Guia Practica Caat Excel

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“Pivot Tables are totally easy. You need no diploma. And still, many auditors look with
fish-eyes when we say Pivot to them. Thanks to this book, you will now be the fisherman
instead of the fish.”
Jean-Louis Vergaert
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To my future wife: Sherlyna Choong, who kept patiently with my long insomniac periods, and kept on
feeding well.
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Contents
I. Preface ......................................................................................................................................................... 1
II. A quick introduction .................................................................................................................................... 3
1. Why this Book? ........................................................................................................................................ 3
2. Who should Read this Book? ................................................................................................................... 3
3. Contents of this Book? ............................................................................................................................ 3
4. A few Notices ........................................................................................................................................... 4
III. Why do you need CAAT for almost every Internal Audit? ...................................................................... 5
5. The Meaning of CAAT .............................................................................................................................. 5
6. Is Internal Audit responsible for finding fraud? ...................................................................................... 5
7. Fraud auditing: internal controls versus past transactions ..................................................................... 5
8. Controls and the 4 levels of Management Competence ......................................................................... 5
 Basic Management Competence Level ............................................................................................... 5
 Competence Level under Stress or changing environment ................................................................ 6
 Competence and Integrity ................................................................................................................... 7
 Competence versus organized crime .................................................................................................. 7
 Conclusion ........................................................................................................................................... 8
IV. Why using Excel 2010? ............................................................................................................................ 9
9. A quick History ......................................................................................................................................... 9
10. Excel 2010: no limit ............................................................................................................................. 9
11. Dynamic filters ................................................................................................................................... 10
12. Calculated/Computed Fields ............................................................................................................. 11
13. VLookups ........................................................................................................................................... 11
14. Pivot/Dynamic Tables ........................................................................................................................ 12
15. Macros and VBAs ............................................................................................................................... 13
16. Multi-lingual ...................................................................................................................................... 14
17. Precautions to Take ........................................................................................................................... 14
18. The Excel mind................................................................................................................................... 14
V. Let’s start Technical: data import .............................................................................................................. 15
19. What data to import .......................................................................................................................... 15
20. How to extract the data..................................................................................................................... 15
21. What type of file do you need ........................................................................................................... 15
22. The nitty-gritty of dates ..................................................................................................................... 16
23. Data Import Tutorials ........................................................................................................................ 17
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 Tutorial: Use the Text To Column to import CSV files ....................................................................... 17

 Tutorial: importing Text files ............................................................................................................. 23
 Technical Tip: importing formatted numbers from a text file .......................................................... 26
24. What data to import: practical examples.......................................................................................... 28
 The Sales File ..................................................................................................................................... 28
 The Accounts Payable File ................................................................................................................. 29
 The Bank Ledger ................................................................................................................................ 29
 The General Ledger ........................................................................................................................... 30
 The Web-Banking transactions.......................................................................................................... 30
 The Payroll Files ................................................................................................................................. 30
 The Suppliers, Payees, Clients and Employee master-files ............................................................... 31
VI. Getting organized with your Data ......................................................................................................... 32
25. Configure your Excel toolbar ............................................................................................................. 32
26. IMPORTANT: Create a Table with your Source Data ......................................................................... 33
 How to create a Table ....................................................................................................................... 33
 What are the advantages of creating a Table ................................................................................... 35
 Rename your sheet Table .................................................................................................................. 35
27. Create the Audit Docket .................................................................................................................... 36
28. Organizing the sheets ........................................................................................................................ 37
 Conventions ....................................................................................................................................... 37
 Using coherent Names for your Sheets ............................................................................................. 37
 How to name and manage Sheets? ................................................................................................... 37
 Copy Sheets ....................................................................................................................................... 38
29. Cleaning up Fields .............................................................................................................................. 39
 Removing spaces: the Trim function ................................................................................................. 39
 Removing numbers from fields: the Substitute function .................................................................. 39
 Remove un-printable characters: the Clean function ....................................................................... 39
 Working with foreign languages........................................................................................................ 39
VII. Calculated Fields .................................................................................................................................... 41
30. Entering Formulas ............................................................................................................................. 41
 Copying Formulas across all the rows of your Table ......................................................................... 42
 So the lesson is…................................................................................................................................ 42
 Operations over dates ....................................................................................................................... 42
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31. A particular case: Concatenate.......................................................................................................... 42

32. The VLookUp fields: adding data from a master-file ......................................................................... 45
33. Audit Calculated Fields ...................................................................................................................... 48
 Amounts LC and USD ......................................................................................................................... 48
 Sales review ....................................................................................................................................... 48
 Accounts Receivable review .............................................................................................................. 49
 General Ledger review ...................................................................................................................... 49
 Accounts Payable review ................................................................................................................... 50
34. Saving calculated fields as value........................................................................................................ 50
VIII. Filters ..................................................................................................................................................... 52
35. ABC of Filters ..................................................................................................................................... 52
 Install Filters ...................................................................................................................................... 52
 Clicking Filters .................................................................................................................................... 52
 Using Filters on Numbers .................................................................................................................. 56
 Using cumulative/successive filters................................................................................................... 57
 Clearing Up Filters ............................................................................................................................. 57
36. Using Filters properly ........................................................................................................................ 58
IX. Pivot Tables – the Basics........................................................................................................................ 59
37. Basics of basics: create a Pivot Table ................................................................................................ 59
38. Add 2 row categories ......................................................................................................................... 65
39. Showing Percentages ........................................................................................................................ 66
40. Sorting Values .................................................................................................................................... 68
41. Using Report Filters ........................................................................................................................... 70
42. Formatting your Table ....................................................................................................................... 71
43. … and that’s it!................................................................................................................................... 71
X. Examples of Pivot Audit Techniques ......................................................................................................... 73
44. Sales ................................................................................................................................................... 73
 Analytical Review of Clients............................................................................................................... 73
 Grouping Dates into Months or Quarters ......................................................................................... 73
 Sales Reconciliation with Reporting or Accounting system .............................................................. 75
 Invoice Accuracy, Taxes, Discounts ................................................................................................... 75
 A practical case of Sales terms review, using Calculated Fields ........................................................ 76
45. Accounts Receivable .......................................................................................................................... 79
 Statistics on Delays ............................................................................................................................ 79
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 Precautions with partial payments.................................................................................................... 80

46. Accounts Payable............................................................................................................................... 81
 Suppliers Statistics ............................................................................................................................. 81
 Suppliers and Cost Codes .................................................................................................................. 81
 Late Recording ................................................................................................................................... 82
 Different names Suppliers <> Payees ................................................................................................ 84
 Duplicate Invoice references ............................................................................................................. 85
47. General Ledger .................................................................................................................................. 87
 Introduction ....................................................................................................................................... 87
 Monthly costs – example of Payroll costs ......................................................................................... 88
 Bank Ledger ....................................................................................................................................... 90
48. Web-Banking transactions................................................................................................................. 91
XI. Audit Documentation ............................................................................................................................ 92
49. Drilling down the Pivot Tables ........................................................................................................... 92
50. Documenting in the Source ............................................................................................................... 93
 Basics of Source documentation ....................................................................................................... 93
 Complicating factors .......................................................................................................................... 93
 Sending the Sample file to the Auditee ............................................................................................. 94
 Source documentation in the G/L ..................................................................................................... 94
51. Using Pivots from one audit to the other .......................................................................................... 95
XII. What’s next? .......................................................................................................................................... 97
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I. PREFACE
I wrote this book out of passion for Excel 2011 and Computerized Auditing, and wanting to share it with my
fellow practice auditors. It is totally free to read, use, distribute and duplicate. It is distributed under the
Creative Commons license terms. It basically enforces just a few restrictions: that you refer to my-self, Jean-
Louis Vergaert (your humble servant) as the original author, and please do not pretend to have written it, or
any part of it, and do not sell it!
If you like this book and feel that it contributed in a small way to improving your audit process, you can
reward me by connecting to my LinkedIn account (Jean-Louis Vergaert), endorsing my “Audit” skills and
posting any recommendation where you can say what you think about this Book.
Although I made this book as clear and complete as possible, a complete CAAT review requires much time,
skills and experience. I work as well as independent consultant and you can contact me anytime for
processing your data and automating the analysis using advanced VBA (please refer to the XII What’s next?
chapter). The advantage of providing Excel tables is that you, after having glimpsed to this book, will be able
to understand it, re-run it on next audits, and suggested useful improvements.
Attribution-Non Commercial-No Derivs 3.0 Unported (CC BY-NC-ND 3.0)
CAAT Excel 2010 Practical Guide 1 © Jean-Louis Vergaert, 2013

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ABOUT THE AUTHOR
Jean-Louis Vergaert has audited about 60 territories during about 20

years of world-wide auditing, mostly for a large IT provider and a
Hollywood movie distribution company.
In addition to travelling and auditing different control environments

across the world, Jean-Louis has developed a keen interest on CAAT,
using Excel. He also develops audit solutions on IBM XPages (web-
based).
He is now living between Kuala Lumpur (Malaysia), London and Brussels. But believing in a truly inter-
connected world thanks to new communication and IT technologies, he continues travelling 40% of his time
and provides remote auditing to various companies.
Outside the audit life, he enjoys swimming, scuba-diving and horse-back riding.
You can connect to him on LinkedIn. Feel free to ask for any advice.

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II. A QUICK INTRODUCTION
1. Why this Book?
After 2 years of reading and participating to debates on the various LinkedIn Auditing groups, I have reached
the conclusion that many auditors do not perform systematic Computerized Auditing (CAAT). They wrongly
believe that CAAT would require enormous investment and technical knowledge.
I believe that technology, using Excel 2010, now allows any Audit Team to perform systematic CAAT; that
you just need a computer-versed auditor to do so; that Excel 2010 proves to be an excellent tool; that you
will learn and improve your auditing techniques every day; that you will have fun with it; that you will be
able to give better opinions in the audit report about the probability that something wrong happened (or did
not happen); and that your auditing methodology will soon or later focus on CAAT instead of taking it as an
accessory.
And I believe that all what you need to know is a set of relatively simple techniques, which took me much
time to understand and develop. I hope this book will save you time and open to you the horizons of cost-
effective CAAT.
2. Who should Read this Book?
Any Auditor who always wanted to do some CAAT but feared asking because “only experts can do CAAT” can
read this Book. CAAT will improve your audit methodology by reviewing transactions of a whole population,
perform detailed statistics and exception testing, and extract effective transactions sample. So if you are
tired of just drawing a large, meaningless sample of 500 invoices, you will find this book highly interesting.
Auditors without much time can start by reading the Parts IV and X: they will see whether the new Excel
2010 features, and Pivot auditing, are exciting to them. Audit Managers can then decide to hand over this
book to their computer-enthusiastic auditor, who will be able to start designing a new Pivot model.
You may also not be specifically an Auditor; this book will still show you some easy tutorials about Pivot
Tables, plenty of practical tips, and some practical Pivot Table purposes.
3. Contents of this Book?
Part III is a philosophical discussion about what is the role of CAAT within Audit.
Part IV will present some exciting Excel 2010 features which will be explained in detail later in this Book.
Part V is technical: it explains the nitty-gritty of importing data, what data to import, how to do it. The
section 24 What data to import: practical examples is specific to auditing and will provide you with a first
glimpse about the CAAT potential.
Part VI is very technical and many of you may consider it as boringly patronizing. It provides you with the
essentials and multiple tricks on how to organize your data. It took me numerous hours of experiment, and
many frustrations, until I managed to properly organize all the data into efficient Excel CAAT, and I am
sharing here my experience.

