22,715.81 -> 28,391.03
28,391.04 -> 34,066.27
34,066.28 -> 39,741.50
39,741.51 -> 45,416.73
COUNT <-- % % -->

Cost
89 87.25% 40.68%
8 7.84% 13.74%
2 1.96% 12.44%
2 1.96% 24.03%
0 0.00% 0.00%
0 0.00% 0.00%
0 0.00% 0.00%
0 0.00% 0.00%
Quantity
15096
5099
4616
8917
0
0
0
0
Unit
1100.68
317.83
43.34
43.64
0.00
0.00
0.00
0.00
45,416.74 -> 51,091.96

51,091.97 -> 56,767.20
0 0.00% 0.00%
1 0.98% 9.11%
102 100.00% 100.00%
0
0.00
3379 16.80
37107 1522.29
STATISTICS ON INVOICE_AMOUNT TO SCREEN NUMBER 5

Field : INVOICE_AMOUNT
Number
Total
Average
Positive :
102
278,641.33
2,731.78
Zeros :
0
Negative :
0
0.00
0.00
Totals :
102
278,641.33
2,731.78
Abs Value:
278,641.33
Range :
56,752.32
Highest : 56,767.20 20,386.19 18,883.34 16,642.56 15,444.80
Lowest : 14.88 21.12 31.68 46.08 49.68
INVENTORY
STRATIFYING DATA
1. .a. Run the PROFILE command on all of the amount fields in preparation of running the STRATIFY
command.
b. Run the STRATIFY command on VALUE. Accumulate on VALUE.
c. Which of the numbers would be of interest to an auditor?
Ans@ PROFILE SALEPR MINQTY MKTVAL QTYOH QTYOO rem_days UNCST VALUE
Total
Abs. Value
Minimum
Maximum Name
3,748.66
58,805
1,029,061.61
169,285
117,145
-14,413
2,625.47
680,479.94
3,748.66
58,805
1,031,588.81
169,325
117,145
18,895
2,659.23
708,243.94
0.04
499.98 SALEPR
0
4,600 MINQTY
-839.76
143,880.00 MKTVAL
-12
71,000 QTYOH
0
40,000 QTYOO
-636
280 rem_days
-6.87
381.20 UNCST
-10,167.60
100,800.00 VALUE
@ STRATIFY ON VALUE ACCUMULATE VALUE INTERVAL 10 TO SCREEN

Page ... 1
03/14/15 12:13:40
<<< STRATIFY over -10,167.60-> 100,800.00 >>>
>>> Minimum encountered was -10,167.60
>>> Maximum encountered was 100,800.00
VALUE
COUNT <-- % % -->

Value
at Cost
-10,167.60 -> 929.15

929.16 -> 12,025.91
12,025.92 -> 23,122.67
23,122.68 -> 34,219.43
34,219.44 -> 45,316.19
45,316.20 -> 56,412.95
56,412.96 -> 67,509.71
67,509.72 -> 78,606.47
78,606.48 -> 89,703.23
89,703.24 -> 100,800.00
Inventory
52 34.21% 1.23%
87 57.24% 48.84%
8 5.26% 18.87%
3 1.97% 10.79%
1 0.66% 5.45%
0 0.00% 0.00%
0 0.00% 0.00%
0 0.00% 0.00%
0 0.00% 0.00%
1 0.66% 14.81%
152 100.00% 100.00%
8401.87
332323.97
128431.50
73422.60
37100.00
0.00
0.00
0.00
0.00
100800.00
680479.94
TUTORIAL 4
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
@ AGE ON due CUTOFF 000831 INTERVAL 0,30,60,90,120,10000 ACCUMULATE amount TO SCREEN

Page ... 1
03/14/15 20:26:36
<<< AGE over 0-> 10,000 >>>
>>> Minimum encountered was -35,675
>>> Maximum encountered was -34,717
due
COUNT <-- % % --> Trans

Amount
<0
772 100.00% 100.00% 468880.69
0 -> 29
0 0.00% 0.00%
0.00
30 -> 59
0 0.00% 0.00%
0.00
60 -> 89
0 0.00% 0.00%
0.00
90 -> 119
0 0.00% 0.00%
0.00
120 -> 10,000
0 0.00% 0.00%
0.00
772 100.00% 100.00% 468880.69

Analyzing Payroll Transactions and Identifying Anomalies

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TUTORIAL 1

There are none because total = absolute total ($278,641.33)

*** Duplicate key fields at record

*** Duplicate key fields at record

*** Duplicate key fields at record

*** Duplicate key fields at record

*** Duplicate key fields at record 110, Key:IN

*** Keys out of sequence at record 97, Key:IN

*** Gap detected between 260 and 270

2. Rerun DUPLICATES command, but this time uncheck GAPS.

DUPLICATES ON CHEQUE_NO GAPS ERRORLIMIT 10 TO SCREEN

. How would an auditor

Ans:@ CLASSIFY ON VENDOR_NO ACCUMULATE INVOICE_AMOUNT TO SCREEN

VENDOR_NO COUNT <-- % % -->

@ STRATIFY ON INVOICE_AMOUNT ACCUMULATE QUANTITY UNIT_COST INTERVAL 10 TO SCREEN

<<< STRATIFY over 14.88-> 56,767.20 >>>

COUNT <-- % % -->

45,416.74 -> 51,091.96

102 100.00% 100.00%

STATISTICS ON INVOICE_AMOUNT TO SCREEN NUMBER 5

@ STRATIFY ON VALUE ACCUMULATE VALUE INTERVAL 10 TO SCREEN

COUNT <-- % % -->

-10,167.60 -> 929.15

152 100.00% 100.00%

@ AGE ON due CUTOFF 000831 INTERVAL 0,30,60,90,120,10000 ACCUMULATE amount TO SCREEN

COUNT <-- % % --> Trans

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