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Part VII introduces you to Excel calculated fields. Next to specific audit techniques (Vlookup, Concatenate), it
also shows you some calculated fields which you can use through your audit analysis.
Part VIII explains to you how to use the remarkable Excel auto-filtering. You will see that finding information
across thousands of records is now very easy and fast, even if you are not sure about what you are looking
for.
Part IX explains how to create a Pivot table. If you don’t know about Pivot Table, you will see how easy it is,
and look back at all those miserable previous years when you used Excel without pivot tables. If you know it,
you may pass this chapter… although it includes some tips on advanced pivot features which you may not be
aware of.
Part X is the real stuff: it shows to you specific examples about how to use Pivot Tables for your audits. It
covers in detail the audit of Sales, A/Rs, A/Ps and General Ledger. It also presents some more advance Pivot
techniques in a practical context.
Part XI refers to the Audit Documentation, and provides guidelines on how to drill down exceptions and
document all exceptions. It also shows how to prepare and send to the Auditees the list of transactions to
review in advance.
Part XII is a quick overview about What’s Next. Future is exciting especially with Continuous Auditing.
Contact me if you want to share it.
4. A few Notices
 This Manual is destined to users of Excel 2010. Excel 2007 is not a bad tool, but you should definitively
upgrade.
 My personal experience covers CAAT testing of middle size entities over 50 countries. This does not
cover very large corporations or public offices.
 It is always difficult for a technical book to appreciate the knowledge level and computer proficiency of
any individual reader. Some of you will find some Tutorials childish, while others will struggle and wish
for more examples. I tried to always include some valuable technical tip, and not to repeat the obvious.
Every chapter builds up on the previous ones, therefore you should read this book from beginning to
the end. I also try to avoid the style of a reference manual, which repeats “ad nauseum”: “Press Ctrl-X
to delete the selected data and store it in the clipboard, then go to the area where you wish to paste
the data and press Ctrl-V, or select Paste from the menu”.

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III. WHY DO YOU NEED CAAT FOR ALMOST EVERY INTERNAL AUDIT?
This first chapter is the only part which discusses the theory of auditing. After that one, we move to the
practical stuff which you so eagerly await – no more theory, that’s a promise!
5. The Meaning of CAAT
CAAT stands for Computer Assisted Audit Technique. Most likely nobody outside the Audit practice will
understand you. You may make that acronym further more complicated by saying CAATT for Computer
Assisted Audit Technique and Tool, or Computer Aided Audit Technique and Tool.
6. Is Internal Audit responsible for finding fraud?
There is much debate around this, and most Auditors will reply that Internal Audit is not responsible for
finding frauds because this would require considerable work and investigation, but should remain alert for
the possibility of fraud.
In practice however, in the case that a large fraud takes place in an entity which has recently be audited, the
Board is likely to ask “where were the internal auditors?”, and such question does not bear well for the
internal auditor career prospects.
7. Fraud auditing: internal controls versus past transactions
What Internal Audit has always been good at is reviewing the effectiveness and efficiency of controls, to
reduce the risks of errors and frauds. As an Internal Auditor, you will review the controls, assess how they
perform against scenarios of fraud, error, abuse or misuse, you will then highlight any noted control
weaknesses, expose what can go wrong, and recommend a control improvement. This is the prospective
review, focused on the corrective measures to potential errors or fraudulent transactions.
But Management is also curious about the past. They want to have some idea on whether something wrong
happened in the past. Are you are ready to review previous transactions and confirm that “you performed
extensive testing and found no issue”? This is the historical side of auditing, the review of past transactions.
8. Controls and the 4 levels of Management Competence
Let us move aside the traditional definitions of controls. We all agree that controls must be designed and
implemented by Management, and not Auditors. The Internal Audit is there to review the controls, and
indirectly whether Management is competent enough to design and implement those controls. I have set my
own levels of Management Competence, and where CAAT can be useful.
Basic Management Competence Level
It is true that some entities are plagued by nepotism and incompetence, and nominate totally inept
Managers who know (or pretend to know) nothing about basic competitive bidding, segregation of duties,
approval levels, record-keeping, assets safeguard, IT controls and financial statements. Or maybe various
levels of Management are simply used to do what they want, taking a huge bribe or helping themselves to
the cash on the way.

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But most likely, you will work for a well-established company: those have Policies and Procedures, the
Finance Managers are competent and qualified, they underwent high education, they are aware of the
necessity of controls, they keep abreast with the latest legal developments, and they know what is inside
their financial statements. Therefore, you may decide to review basic controls, design impressive-looking
flow-charts and review the trial balance, but you would go much faster by asking to Management about
what goes wrong or what could go wrong (nowadays called “Control Self-Assessment”). In practice
however, your first-level of controls review will allow you to gain a valuable understanding of the main
business processes and controls with a perspective of the risks, and should not be discarded.
CAAT can provide some interesting statistics about the type of sales and purchases, activity which clients or
suppliers, or basic financial indicators. Such analysis is very easy to perform using Excel pivot tables.
Competence Level under Stress or changing environment
Every Manager will tell you that their life would be boringly easy if they could afford to simply apply policies
and procedures, follow the rules and perform all the required controls through the routine of self-repeating
transactions.
The reality however is more challenging. In the nowadays ultra-competitive and ever-changing environment,
Management must face the following complications:
 Increased complexity: companies must adapt their products, or tailor them to the customers’
requirements, production processes need to be supportive of that complexity; negotiation with
suppliers and customers often gives birth to arcane pricing, discounts, advance payments, warranties
and maintenance; new legislation and sudden changes to it may require significant modifications of
financial or tax reporting, or new health & safety measures; Head Office wants to implement a new
process or system, and local staff has trouble following.
 Limited resources: to remain competitive, most companies have embarked in a ruthless exercise of cost
cutting, with major impact on segregation of duties and reducing the remaining time which can be
allocated to controls. The area of bureaucratic controls is reaching an end.
 Stress and unexpected events: a key-staff is sick; a computerized system crashed; a warehouse took
fire. Management must rush to take corrective action, and in such periods controls are overlooked.
Errors may happen, and opportunists may see their chance to take a grab. Those are risky moments,
usually poorly documented and therefore difficult to review.
Internal Audit may decide to live in their bubble and refuse to acknowledge those changes. Do you want to
become irrelevant by recommending a segregation of duties in a 2 members department? by requiring new
reporting and additional photo-copying to staff already working overtime? or by slapping Management on
their fingers for not keeping proper records and approvals when they had to repair a crumbling roof?
Another problem is the control analysis: traditional auditing techniques are very good (although time
consuming) at reviewing and documenting routine controls and streamlined processes. When the exception
becomes the rule, your flowchart will be pages long and defy their stated purpose of summarizing
complexity.
Here CAAT can become most valuable, for instance:
 For a new computerized system, you can confirm basic accuracy like accurate summing and calculation.

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 Analytical review will highlight periods of stress or unusual activities.

 Review of transactions integrity and judgmental sampling will help you to provide an opinion about
those difficult moments.
 You can use CAAT for continuous monitoring, as this provides its own control layer, much appreciated
by Head Office Management.
Competence and Integrity
Here lies the most complex aspect of auditing: facing the scenario that a highly competent Manager, well
versed in controls, and knowing what internal audit usually looks at, decides to turncoat and either take his
grab, or sabotage the company. A loyal collaborator may suddenly have to incur considerable expenses for
his sick wife, or pay the college fee of his daughter, or be dragged in a gambling or consumerist surge. If this
occurs simultaneously to a promotion or salary increases which passes under his nose, that highly
competent Manager may decide to put his skills and deep knowledge of the business process to a purpose
which he may consider to be more beneficial to his own interest. There may be sincere rationalization (he
thinks that he is just taking a cash advance, and that he will reimburse the company later) or a real desire of
vengeance. But in most cases, the culprit is highly knowledgeable and his fraud will be extremely difficult to
detect.
Even the most complex CAAT will not guarantee that no fraud did take place, because the computer records
do not store the whole story. Invoices, documents and signatures are easy to falsify. Items received may be
different from their description. But except for viewing hours of CCTV over the shoulders of Management,
CAAT still remains the only effective tool to Auditors who perform routine audits (aside tip-offs):
 You can perform CAAT over the web-banking records to see actual payments to third parties.
 Fraudsters usually get bolder as they do not get detected, and increase the value of their fraud; there is
chance that this will appear through focused analytical review.
 Fraudsters may be unaware of your CAAT, and not suspect that you will be able to analyse such volume
of transactions. For instance, they do not believe that you will review the accuracy of each invoice; that
you will reconcile all cash disbursements with purchases; that you will review all transactions on the
bank ledgers. They believe that they can hide fraudulent transactions in thousands of legitimate ones.
Competence versus organized crime
I found little debate within audit circles about this danger, although it permeates our society. Organized
crime is increasingly ruthless and competent in mounting sophisticated computerized attacks, or planting a
mole just waiting to strike, either by sneaking some information away, or stealing a vast amount of money
and disappear. And our Management, although competent and senior they might be, is ill-prepared against
such threat.
I do not see that Internal Audit has the tools to counter such threat by ourselves. This would require
extensive collaboration between all services and outside consultants. I just highlight this fourth level of
Management competence, but the review of risks and measures (including CAAT) goes far beyond the scope
of this manual.

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Conclusion
Traditional audit focuses one level one. It is necessary to design and review the routine controls, and to have
a basic understanding of the business processes. External Auditors may ask for the documentation. In case of
any issue or fraud, Internal Audit will have to demonstrate that they did their basic review. And sometimes,
a stupid and obvious fraud or event may happen, with a red herring visible to everyone but nobody looking
at it.
But advanced Internal Audit must also look at Levels 2 and 3. And for that purpose, CAAT is the most
efficient tool. Proper knowledge about those risks, and CAAT techniques may not be part of the required
curriculum; but it will surely set you apart the others and provide good career prospects.

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IV. WHY USING EXCEL 2010?
9. A quick History
20 years ago, even medium size entities needed a large mainframe to record their transactions. To analyse
those files, Audit also needed a mainframe data interrogation software. I had the privilege to test my first
CAAT skills on a monster software called Easythrieve. You still needed the services of a specialist technician
to extract the data and configure the data fields. Easythrieve produced reports and nothing else. Then, you
would have to spend considerable time in reviewing the exceptions.
15 years ago, a new generation of data interrogation software started blossoming, and I burned my feathers
on ACL (Audit Command Language). Similar software can import various formats of data files, usually sheet
or text files. The main characteristic of such software is that the data remains independent of the query.
Computed fields are programmed fields, which do not become part of the data but instead are re-calculated
every time a query is launched. The interrogation software reads the data source, it can compute calculated
fields, it creates reports (summarizing, sampling or stratifying data), and can extract subsets of the data and
export it as well.
ACL was a great improvement and still boasts impressive qualities: it is relatively easy to learn, you can join
tables (combining for instance a client master-file with the sales invoices so that your report can show the
client name, even though the sales invoices only include the client number), you can easily create scientific
monetary unit samples and highlight duplicate payments; with more advanced knowledge, any computer
literate person can create scripts which automate the auditing process.
Actually, I thought it was the best data analysis tool… until I met Excel 2010.
I will quickly introduce you to several features of Excel 2010 in this chapter. Do not worry if you are not
familiar with those features, as I will explain them in detail throughout this Manual.
10. Excel 2010: no limit
With Excel 2010, the maximum sheet size is 1,048,576 rows by 16,384 columns. In practice, my standard
laptop (a good level HP EliteBook with Intel i-7 and 8 GB RAM, costing around US$ 1,500) can handle a sheet
with 300,000 records (and still check my e-mail next to it). A typical record will include 20 or 30 data fields,
and you can add 20 or more calculated fields. I will explain some rules to minimize the processing time of
calculated fields later. The same workbook can include a few dozens separate pivot (or dynamic) tables. My
largest audit file takes 81 MB, which is significant but any good laptop nowadays can smoothly process it,
save and back it up.
300,000 records is already considerable and should allow you to audit most ledgers. Except if you audit the
ledger of a very large corporation, you should not have to worry about size, memory and performance of
your laptop.
Even for the case that you must access largest files, Excel allows you to create connections to data stored in
a server (SQL, Access, OLEDB…). This becomes out of the scope of this book, but the important to know is
that once a computer technician has created those connections, you can just continue your data analysis as
if you had simply imported a file.

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So for anyone who would laugh about Excel, that “it cannot handle the volume of data”: think twice. My
laptop has the full 3 years data of 50 territories (and is password-protected and encrypted, by the way).
11. Dynamic filters
Excel stores all the data in RAM: this means that it is immediately accessible, that you can go straight to any
records. Other interrogation software does not: they run the audit query and present the results to you, but
the data is then “forgotten”. It has its advantage, that it takes little memory and runs smoothly very large
files. But it also has a big disadvantage in term of filtering.
In a classic data interrogation software, to filter a file you must enter a specific criteria. Excel, on the other
hand, displays all the options. As an example, if you want to see all a client with the name “Company Acme”,
you must type exactly the query “Client = “Company Acme”. With Excel, you simply scroll down the list of
values or enter Acme in the search. It will show you any value including Acme, be “Company Acme”, “Acme
Company”, “Acme Co”, etc.
As an example about filtering a Client field:
All the various client names are displayed in the

drop-down list:

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Type one word and see all the options:
I will explain later some tips about filtering. But you can see that you do not need to know the precise name
of the client you search. With Excel 2010, you just need a clue.
12. Calculated/Computed Fields
Both classical data interrogation software and Excel allow easy creation of calculated fields. Just enter a
formula, for instance: Actual Discount Percentage = (Net Price – Regular Price)/Regular Price. You will also
use calculated fields to clean up unreadable data, with unnecessary spaces or special characters.
To be sure, the Excel formula language is quite tedious, especially when you use the infamous nested IF
formulas.
You will use extensively calculated fields, for instance for checking discounts, tax rates, calculation, etc. Then,
by using a filter, you can spot on the exceptions and investigate them.
13. VLookups
Often you will have a record file (showing all the sales invoices with the client number), and a master-file
(showing the client number, client name, address etc.). With classical data interrogation software, you must
“join” or “connect” the tables by creating a “relation” based on the client number. This can be tedious as you
must ensure that both fields are exactly of the same type and length.
With Excel, you can create a calculated field using the VLookup formula, for instance: VLookup(Client,
ClientTable, 2, false). There are a few rules which help to effortlessly create VLookup, which I shall explain.

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14. Pivot/Dynamic Tables
Pivot Tables is the most fantastic analytical tool ever created in this solar system. For instance, you can easily
create a Table showing the evolution of the sales per client per fiscal year. Here it is (note that as in every
figure of this manual, I am hiding some key data in order to avoid data disclosure – most of my examples
come from practical audit work, not from a dummy file):
This table will take you a minute to create. Most important, it will take you another few minutes to modify,
for instance replacing the sales in local currency by sales in USD. The creation interface is very intuitive:

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After creating a Pivot Table, you will see the list of all
the data and calculated fields: simply drag and drop
the desired fields on one of the 4 boxes: Filter,
Column Labels, Row Labels and Values.
If you change anything, the new results will be
immediately displayed.
The above is a simple statistical table showing to you the evolution of the sales per client. But you will
quickly discover new uses of Pivot Tables, specific to the review of transactions. This Manual will introduce
you to some of them.
15. Macros and VBAs
ACL allows you to create Scripts to automate tasks. Those scripts are highly structured, but relatively easy to
create.
Excel has VBA (Visual Basic) macros, and is object oriented. I use VBA for cleaning up the data (especially
with multi-line records), automate my filters and create impressive sample sheet of journal entries. VBA is
extremely powerful, but is a pain in the neck to learn. VBA books are consistently thousands of pages long,
and you do not know where to start. I took several days of intensively frustrating trial and errors in order to

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develop VBA macros, which now greatly facilitate my life, by making my investigation work 10 times faster;
however, this is way beyond the scope of this Manual.
16. Multi-lingual
Excel is part of Windows, and can recognize any type of alphabet, from Chinese to Arabic, Hebrew to Danish.
Best part is that it immediately recognizes it without needing to install additional language packages.
17. Precautions to Take
CAAT through Excel is highly intuitive and flexible, but it has some disadvantages compared to classical
interrogation software: the source data is included in the workbook, accessible by everyone, and therefore
vulnerable.
The simple precaution is to make multiple backups, not only of the latest versions of also of several versions
(keep a copy of the file as saved 1 hour ago, 2 hours ago, one day ago, and the last 3 days). With a bit of
discipline and the right technique, you will see that it is not that difficult, but it is essential to do so.
18. The Excel mind
With Excel 2010, you can very easily imagine a new audit analysis, test it, and immediately see the results.
And any computer-versed auditor can try a new approach: if it works, the new tool can be easily
implemented across all future audits; if it fails, nobody will care as only an hour or less will have been spent
on trying a new technique.
With Excel 2010, you can start with simple analysis and constantly improve it throughout all the audits, try
new techniques, find incremental improvements which make your work more effective. There is no need to
perform advanced planning, trying to develop the perfect tool from scratch.
Field auditors will find during the course of their audit new processes, exceptional cases, specific risks which
even considerable advance planning would fail to discover. It is the role of audit to discover cases which
Head Office did not expect. With classical interrogation software, the auditor would have to contact the
CAAT specialist in head office, communicate the case, specify requirements, wait for the programming to be
done and follow up the results. With Excel 2010, the auditor immediately tries to program a new calculated
field or pivot table, and can complete an analysis tailored to that case within an hour of trial and error.
Excel 2010 is an open tool, accessible by the whole team, easy to improve. The tool shapes the user as much
as the user shapes the tool, and you will surely considerably improve your Excel analysis after several audits,
effortlessly. Every auditor will sense the feeling that they own their CAAT more than the CAAT owns them.

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V. LET’S START TECHNICAL: DATA IMPORT
19. What data to import
You should consider the import of the following data:
 Sales transactions/invoices.
 Accounts Receivable (if not combined with sales invoices).
 Payable transactions/purchase invoices.
 Accounts Payable (if not combined with purchase invoices).
 Clients and Suppliers master-files.
 The whole General Ledger from your accounting software.
 Web-banking file.
 Payroll data.
 Stock movements, purchase orders, product master-file.
20. How to extract the data
Nowadays most types of modern software can export data as Excel, csv or text format. PDF files are mostly
useless (although you can always try to use the pdf text export or Optical Character Recognition). The
problem is that the systems often export only reports which the software developer considered as “useful”.
What you must try to have is simply most of the data available, without any restriction of scope.
Another problem is that some software developers like to apply fancy formatting to the reports, with
borders, totals and subtotals, multi-lines, merged cells, etc.
The easy way to do is asking the software developer (in-house or outsider) to program the data export
according to your wishes. You only need basic data, without filter, without any formatting, and under a
standard format. Therefore, it should be neither expensive nor time consuming for the developer to
program.
21. What type of file do you need
The magic word to say to the Programmer is “Flat File”. You need a simple file, one line per record, no
formatting, no total, no subtotal, no sorting. All data must be repeated in every record, so you cannot have
one line showing the name of the client, followed by lines showing all the purchases of that client.
Then as the Programmer asks you what data you need, simply reply “everything you have”. Often a system
may have useful data you would not suspect and forget to task. The more data the merrier, and you can
easily hide the columns of data you do not need.
The best format is csv, separated by semi-columns. Those files are extremely portable and easy to import
into Excel. Some software can export as Excel files directly, with the columns headings: those are great, as
long as there is no pre-formatting. You can also import as Text file, but beware with the alignment, as the
following example:

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The data becomes unreadable and impossible to import using the Excel Data Import Wizard. This problem
may originate from some text fields be very long, or the use of special characters in another language. This is
why csv file where all data is separated by a symbol like a column or semi-column, is usually more useful.
22. The nitty-gritty of dates
Date fields can be a nightmare to export if not properly handled. Excel stores a date field as a number. It will
display that number according to the format you define (for instance: 22-dec-65, or 22/12/65). When
importing data, Excel is usually very good at recognizing any kind of format…. as long as it is logical.
One main problem is the confusion between US (Dec 22 1965) and most other countries (22 Dec 1965). If
your computer is configured as a non US, it will take Dec 10 1965 as 12 Oct 1965, and it will not recognize
Dec 22 1965 because there is no 22th month in the calendar. This can quickly become a total mess.
Being technical:
- If the date is exported as Excel, there is no problem (because the date is exported as a number,
which Excel recognizes in any PC date configuration).
- If the date is exported as text, then be sure that the export is consistent! The date can be exported
under any format, and the tutorial below will show you how to configure a date field. What matters
is that the format is consistently applied. Excel is incredibly forgiving: you can import from a file
records with the date 22/12/65, 04/03/40, 4/5/34 and 1/6/10and it will properly recognize the date
as 22-Dec-1965, 4-Mar-1940, 4-May-1934 and 1-Jun-2010. If the data is entered in the Month Day
Year format (12/22/65, 03/04/40, 5/4/34, 6/1/10), Excel will also recognize it properly as long as you
define the date properly as MDY:

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23. Data Import Tutorials
Tutorial: Use the Text To Column to import CSV files
If you receive a CSV file, you can open it easily from Excel, but it will display the following:

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All the data is stored in the first column, separated by a distinct separator, here a quote (“). Other frequently
used separators are the coma, or semi-column. Make sure to select the whole column by clicking on the
header “A”.
So you must split the first column into columns. This is very easy, follow those steps:
 Select “text to Columns”:
 As your file is of CSV type, select “Delimited”
 Here the separator is a quote (“), so enter it in Other

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 You see that once you have entered the quote (“), the wizard automatically splits the data into
columns.
 The wizard will specify most columns as general.

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 Some columns may be unnecessary for your analysis, or blank: click of the column, and select the “Do
not import” option.
 For the date columns, you can select one of various date formatting.

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 Have a last look, then click “Finish”.
 The data is now nicely split.

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 And you can change the date formatting as per your needs. Most important is that Excel recognizes that
field as a Date.
 And when everything is ready, you must save the file in Excel format instead of CSV. Select “Save As”,
and change the type from CSV to Excel Workbook:

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Tutorial: importing Text files
Text files typically do not include a separator, but instead align the data. The procedure follows exactly the
same procedure as per the CSV files, with 2 exceptions:
 You must first open the text file through Excel. Select Open, and All Files.

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 Select the text file you wish to convert:
 Select the “Fixed Width” option:

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 Follow the instructions to create a break line, meaning a distinctive column or field. Do not worry about
leading or trailing spaces, Excel will eliminate them. But be sure to include trailing minus signs, which
indicate a negative number.

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Technical Tip: importing formatted numbers from a text file
Contrary to CSV files, text files usually display a number with thousands separators, like this:
There are around the world 2 sets of separators: the anglo-saxon one: 45,040.54 and the continental Europe
one: 45.040,54.
A potentially frustrating case is when the file you import displays the opposite thousands and decimal
separators as your computer is configured. For instance, your computer is configured in the Anglo- Saxon
way, meaning that it displays amounts as follows: 45,040.54 – but let us assume that you import a text file
displaying numbers in the European way, as follows: 45.040,54. If you do nothing, Excel will import that
amount as text, as follows:
You can see that Excel does not recognize the imported amount as a number, because my formula
“=A1+1” shows an error.
Fortunately, the Import Wizard brings the solution. Select the column with the number, and click the
button “Advanced”:

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Now chose the proper separator in the way numbers are displayed in the text file, not in the way
numbers are displayed on your computer:

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Do the same for all the columns and click OK. The amounts are now properly imported and recognized
as numbers, as below:
24. What data to import: practical examples
As I said above, you should try to import as much data as the system stores. Your laptop has plenty of space
available, even a dozen of columns more will take less space on your hard-disk than a photo of your beloved
partner in life; and it is faster for you to hide a column than going back to the software developer and beg
him to add an additional field to his export routine.
The following examples are therefore to give you an idea. They originate from my practical and limited
experience.
The Sales File
The Sales File typically includes all the data recorded on a sales invoice:
Client number | Date & Fiscal Month & Fiscal Year of invoice issuance | Description | Sales amount | Tax
amount | Gross Sales amount
Within the sales system, the client number is likely to refer to the client master-file where all the client data
is stored. I will explain later how you can include all that data within your Excel, using the VLookup formula.
But if you deal with a friendly IT consultant, you can nicely ask him to do that link within the export feature
so that it also includes that data on the each sales invoice record:
Client name | City | Delivery location | City | Tax code | Bank number etc…
The Description of the rental invoice may be a simple comment, or a reference to a Sales Order, or a
reference to various product numbers (and quantity and unit price). Try to get as much data as possible. You
can decide to export the Sales Order table separately, and link it to the Rental invoice using a VLookup. Or
you can ask the friendly IT Developer to do that job for you.
One particular case is when a sales invoice includes references to various products, a typical case for a multi-
lines record. Classical data interrogation software and Access are good at handling those multi-lines records,
but they require advanced skills. Here I suggest 2 solutions:
a) In the case that you have a maximum of 3 products, include all of them within your exported data,
for instance: Qty Pdct 1 | Unit Price Pdct 1 | Total Price Pdct 1 | Qty Pdct 2 | Unit Price Pdct 2 | Total
Price Pdct 2 | Qty Pdct 3 | Unit Price Pdct 3 | Total Price Pdct 3 | Total Price Invoice.
b) Or you export separately the Table with all the product descriptions, as follows:

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Sales Invoice 4567 | Qty Pdct 1 | Unit Price Pdct 1 | Total Price Pdct 1
Some sales systems also link the sales invoices to the accounts receivable module. If your IT developer is
really friendly, or if you are ready to pay him a good lunch, you can also ask to add to the sales invoice
record: Payment Date | Balance.
If your system has some data analytics, you can also import the profit centre number, label, geographical
area, product category, sales person, sales commission, etc.
You must investigate whether the Sales Invoices file includes the Credit Notes, and sundry Debit Notes, as
sundry and out-of-the-ordinary transactions may not be included in the standard Sales system.
And finally, in the case that the sales invoice is connected to a Sales Order, you should also try to get that
Sales data: date of creation, person who created it, approver, etc. But again, your IT consultant may be tired
of your lunches and will export that data under a separate table.
The Accounts Payable File
Many accounting software have a special A/P module which processes all purchase invoices. The A/P module
may also be connected to a Purchase Order system detailing the product purchased, or it should include a
good description of the items purchased or services ordered in the comment field. The data to be
downloaded will be very similar to the Sales File. You will make sure to include the Supplier Invoice Date and
Reference number, which will allow you to search for potential duplicate invoices. The A/P file will often
include the Session number, and the data of payment.
A very interesting data you should try to include is the general ledger account, or cost code, that a specific
purchase invoice relates to.
You must also investigate whether that A/P file includes advance payments or sundry payments not related
to purchase invoices. Often they don’t, and this is why you will perform the Bank Ledger Review.
As an example, a typical A/P File can include the following: Supplier number | Supplier Name | Payee Name
| Payee Bank account number | Supplier Invoice Reference | Supplier Invoice Date | Accounting Date, Fiscal
Year and Fiscal Month | Approver | Invoice Description | General Ledger Account and description| Cost
Code | Net Amount | Tax, Value Added Tax code and amount | Gross Amount | Payment Date.
The Bank Ledger
We do not talk here about the web-banking records, but about the Bank Ledger as a subset from the General
Ledger. I see 2 types of bank ledgers, depending on the accounting system:
1) The Bank Ledger which shows total amounts of an A/P sessions: if 50 payments were recorded in an
A/P session, the Bank Ledger will only show the total of that session. The same applies to the A/R
transactions. That Ledger will then only show the details of sundry payments, bank charges,
remittances, transfers to/from other accounts and all other operations not performed through an
A/P or A/R session.

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2) The Bank Ledger which shows all individual payments made or received to anybody.
In addition, some well controlled companies have a separate bank account for payments, and another one to
receive all payments from clients.
The fields available to download will greatly depend upon the type of Bank Ledger, as described above. I can
be simply the date, amount and description, or the full detail of the payee or payer and of the purchase and
sales invoice.
One must be careful to remember that the bank ledger is only what the accountant recorded in it, not the
actual bank account statement. The best solution is naturally to download the actual bank operations from
the web-banking system. Nevertheless, a review of the bank ledger is always of the greatest interest.
The General Ledger
Not many auditors do actually download and perform CAAT on the complete General Ledger, but I find it
very useful. There is no magic wand testing, but it allows a great review of the monthly salaries, to see the
accounts intensively used, to check the fixed assets, and many others. Also, it is very easy to extract from
that file the Journal Entries you want to investigate, and give the Sample File to the Accountant.
A typical General Ledger file may be succinct: Account Number | Account Description | Amount (negative for
credits, or a special Debit/Credit field flag) | Accounting Date, Fiscal Month and Fiscal Year | Session number
or reference | Document Affected. Some accounting systems may also provide more description about the
purchase or sales invoices recorded in through the Journal Entry.
The Web-Banking transactions
In the case that your company has a connection to a relatively modern web-banking system, you can
download the data from that system and have a direct access to the bank statement data. This data reflects
the actual banking operation, and is more reliable than the Bank Ledger, which only reflects what the
accountant recorded in it.
However, web-banking files are not yet the panacea, and the data varies considerably across the world.
Specifically:
 Many systems only allow you to download recent data, for the last 3 or 6 months. In such case, you
should perform the download every 3 or 6 months, and keep the file ready until your next audit.
 In case of cheque payments, the bank data will often only include the cheque number, without any
mention of the payee name.
 In case of bank transfers to a supplier, the payee name is mostly included, which provides a great basis
for testing outgoing payments…. But some systems actually allow the user to modify that payee name
as a text field, and therefore a smart fraudster may cover his misdeeds. You should look instead at the
bank number.
The Payroll Files
If you company contracts a lot of staff, they will most likely use a computerized payroll system which allows
data extraction of all the salaries, over-time, hours worked, and tax deductions. This can be a good basis for
a payroll audit. Beware that highly complex social legislation would allow a cunning payroll manager to

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perform sophisticated fraudulent schemes (for instance by manipulating pension deductions), and you
should always perform a payroll audit with the help of an experienced payroll consultant.
The Suppliers, Payees, Clients and Employee master-files
You can also ask to download those files. I remember with fondness, 20 years ago, that one of the first
testing performed with Easythrieve was to compare the bank accounts between the suppliers and employee
master-files, under the suspicion that an accountant would create a fictitious supplier to process payments
to his own bank account (truth: we never found such an idiot accountant). You can now easily perform this
check using sorting in a few minutes.
I already describe above how you can ask your friendly IT Consultant to merge the suppliers and client data
with the A/P and Sales files. In case this is not possible, I will explain below how to use VLookup.
Some accounting systems keep track of all changes made to the supplier and clients records, for instance
when someone changes the payee name or the bank account number. If available, you can download the
report and quickly browse to it to see the sensitive changes (especially the bank account number, if you see
it is changed for a few days, then reverted to his original number).

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VI. GETTING ORGANIZED WITH YOUR DATA
You have downloaded all the data in a nice sheet, congratulations. Before you proceed, you should get
organized. The following steps provide best practice which will reduce many risks of errors and optimize
your analysis work.
25. Configure your Excel toolbar
While performing CAAT, there are a few specific Excel operations which are worth to have at your fingertips,
in order to save you repetitive mouse movements.
In case you forgot how to configure the Excel toolbar: click the small downward arrow at the far right of the
icon bar, and click “More Commands”:
Now select the category from the dropdown-box (“Popular Command”), then the icon, and click Add.

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I will show you now where to find some very useful icons:
Home Tab>Delete Sheet You will create many “drill-down” sheets while
using pivot tables for review only, which you do not
need to keep. You should therefore have a quick
way to delete a sheet within your workbook.
Formula Tab>Trace Precedents For your calculated fields, you wish to see which
other fields are included in your formula (not really
necessary if you use Data Tables, as explained
below).
Formula Tab>Name Manager To prepare the VLookup formulas, you should
reference to all tables by their name.
Data Tab>Filter Create automatic filters (not really necessary if you
use Data Tables).
Data Tab>Clear (Filter) When you have used a filter, you must remove it
before doing another analysis.
Data Tab>Sort Call the Data Sort dialog to sort your tables.
Insert Tab>Insert Pivot Table You will create dozens of pivot tables throughout
your audits.
IMPORTANT: in my screen-shots throughout this book, I shall refer to those icons instead of the full tab
name and menu. I therefore recommend that you remember and configure the above icons immediately.
26. IMPORTANT: Create a Table with your Source Data
How to create a Table
When you have finished importing your data in a sheet, I recommend that you rename that sheet “Source”.

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To rename a sheet from “Sheet 1” to “Source”,

simply double-click on the bottom tab and type
“Source”.
If you have not done so yet, you must create HEADERS on the top first row of your data. Give useful names,
like “Customer”, “Customer No”, etc. Some of your fields are of little value per se, and may only be used ad
input to calculated field formulas. In such case, I would precede the names by a “X_”.
Then, it is of great importance that you create a Table with the data you have just imported. To create that
table, simply leave your cursor anywhere within the data, and select Insert>Table
A dialog box will ask you to confirm the range of the data: it should be correct, but you can further check by
scrolling down to the end of your file, just in case there is a blank row or column within your data.
The table is created, and you can see the new blue style.
And if you go to the Name Manager, you can see that you have created a new Table called (imaginatively)
“Table1” (I will explain later how to rename this table to “Source”:

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What are the advantages of creating a Table
The above operation will have taken you 15 seconds, and is very useful:
 When you create a calculated field by entering a formula in the first data row (right under the header),
that formula will be automatically copied across the table, until the last data row. You do not need to
copy and paste the formula yourself.
 When you enter the formula, you can use references to the headers of other fields, instead of entering
cell reference. You can for instance type the self-explaining formula = [Quantity]*[Unit Price], instead of
the cryptic = C2*R2. We will explain more in the section “Calculated Fields”.
 When you modify a formula in the first data row, all changes will be automatically copied in all the rows
of the data table.
 When you create a Table, Excel automatically addd filters to the header.
 If you add rows to the existing data, the Table will automatically include those new rows. This is
important as all your Pivot Tables will be automatically created from “Source” (as explained below), and
you can easily refresh those tables to include those new data rows in the analysis. If you had not
created a Table, you would have to manually change the data source of all your tables to include those
new data rows. This may sound a bit complicated, but you will understand when we start creating Pivot
Tables.
Rename your sheet Table
Your data is currently stored in a newly created sheet, most likely to be called “Sheet1”. I would change the
sheet name to something more meaningful, like “Source”. To rename your sheet, simply double-click on the
lower Tab and type over Sheet1 the new Source name:
Your Table is currently named “Table1”. I find this name very hollow. You may have to create other Tables
later (for instance, some tables with master-files of suppliers and clients), and it is important to give a
meaningful name to each of them.
To rename my Table1 to Source (I like naming all my source data: “Source”):
Click on the Name Manager icon

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You can see your newly created

Table1: click on Edit.
Change the name from Table1 to

Source
That’s it: you can see that your Table1

has been changed to Source.
27. Create the Audit Docket
You should always immediately create a first sheet called “Docket”. A typical Docket is as follows:

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It includes the scope of your data, for instance the first and last document dates (1-Jan-10 to 20-Sep-12), or
the first and last invoice numbers. Use the MIN and MAX formulas to automatically find the earlier and latest
number or date within the column of your Source, for instance: =MAX(Source!AB:AB,1).
Then, I show the various sheets with a short description of the Test, the comment of the Testing, and what
remains To Do. This is a very informal documentation, but by starting immediately (even before the testing)
and by updating it regularly, I make sure that everyone (including myself after coming back from vacation, or
being interrogated on this audit by a hostile reviewer) can understand what testing it includes, and what
period it covers.
28. Organizing the sheets
Conventions
Just in case you did not follow Excel 101, you should remember that an Excel file is called a Workbook, and is
made of several “Sheets”.
Using coherent Names for your Sheets
The best practice is have one sheet for each testing (pivot table, sample of transactions). I like to name my
sheets using a “A”, “B”, “C” sequence, and abbreviate them following the same order as shown in the Audit
Docket above.
Sometimes you will create sheets which support a specific testing, for instance for additional statistics or
samples of transactions. In that case, I prefer not to give a full name to the tabs, but instead use the simple
abbreviation “E2”, “E3” like below:
How to name and manage Sheets?
Just in case you need some refreshing:
To change the name of a Sheet from “Sheet 1” to

your selected name: double-click on the name, and
type to overwrite the old name:
To move sheet tabs: simply drag and drop the sheet Sorry: no image available, the screenshot software

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to the desired destination. cannot take a photo of this operation.
Note: by default, pivot tables will be automatically created in a new sheet. Therefore, do not waste your
time in creating in advance sheets for all your future pivot tables.
Copy Sheets
Sometimes you want to copy a whole Sheet… for instance, from your main CAAT workbook to a Summary
workbook which only shows the testing sheets. The procedure is easy:
Go to Home > Format > More or Copy Sheet
Select the destination workbook. By default, the

same workbook is first displayed, meaning you copy
your sheet within the same workbook. However, you
can select any other workbook which is currently
open, or the option “new book” to copy this sheet in
a newly created workbook.
And the most important: do not forget to tick the

box “Copy sheet”, otherwise Excel will MOVE your
sheet to the selected destination (and delete if from
your source workbook!). Beware that this little trick
is easy to forget, and you may inadvertently move
sheets instead of copying it. I wish that the great
Excel designers had instead created 2 buttons
“Move” and “Copy sheet”… but critics is easy.

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29. Cleaning up Fields
Removing spaces: the Trim function
In some cases, due to upload technical issues, your data fields may include spaces before or after the field
value, or several spaces between words. Create an additional column and use the Trim function to clean up
those spaces: that function only leaves a unique space before words.
For instance:
Removing numbers from fields: the Substitute function
Sometimes a client field will include a number identifier, which identifies a shop store. You can use the
Substitute function to remove those numbers, and obtain the single client name:
The Substitute function is a bit of a pain: if you enter the formula =Substitute(C2,”1234567890”), it will not
work because it will search for the string “1234567890” to remove, and leave any “1”, “34”, “11”. So you
must use that awfully complex formula – I spent frustrating minutes defining the exact nested parenthesis,
you can simply copy and paste it:
=SUBSTITUTE(SUBSTITUTE(SUBSTITUTE(SUBSTITUTE(SUBSTITUTE(SUBSTITUTE(SUBSTITUTE(SUBSTITUTE(SUB
STITUTE(SUBSTITUTE(I2,"0",""),"1",""),"2",""),"3",""),"4",""),"5",""),"6",""),"7",""),"8",""),"9","")
Remove un-printable characters: the Clean function
In some cases, your file will include some unprintable characters. This may be often the case when you
import data from foreign language (see below).
In such case, use the Clean function. For example:
Working with foreign languages
Excel 2010 recognizes most of any foreign languages automatically. As you can see from below, my standard
Excel 2010 easily recognizes Cyrillic alphabet from Ukraine, and this without any need for an add-on:

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You may have problems with the actual engine export from the source software, which generates your text
file. In that case, your file may be full of un-printable characters. The solution is complex: use the Clean
function as above or do not import the text fields, and use vlookup fields to link for instance the Client
number with a separate table showing the Client Names with the correct alphabet.

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VII. CALCULATED FIELDS
Now that your data is properly imported and well organized, you can start to dissect it. The first task is to
create calculated fields. I will show below how to efficiently enter calculated fields, some specific practical
examples, and some ideas of the analysis you can perform.
30. Entering Formulas
I assume that you were not sleeping over the preceding pages and you created the Data Table, as explained
above.
In the following example, I show how to calculate the Delay of Payment in days. The formula is easy: if first
check whether any date is empty, in such case I return a blank value (because I hate the #VALUE! error
message being displayed in my sheets); otherwise, the formula returns Date Payment – Date Invoice.
The first row shows the classical way to enter a formula – terribly confusing:
The second row shows the Data Table way to enter a formula – now this is much clearer indeed:
To enter a formula the Data Table way is great fun and simplicity. Forget about scrolling left and right to see
and remember the column number (AB2, AC2)! Instead, you must remember the header name, and start
typing it between “[“ and “]”. Therefore:

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As you can see above, when you start entering the first letter of the header name, Excel shows you the
various headers available from your name. Simply scroll down to the right header name. So you do not need
to remember the exact name of the field you want to include, just remember the first few letters.
Copying Formulas across all the rows of your Table
Again, if you have properly created a Data Table, there is another great advantage: once you have entered
the formula on the 2nd row (which should be the 1st record, under the header name), Excel will automatically
copy the formula over all the rows of that same column, until the bottom of your table. There is no need to
manually select all empty cells until the end of the table, and paste the formula.
So the lesson is…
… that you should always create a Data Table of your source data. It takes seconds, and it considerably
facilitates the entry of formulas.
There is only one disadvantage with Data Tables: the “Custom View” feature is de-activated. Custom Views
could be great to create several views which hide unnecessary columns, for instance a “Complete View”
which shows all columns, a “A/R View” which only shows the amount, invoice and payment date and
payment delay, a “Summary View” which only shows the key columns…. Well, sorry but this Excel little bug
prevents you from using Custom Views over Data Tables.
Operations over dates
As you see above, there is no need of complicated formulas or functions in order to calculate differences
between dates. This is because Excel immediately recognizes dates under any coherent format, and
translates them into numbers. So to calculate a payment delay into days: Date Pyt – Date Invoice.
31. A particular case: Concatenate
You will see when reviewing Pivot Tables that it is often useful to join 2 descriptive fields into one. For
example:

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if you have the sales per

shop, city, product and year,
as follows (I use a purely
theoretical example):
You can easily create a Pivot

Table showing the sales per
shop for all product

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You can also easily create a

Pivot Table showing the sales
per city, and shop within the
city:
The problem is if you wish to

see the most profitable shops
on the top, and to which city
they are located. I will show
you later how to use the
“sort” feature. In this case, it
will show you first the most
profitable city, then the most
profitable shop within the
city… not what you want.

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The solution is easy: we must

go back to the Source data
and create a field called
“Shop>City” using the
Concatenate function. This
function is simply a
complicated name for
combining text values.
Now you can create another

Pivot Table which shows the
Shop, to which city it
belongs, and which is sorted
in relevant order (the most
important shop for 2012
sales on the top).
Another typical example of Concatenate field for the General Ledger is “Account Number > Account
Description”… but I will describe it in detail later.
32. The VLookUp fields: adding data from a master-file
Another typical real scenario is the following:
You receive the following file,

showing the shop number,
product label, and sale.
Obviously the Shop number is

meaningless for your analysis.
You try to invite the IT guy for
lunch, but he is busy and
instead sends you the
following file, with a note:
“DIY”.

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First thing: get organized. As

explained above, create Data
Tables of both sets, and
rename them “Source” and
“MF_Shop” (MF for Master-
File).
Then, make sure that your

MF_Shop data is sorted by
shop number, in ascending
order.
Now are back to your Source

data, and will add 2 headers:
Shop Name, and City.
Now enter your VlookUp

formula – note how clearer it
is thanks to the use of Tables,
with meaningful Table names
and Headers.
The formula for the City is

almost exactly the same. The
only difference is the column
index: 3 instead of 2.
Let us see a bit more about that formula: =VLOOKUP([Shop number],MF_Shop,2,FALSE)
[Shop number] is the heading including the “key” from the Source table you want to get more detail from.
That key does not need to be sorted in any order.

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MF_Shop is the name of the table containing the data master-file. You will see, when entering the formula,
that as soon as you start typing “MF”, Excel will display to you a list of all the Tables starting with MF.
2 is the column number within the Table containing

the data you wish to display from the vlookup
formula. As you can see, the shop name is displayed
in the 2nd column, and the city name in the 3rd
column:
You will surely wonder why the last argument is “FALSE”. The default value, if you omit that argument, is
TRUE and that means much trouble. The TRUE argument means approximate matching: if the Vlookup
cannot find the exact shop number, it will take the next approximate key without you knowing. So if it
cannot find the name of the shop 2346, it will take the name of the shop 2345 without telling you. This is
why you must always, always, always, add the FALSE argument to any Vlookup function (because Auditors
do not like approximate matches, we only accept exact matches).
A few important notes:
1) It is essential that you sort the Master-File data by the key number in ascending order, as explained
above.
2) The index number is the column number within the table; if you table starts on column D, the index
for the shop name remains 2, and does not change to 4.
3) The index number must be a number; I tried to use the column header [City], but it does not work.
Vlookups will quickly become your second nature, an essential component of your data analysis. You can
now easily DIY the merge of a master-file with the source data, without begging for the help of an IT
specialist (and save the lunches for yourself).
Vlookups are also a good way to highlight

errors within the file: see when a shop
number is erroneous because the Vlookup
shows no shop name (#N/A error).

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I advise that you always look in the filter for

any #N/A error after you created a Vlookup
formula
33. Audit Calculated Fields
So far we only reviewed descriptive calculated fields, which add some information. The second purpose of
the calculated fields is to perform accuracy test and provide performance data. Now that you know how to
easily create calculated fields, I will give you some interesting examples of audit calculated fields which I
commonly use:
Amounts LC and USD
If you audit overseas locations, it is interesting to see the amounts in LC (Local Currency) and your main
currency (for instance, USD). I like to have on my Audit Docket, or on another “Preparation” sheet, the detail
of the X-rate I use:
As you can see in the formula bar, I have named the cell containing the exchange rate: “XRate”.
And my formula calculating the amount in USD is simply: =[Amount LC]/[Xrate]
Sales review
You can review the accuracy of simple billing operations, for instance:
=if(rounddown([Total],0) <> rounddown(([Units] x [Unit Price]),0),”Alert”,””)
For the above formula, I review that the total sales price = Units x Unit Price. Two important comments for
the use of accuracy calculated functions:

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1) You should use the rounddown function, otherwise Excel will highlight any difference of 0.0001.
2) I prefer to use the If(condition for an error, “Alert”,””) format, which leaves a blank cell if there is no
error. That way, the Errors are clearly shown when you scroll down. However, another possibility is
to simply show the value of the error through this formula: rounddown([Total],0) -
rounddown([Units] x [Unit Price],0) which shows the difference between the total invoiced and the
calculated total (it is the negative difference which shows a case of under-invoicing).
You can use many of those functions, for instance to calculate as well the tax rate applied on the sales, the
discounts granted or the accuracy of the discounts calculated.
If your Sales file includes the Credit Notes, it is important to have one additional field showing the amount
only if it relates to a Credit Note: if ([Sale] < 0, [Sale], 0). This formula will allow you to create pivot tables
showing statistics for credit notes only.
Accounts Receivable review
Here you can easily calculate delays in day, for instance:
Delay Invoicing: [Date Invoice] – [Date Delivery]
Delay Payment: [Date Pyt] – [Date Invoice]
Delay Total: [Date Pyt] – [Date Delivery]
You can further fine-tune your analysis of payment delays by calculating the “foregone interest rate” or
“opportunity cost” caused by late payers, for instance by using a 10% interest rate:
Interest Payment: [Sales LC] * 0.1 * ( [Delay Payment]/365 )
Using Pivot Tables, you can have fun running plenty of statistics and seeing the average payment delay or
the Total Internet Customer per customer, per product, per area.
General Ledger review
There is no real calculated field for the General Ledger review. But it is important that you have a field
showing both the account number and the account name.
An additional problem originates if the number does not include the leading zeros. For instance, some
General Ledgers may be configured as following:
Without leading zeros With leading zeros

Assets/Liability accounts 1111 01111
P&L accounts 11111 11111
It is always better to have leading zeros for sorting purposes, otherwise for any sorting operating or looking
into filter lists, Excel will display 1111, 11111, 1112, 11112… therefore mixing Assets and P&L accounts. This
will cause a huge mess and you should always be able to quickly differentiate an Assets account from a P&L
account.
The solution is to use the LEN function, for instance:

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=IF(LEN([X_ACCOUNT CODE])=6,CONCATENATE("0",[X_UIP ACCOUNT CODE]," ",[X_ACCOUNT

NAME]),IF(LEN([X_ACCOUNT CODE])=7,CONCATENATE([X_ACCOUNT CODE]," ",[X_ACCOUNT NAME]),""))
In this case, balance sheet accounts have 6 digits and P&L accounts have 7 digits. This formula looks if the
account number is 6 characters, if yes it adds a 0 to the account number and concatenates it with the
account name. If the account number has 7 characters, it does not need any leading 0 and simply
concatenates the account number with the account number. If the account number has neither 6 nor 7
characters, then it returns a blank cell.
Accounts Payable review
Here you can use the same kind of fields calculating delay of goods receipt and payment, as described in the
Accounts Receivable review.
34. Saving calculated fields as value
Excel 2010 on modern mid-range laptops is extremely powerful and fast. Nevertheless, the presence of a
few calculated fields (especially the vlookup) on thousands of records may greatly slow down the operation
of the worksheet.
The best solution, once you are confident about your formula, is to copy the whole column and paste it as
Value on the same location.
To paste a column of calculated fields, select the

column, press Ctrl-C, then select the Paste>Paste
Value option.
It is however always useful to keep a record of your formula somewhere. I suggest 2 solutions:
1) If you do not need to sort your Source table anymore (see below), simply keep the formula on the 1st
record and copy and paste the data from the 2nd record.
2) If you expect some additional sorting of your source table, then copy the first 2 rows, containing the
headers and all the data and formulas, and paste them in a separate sheet (which I call “formulas).
To the question of “do you need to sort your source table, now and later:

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1) In the case that each record is independent of the others, there is no need at all to sort the records.
Whether a sales file is sorted by date, department or by amount, is irrelevant to calculated fields and
pivot tables. The usually best accepted option is a sorting by date.
2) The exception to the above is the General Ledger, where it is advisable to sort it by journal entry
number so that you can see the debits and credits of that journal entry together.
3) Once you have done the sorting as above, there is normally no need to further sort the data.
4) The best recommendation is to keep both options: keep the 1st record with the formulas and paste
as values everything from 2nd record. But for best practice, you should also copy and paste the
header and first whole record in a separate “Formulas” sheet.
Having a record of the formulas will surely be helpful at some time:
1) When you need to make a small change to a formula.

2) When you re-use the same excel workbook/file for another audit.

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VIII. FILTERS
Experienced and investigating auditors know that testing raise more questions than they answer. Every time
your testing will highlight a potential exception, you should ask yourself: “all right, but what is the potential
exposure”? Being able to easily interrogate the total population will allow you to quickly answer to questions
like “how many specific transactions like these?”, “does this supplier only do that type of delivery”, “what is
the amount of over-time approved by this supervisor?” and “show me all the data relating to that journal
entry?”
As you will become acquainted with pivot tables, you will find that those give you detailed statistics. But if
you need to dig in the data at a transaction level, then nothing beats the Filters.
The very interesting point of digging in the source data is that you can write the result of your review within
it, in a column “Comment” located on the right. That way, any other person reviewing the data (or yourself)
will find that you have reviewed that transaction. This will eliminate the common audit scourge of duplicated
investigation.
35. ABC of Filters
Install Filters
If, like I have been at pain to recommend, you have created a Data Table of your source data, then filters are
automatically installed. You can see the filters through the sympathetic little arrows on your header row.
In the case you do not want to create a data table, simply click anywhere within your data and select the
option Data > Filter
Or select the small icon I have recommended to configure:
Clicking Filters

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Applying a simple Filter cannot be easier:

simply click on the little arrow on the header
you want to filter.
The following is a filter on the Supplier name
field (you can recognize that those are from
Denmark).
To select just one or a few suppliers, tick on
“(Select All)” to remove all tick-marks, then
tick on the suppliers you want to see.
To de-select just one for few suppliers, and
seeing all the remaining: just tick on those
suppliers you need to remove.
Enter some text in the Search box, and Excel

will display all the suppliers which include
that text. You can select the ones you wish to
see.

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You can enter the “*” wildcard. That wildcard

is to be used when you know the first
characters of a word, but not what’s next.
My own testing indicates that you cannot use

the “?” wildcard (which is supposed to
represent a single character).
Another example for using the wildcard “*”
You can have even more fun by looking to the

Text Filters.

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For instance:
… and it immediately shows you all the

records which contain the values set, using
the And and Or logical operators.
Note that the drop-down list includes many

types of filter, which you can always combine.

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Using Filters on Numbers
You can also use the Filters on

Numbers. As you can see, Excel
displays all the values in store – but if
your Data Table exceeds something
like 10,000 records, it will not display
all of them, and in any case it
becomes tedious to scroll through all
the number values.
Note that the list of values shows
those values in the same format than
they are displayed. For instance, it will
show the value of -187,890 even
though the actual value is -187889.67.
You can use the Search box as well –

beware that you must enter the
decimal separator as well.
The Number Filters are quite

interesting as well… note the “Top
10”, “Above Average” and “Below
Average”.
Note that the “Top 10” can be

increased or reduced to show more or
less than 10 records.

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Using cumulative/successive filters
You can use cumulative or successive filters.
For instance, I first select 2 suppliers:
Now the search box only displays the

list of amounts relating to those 2
suppliers.
My own testing indicates that you can
use the various number filters, which
will apply on the 2 selected suppliers.
Note however that the Top 10 does
not work here as a cumulative filter.
Instead, it first searches for the Top 10
among all suppliers, then it would look
whether there is an amount relating to
those 2 suppliers within the Top 10.
Clearing Up Filters
Obviously after you have applied with Filters, you

need to clear it up. You can see the header(s) where
a filter has been applied when there is the “filter”
symbol instead of the small arrow.
To remove the filter, click on that symbol, and select
“(Select all)”.
However, this solution is not very effective if you have just implemented cumulative/successive filters, and if
you have many fields. My experience shows to me that it is very easy to forget one of the filters, leaving you
scratching your head about why you cannot see all the records. And even though it may just take you a few
seconds for finding the hidden filter, those are a few seconds too much when you need to apply filters on 20
or 30 cases…

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To remove all filters, select the option “Data > Filter

> Clear”.
You remember in the chapter Configure your Excel

toolbar that we advised you to include the “clear all
filters” icons. If you wisely followed our instructions,
you can simply remove all filters by clicking this
sympathetic icon.
36. Using Filters properly
I trust that you found the auto-filtering capacities of Excel 2010 to be very user-friendly and impressive.
However, we will see that much more can be done with Pivot Tables, and that you can easily “drill down” to
all the transactions making up one amount displayed in a Pivot Table. What I come to is that you will
not/should not spend too much time with Filters. Wait a bit to see all what you can do with Pivot Tables.

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IX. PIVOT TABLES – THE BASICS
Pivot Tables is the core tool which will allow you to do real data analysis auditing, and the fun will start from
here. Be assured however that the preceding parts of this book were very necessary to properly organize
your data before being able to apply pivot tables.
Once you are familiar with the Pivot Table options, they will quickly become a second nature: not only will
you design a full array of standard pivot tables, but additionally you will design in a matter of seconds a new
pivot table to answer any type of question you may have about specific transactions.
I learn everything about Pivot Tables from reading the first half of this great book: Pivot Table Data
Crunching: Microsoft Excel 2010 (MrExcel Library) available among else on Amazon. It is an impressive
tutorial whose thickness is testimony to all the wonderful options you may use with the Pivot Tables. The
second half becomes highly complex and is beyond the scope of this book.
I highly recommend reading the first half of that book if you want to be serious about Pivot Tables. But for all
of you in hurry, I have included below a crash course on how to create a Pivot Table.
The following example is of idiotic simplicity. I do not wish to sound patronizing, so if you know the basics of
Pivot Tables, please give a pass and move to the next section.
37. Basics of basics: create a Pivot Table
This is the source data, formatted as

explained above: it is a Data Table
called “Source”, and I have added a
calculated field which shows to me
the city to which this shop belongs.
Insert the cursor anywhere within

the table, and select Insert > Pivot
Table

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As you will create many Pivot Tables

in the future, I recommend in the
section Configure your Excel toolbar
to include an icon which creates a
Pivot Table.
In the following dialog box, you have
nothing to do. You can see that it
recognizes the table “Source”, and
that it will create the Pivot Table in a
New Worksheet (I see very few
cases where you should create a
new Pivot Table in an Existing
Worksheet). So click “OK”.
And not very much happens: you

are brought on a new sheet, with
the Pivot empty layout on the left:

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… the fields list on the right:
And some additional menu options

on the top (which we do not need
right now):

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Right, let us start: from the source

data, I think that one useful
statistical table could be the list by
shop showing rentals for each year
(2010, 2011, 2012). So you want the
shops as Rows, and the Year as
Columns. Simply drag and drop the
relevant Field from the fields list to
the relevant Row and Column box.
Then, you want to show the Sales as
the Values, do the same drag and
drop.
So what you have done is this:

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And the result is this… impressive

isn’t it?
Now let us continue…. for all their genius, the Excel people unfortunately did not include an automatic
formatting of the values, and furthermore made the formatting a bit complex.
Click on the small downward arrow

of the “Sum of Sales” label in the
Values box.

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Now remember well this Value Field

Settings – we will come back to it
regularly. Click the button “Number
Format”.
And here is the usual Format Cells

Number tab: select the 1000
Separator, and type 0 decimal places.
Then click the OK button.

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And here we are… much better

indeed. Shame that it takes so much
time.
Observe also that the Pivot Table
automatically includes the totals of
the Rows and Columns, and the
Grand total.
If like me you do not like those pesky

“Row Label” and “Column Label”,
click the following icon in the Menu:
Field Headers.
OK, this is less confusing now.

In some cases, the labels are
necessary; apply your best
judgement.
Remember that when you created your pivot table, nothing really happened. That interface may therefore
be surprising. It is actually excellent: you can play by dragging and dropping all fields anywhere in the boxes
Row, Columns and Values, and immediately see the result.
38. Add 2 row categories
You remember that you have in the Source data 2 fields: Shop and City. The above table is based on a
calculated field which concatenates Shop and City (see 31 A particular case: Concatenate). Now let us see
how we can have the sales data per city, then the detail per shop within that city.

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Re-create your Pivot Table, and add the fields as

shown – compared to the previous Pivot, the only
difference lies with the Row Labels.
And here it is: list of City, and shops within that

City.
39. Showing Percentages
Auditors like values, but they also like to see variances in percentages. This will allow us to see immediately
an abnormal variance, for instance why a shop share in a City gets so low. Again, using Pivot makes it so
easy.
In the Value Field settings of Sales, select the Tab

“Show Values As”.

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And here select “% of Column Total”.
And you can easily see the share during the year
that each city and shop take from the total.
There is another interesting option which is “% of

Row Total”. Just try it (remember that Pivots is a
try-and-see tool: do not be afraid, the computer
will not explode).
And you see the proportion for each shop that

each year takes from the total of 3 years.

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Just in case you have played a bit too much and

want to revert back to the good old values,
simply select the option “No Calculation”.
40. Sorting Values
As Auditor, you are interested in

the Key Items, the largest players.
You can easily sort from Largest to
Smallest, by right-clicking the
upper right value cell.
And you can see that City 4 is the

main city.
But wait: you can see that it

sorted the Cities only, but not the
shops inside the same city. Just do
the same operation, but this time
by selecting one of the Grand
Total of a shop (for instance: the
2nd upper right value cell).

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And here it is: you have all the

shops within each city sorted
from largest to smallest.
Now you may be not interested in

Cities anymore, but instead want
to see on the top the most
important shops. This is where
our little “Shop > City”
concatenate field proves to be so
useful. Go back to the 1st table. In
addition, you do not want to sort
shops sorted based on the total of
the 3 years, but instead on the
sales of 2012. Simply click any
value within the 2012 column,
and right-click Sort > Sort Largest
to Smallest.
And the biggest 2012 selling shop
appear first. Observe that the 2nd
shop has the 2nd biggest 2012
sales, but not the biggest Grand
Total sales.

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41. Using Report Filters
Back to our 1st table, let us assume that you

only want to see the shops within one or more
specific Cities. This is very easy: add the City
field to the Filter box.
Nothing has changed… except that you have a

City little label added to the top of your Pivot.
You can see that all the Cities are still
displayed.
But if I click the small downward arrow, I can

select one City.
And here is the result: the Pivot displays only

the shops within City 01.

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You can also tick the option “Select Multiple

Items” to show the shops more for than one
City.
Note: once you have included the City field in the Report Filter, you cannot use it or display it anymore in the
Pivot table. There is an alternative technique, which you will see in 47 General Ledger.
42. Formatting your Table
You may like to change a bit the layout of your Table, add a few colours… I will not describe this at length
(we Auditors are serious at heart and not impressed by fancy formatting), but just go to the Design tab.
43. … and that’s it!
That’s all what you need to know for now on Pivot Tables.
Hang on a second, will you say: “that’s really it? But it is a child-play… any idiot struck by dementia could still
do it! I want my money back”.

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Well, this is the point of this book. Pivot Tables are totally easy. You need no diploma. And still, many
auditors look with fish-eyes when we say Pivot to them. Thanks to this book, you will now be the fisherman
instead of the fish.
But there is much more to know. The following chapter will look at examples on how to perform specific
Audit Pivot techniques. And we shall then learn how to “drill down” the abnormal statistics and present a
nice sample to Management. There is much more to learn, I promise you.

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X. EXAMPLES OF PIVOT AUDIT TECHNIQUES
This section will now show you practical techniques of audit analysis using Pivot Tables. It is the most
exciting. You may read it as information about the potential of Pivot auditing, what you could achieve. But
do not start implementing those Pivots if you have not read the preceding parts of this book.
This section will also introduce you with more advanced features of Pivot tables, like Grouping and Pivot
Calculated Fields.
44. Sales
Analytical Review of Clients
From our Pivot Basics Review, you can quickly imagine several meaningful Pivot tables you can perform on
your Sales File: see the evolution per client, shop, city, and product, per year or quarter (see next section),
and detect abnormal variation. Confirm with a Manager that a shop has decreased significantly or has
closed, that there is no shop in a specific city, that a shop sells very little of a particular product… maybe
there is fraud hidden somewhere.
I cannot stress out enough the importance to look at items with small or reduced value. The sales analytical
review is of primary importance to detect potential revenue frauds. Those specific shops should come first in
your audit universe, instead of focusing on the “key items”.
Grouping Dates into Months or Quarters
In the Basics example, we see the evolution per year and there it is very easy to perform because there is a
“year” field in your Source table.
You can also easily create in your Source table a calculated month field =month[date]. But having simply the
month brings another problem if your data runs over several years. If you simply chose the month as the
column field, Pivot will show under the column 01 the total of January 2010, January 2011 and January 2012.
As we have seen in the section 38 Add 2 row categories, you can insert in the column the year and the
month, so that the Pivot will show:

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10 means 2010, 11 means 2011. If you click on the small icon, you collapse the whole year and only see
the annual total (currently the case for 2010).
Now this works very well for months, but obviously you are also interested in quarters – and for this, there is
no easy way to have a calculated field.
But Excel Pivot comes with another miracle under its sleeve: the Grouping feature.
First, from the table above: remove the

Month and End from the Column Labels
box, and replace them by the Supplier
Invoice date (or delivery date, or
accounting date)
The Pivot shows all the dates as column
headers. Obviously there are hundreds
of different dates, meaning hundreds of
columns and the table is unreadable.
But do not worry: Excel can handle
this.
Now select any date, and in the Pivot

menu: Group

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Make sure, clicking and using the Ctrl

key, to select both “Years” and
“Quarters”
The result is so impressive that it deserves to be framed:
Sales Reconciliation with Reporting or Accounting system
Often the Sales system is relatively independent from the reporting and accounting system. Using all
techniques and statistics above, you can easily match the data from the sales system with the reporting,
based on criteria like product and period of time. There are often discrepancies between both systems,
which complicate the reconciliation (when for instance the shop names differ from one system to the other)
and require more testing. But as the Pivot actually sums up each transaction, this testing will confirm that
you that no transactions has been forgotten in the upload from the Sales to the Reporting or Accounting
system… something that External Auditors like to know about.
Invoice Accuracy, Taxes, Discounts
Invoicing is nowadays rarely Units x Unit Prices + Tax. Sales practices and tax legislation will imply terrifying
complexity of various discounts, rebates, free items, sliding scales, taxes deducted or added. Sometimes the
sales system will automatically calculate the discounts, prices and tax rates, and sometimes the user will
enter it manually.
Pivots can be of great help to analyse the discounts and average prices per shop, per salesman, per period,
and you can easily identify the salesmen who give the most discounts.
Reviewing the invoice accuracy is usually done through calculated fields which re-calculate the sales (for
instance:

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- The Gross Sales data field = [Gross Sales]

- You create a calculated field [Calc Gross Sales] = [Unit Price] x [Quantity] x (1 + [Tax Rate])
- Then the calculated field [Calc Gross Sales] = if (([Calc Gross Sales] – [Gross Sales ])/[Gross Sales] >
0.01,( [Calc Gross Sales] – [Gross Sales ])/[Gross Sales],0)
This formula will show the difference in percentage for the records where the re-calculated sales
including tax > the actual sales including tax by more than 1%. This means that you will not review
the differences below 1%, or when the actual sales > re-calculated sales (because it turns out to be
advantageous pour your company). I know very well that some Auditors will shudder at the idea of
not reviewing those differences, but the idea here is that you have little time and many test to
perform, and should therefore concentrate on the perspective of relevant differences.
The calculated field above will highlight in the Source file all cases of potential under-invoicing. Now you can
make a pivot table which will show the materiality of those potential under-invoicing per client, or per shop.
A practical case of Sales terms review, using Calculated Fields
I will now demonstrate a practical case of a complex review of sales terms. This review will introduce you to
an interesting feature of Pivots: the Pivot calculated fields.
Pivot calculated fields are fields which are based over the data from the Pivot. They are different from the
calculated fields within your Source table, which calculate values over every single record.
I shall start with an introduction: one of my auditing fields is the distribution of movies (Hollywood
blockbusters) to cinemas around the world. When you go to the movie theatre and purchase a ticket, the
value of this ticket is shared between:
- The Tax authorities, for instance 20% or rates which may vary depending on the city;
- The Distributor and the Cinema then share the balance, according to a sales percentage.
That percentage is often negotiated between the Distributor and the Cinema. As always negotiations depend
on multiple factors, one of them being the week after release: terms are higher for movies played during the
1st week after release than on the 2nd or 10th week. The older the movie, the less interest people and a
Cinema have in it, and therefore the less share a Distributor can charge.
My objective is to create a Pivot Table which will show the average sales percentage per cinema, per week
after release. So I can see whether the Sales Manager of my company invoices Cinema 1 an average 40% for
the 1st week, and 35% for the 2nd week, while other cinemas are invoiced 60%/55%; I would become
suspicious that the Sales Manager gives an unexplained favour to Cinema 1.
I must first ensure that my Source data includes the following data fields:
- [Term]: shows whether the invoice is based on percentage as above (“SP”) or anything else, like
Fixed Price.
- [Client] and [Theatre] (meaning the cinema name)
- [BO Net]: this stands for Net Box Office, which is the value of all tickets, after deduction of the taxes;
- [Rental]: the sales as invoiced to the Company, which should equal [BO Net] x [Rental Pct]; note that
the movie industry does not “sell” movies, but instead “rents” them to cinemas.

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- [Invoice Percentage]: the actual percentage invoiced for that invoice – as you will see below, we
actually do not use or need that field.
I must also have defined an important calculated field: [WkAfRel] standing for Week After Release =
roundown((([Start Date] – [Release Date])/7 + 1),0).
Based on this, I can easily create my Pivot Table – with that little secret that I will share with you:
Observe the way fields are distributed across the

boxes.
The Term Filter will select only the “SP” invoices,

which are the percentage ones.
Now you will have immediately spot a field which I have not explained above: Pct (for Percentage). Where
does it come from?
Think again about the objective of our analysis: we want to see the Average Percentage per week after
release, and per cinema. I could take the data field [Invoice Percentage] and use “Average” in the Value
Settings – but that figure would be biased because it will average 45% of an invoice of US$ 10 with 30% of
another invoice of US$ 10,000 = (45+30)/2 = 37.5.
Instead we will use a Calculated Field, as defined below:
Select Calculated field – you see that it is well

hidden under that little icon “Fields, Items &
Sets”, but it is important that you remember
where it is.

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Enter a name, and select the various fields you

need. See how Pct is simply calculated as
Rentals/BO net (or Sales / Net Box Office).
Your newly created “Pct” calculated field has

now become a field part of the list of all fields,
which you can drag and drop to the values.
The Value setting of my Pct field is the Sum,

and not the Average. This may be a bit
confusing (I also first tried average), but
remember that the way that my calculated
field is calculated is by dividing the total sum
of Rentals and NBO for that specific week and
cinema – and not by dividing the average of
Rentals and NBO.
Now let us see the results: the data below comes from an actual review from an Asian country (where
people eat and shop and go to movies), so I will hide the names of the clients and cinemas.

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So you can see above the week after release, the rental and the average percentage for each cinema and
each week. It is all what I need. From the above, percentages appear very coherent.
Now compare this analysis to the traditional audit methodology of taking a sample of 50, 100 or 200 invoices
and review the terms. What coverage does that sample reach out of a file of 20,000 invoices? What certainty
does it provide? And how much time will it take?
Long live to CAAT!
45. Accounts Receivable
Statistics on Delays
You will remember in the section Calculated Fields > 33 Accounts Receivable review that you should create
calculated fields for Delays Invoicing, Delay Payment, and Delay Total. Now it is time to put those in good
use.
Traditional audit will look at the ageing balance extracted from the accounting systems for specific months.
Those balances show only a snapshot, usually at month-end (after the Accountants have spent much time
calling clients and chasing payments). CAAT will give you a global view, by calculating an ageing balance
based not on snapshots, but on all transactions.
You can easily create the following Pivot by Grouping Delay Total – see the section Grouping Dates into
Months or Quarters, which also shows how to group values.
The first Pivot shows the values per client and cinema on the Delay Total (paid between 0 and 14 days, 15
and 30 days…):

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And the second table shows the percentage this same cinema pays within the specified delays:
Precautions with partial payments
Remember that the Pivot is based on the invoice amount, and the payment date as downloaded from the
A/R system. There may be cases of partial payments, that an invoice is paid half on 1 January, and the other
half on 1 July. You should discuss with the IT Consultant what payment date you will have – usually it is the
payment date of the last instalment. Just beware therefore that your statistics may be more conservative
than it is in reality.

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46. Accounts Payable
Suppliers Statistics
Purchase invoices may total tens of thousands during a period of 1 or 2 years, and taking traditional
sampling brings little comfort. Monetary value sampling will look at the big invoices, but about all those
small suppliers which may hide strange transactions?
You should start to have Pivots as your second nature, and will immediately imagine a table showing the
purchases per vendor and per year, sorted with the biggest suppliers at the top. Like this one:
But you will wonder: what is the 2nd white column, called “Sum of Sample”?
The grey column is the total value of the purchase invoices for that supplier and that year. In my source file, I
have created an additional column “Sample” where I copy the value of the invoice after I have included it in
my sample of invoices to review. That way, I know my sample coverage per invoice and per year. I will
explain this technique in more detail later.
Suppliers and Cost Codes
A supplier is usually used for a specific activity, and therefore recorded under a specific general accounting
code, or specific cost code. You can design a table which shows the total purchases per vendor and per cost
code. That way, you will see:
- The general activity for each supplier: what are they supposed to do;
- How many suppliers do we use for each account number or cost code – and whether we are
dependent of one single supplier only;

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- Any strange case where a supplier is used for very different cost codes.
The data above comes from an analysis of the advertising suppliers of our movie distribution entity in
Denmark. As per the Table above, it also shows the Sample value. The interesting part is that the Sample
includes all invoices reviewed under all A/P tests: if you have already reviewed a purchase invoice as part of
a previous test, it will be included in the Sample value. That way, you know that you have already reviewed a
good sample of that supplier under that cost code, and there is no need to duplicate the test. Do not forget
to refresh your Pivot, so that it updates the Sample value with all the tests you have done.
Late Recording
It is interesting to see whether invoices are recorded on time – you may wonder why an invoice with a date
of 1 January has been recorded in the accounting system on 1 July. If your accounting system also shows the
actual goods and services delivery date, you may compare as well that date with the accounting date.
First, I must configure in my Source a Calculated Field: [Days Recording Invoices] =
=IF(OR([Supp Doc Date]="",[Acctg Date]=""),"",[Acctg Date]-[Supp Doc Date])
So in the case above, the Delay would be 1 July – 1 January = 181 days.
Then I create the following Table, where the row label shows the [Days Recording Invoices], including the
Values and Count (so that I know how many invoices were recorded in that category).

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The only problem is that I have as many columns as different days of invoice recording delays, so let us
quickly Group those. Select any number above from the delay reporting row, and click the Group option.
Select the Grouping options, for instance like this:
The result is as follows:

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Different names Suppliers <> Payees
In some cases, your A/P system has 2 fields: one with the Vendor name (the official supplier address), and
the other with the Payee name (the name which appears on the bank account).
Discrepancy between those 2 names may be explained by various legitimate causes: the bank name is
slightly different, or the payment is made to a factoring company. Obviously you want to make sure that all
reasons are legitimate, and highlight cases where payments are made to a shadowy figure, or a fraud is
committed to register a purchase against one supplier and the payment to one invoice.
This works only if your accounting system keeps track of both names at the time of the transaction. If the
current payee name is simply linked to the supplier name, then this test will never show a discrepancy.
To create the Table, simply drag to the Row Labels

the Supplier Name and the Payee Name
And this is the result – under the Supplier name you can see the various Payee names – in this case, small
differences due to formatting issues. The Amount will also show to you how much was recorded under each
name.

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Duplicate Invoice references
This is one of the pet tests of the Auditors, seeing whether the same invoice was paid twice.
It is very true that more specialist audit software will provide immediately the duplicate payment option, but
if we decide to use our good and free Excel, we can as well make a quick test here.
There are different duplicate options. The first one is the most restrictive (would really have to be a
duplicate of the same invoice): Same Supplier AND Same Supplier Reference AND Same Amount.
Drag to the Row Labels the Supplier name and

Supplier invoice Reference, and in the Values the
Amount in Local Currency.
As a result, a big pivot is created: this is simply a copy of your data table, but sorted by Supplier name, then
by Reference.

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Now what will you do with this? You may scroll through all the records and have a headache. A better option
is to enter a formula in one column to the right, with the following formula (starting in cell E4):
=AND(A4=A3,B4=B3,C4=C3)
That formula looks whether the supplier name, reference and amount of row 4 is the same as the above
row. If yes, this is a duplicate and it will show “TRUE”. Otherwise, it will render a “FALSE”. Using a Filter, you
can quickly see all the TRUE values.
Most accounting systems have now a feature which would warn the accountant when he/she enters a
duplicate supplier invoice reference, therefore this test will most likely return no error. But of course,
neither the duplicate feature from the accounting system or the test above would detect a duplicate invoice
entered under 2 slightly difference differences, for instance: 34667 and 34667/a.
Therefore you can also make a Duplicate review based on the supplier name and invoice amount, but
without looking to the reference number.

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Drag and drop the Amt LC in both the

Row Labels and the Values. Notice how
here I also include the Sample Values,
so that the Pivot will show if you
already have covered some of those
invoices in previous tests.
The last column is not part of the Pivot,

but a simple formula: for instance, cell
E4: =C4/B4.
Explanation (this would surely be clear
from first sight): the column B shows
the invoice amount (which appears on
the duplicate invoices), and column C
shows the total value of all invoices
recorded with that amount. Therefore,
column E will show the number of
invoices with that amount. You can
clearly see that 11 invoices of 72,000
were recorded for a total amount of
792,000.
This testing will clearly show many
more cases to investigate, and may
become much more time consuming.
Up to you to see how much time you
should allocate to this test. But in any
case, using CAAT will optimize your
review time and the likelihood that you
will catch a duplicate payment.
47. General Ledger
Introduction
Using CAAT over the General Ledger is less obvious than on Sales and Purchases. Surely we can already
consult everything from the accounting system, so why bother?
I have found quite a few reasons which clearly justify the use of CAAT on G/L:
1) You can easily prepare a sheet with a sample of Journal Entries for the Auditee to extract and
explain.
2) You can easily prepare analytical review of specific accounts with total monthly costs. For instance,
you can see the monthly payroll costs, and immediately highlight the month where the payroll is
higher than usual.

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3) You know that a G/L is made of Journal Entries which consist of debits and credits. Every time you
analyse a debit, you also look at the credit, and vice versa. Very often, a debit of a Profit & Loss
account will affect a Liability account. So if you start testing the payroll and review the latest payroll
payment, you will also confirm the payroll, withholding tax and social security liability. You should
make sure to avoid duplicating your sample of J/E’s if you look separately to each account, which is a
bad practice.
The download of the G/L should be quite straightforward: account name, account number, debit amount,
credit amount, and accounting date. As explained in the Calculated Field section 33 General Ledger review,
you should create a calculated field combining account number and name. In the case that your file has only
one column which renders positive amounts as debits, and negative amounts for credits, I advise that you
create 2 more columns: the Debit column which only shows the positive amounts, and the Credit column
which only shows the negative amounts.
Remember that the download of the Accounting Ledger will only show you the transactions during the
specified period of time – it usually does not include the opening and closing balance (unless your IT
Consultant is really good). This G/L review is focused on reviewing costs, income and J/E’s during a defined
period of time, but not the closing balance.
Monthly costs – example of Payroll costs
The first test you can do is to compare the monthly costs of a range of cost codes. For instance, you can
combine on one sheet various payroll P&L accounts, and easily see the monthly debits and credits.
See how we insert here the

Acc Nb Name (calculated
field with the account
number and name), the
Doc Type (type of
document which would
show whether it is a
Journal Entry, Purchase
Invoice or other), FY and
FM (Fiscal Year and Fiscal
Month) in the Row Labels.
The Values box will show
both the Dt (Debit) and Ct
(Credits). I also, as always,
add the sum of sample
coverage.
Please note: you see in the

Column Labels that “∑
Values”. This is an
automatic insert when you
drag and drop nothing in
that box. You have nothing
to worry about.

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The table is created, but

displays all the accounts.
You want to show only
specific accounts relating to
payroll. Click that small icon
here:
Select here the accounts
you want to display. You
can see how useful it is to
have the accounts
displayed in a logical
sequence, thanks to the
calculated field which
makes sure that account
numbers follow the same
pattern.
The result is as follows:

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Here you can immediately see the payroll costs per year and month. Any month with higher than expected
cost, any suspicious credit, will highlight questions. If you review in the Source file the relating J/E and
indicate the value of your sample in the Sample column, this will be reflected in the Pivot… and evidence
that you have searched this exception.
You can just copy this sheet and select other account numbers for a review of the Fixed Assets, Depreciation,
Outside Services, Travel & Entertainment, Office costs, and any other category you have in mind.
Bank Ledger
A substract of the General Ledger is the Bank Ledger. Depending on the level of data stored in the Bank
Ledger, you can perform additional testing. For instance:
1) Any J/E credit on the bank ledger, meaning a cost not entered through a regular A/P transaction.
This may include bounced client cheques, international transfer, interest cost, sundry bank taxes…
always good to know where the money goes.
2) Any J/E debit on the bank ledger, meaning an income not entered through a regular A/R transaction.
This may include cash receipts by petty cash or interest income.
All the above may include legitimate transactions, corrections of errors, or the Holy Grail (for the auditor’s
career) of an un-corrected error or unauthorized transaction. In any case, you will be respected across the
Auditees by spotting the exceptional transactions or highlighting all the errors they have done (even if they
can justify a later correction).

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Some companies have established a bank account structure where there are 2 accounts: one “special”
account to collect the money from clients, and the other “operating” account to pay operating expenses.
This allows the set-up of additional controls over the transfer from the special to the operating account. You
can design additional pivot tables to detect any cash outflow from the special account and reconcile it with
the amount received on the operating account, and investigate any other amount (as per Policy, money
taken out of the special account must comply with strict procedures). You can also review the monthly
amount transferred from the special to the operating account to ensure compliance with transfer policies
(maximum monthly limit, special authorizations for excess transfer).
48. Web-Banking transactions
If your company uses a good web-banking system, you can download the transactions from it. For instance,
you can check all the payments made out of an operating account.
Reviewing the bank disbursements as downloaded from the web-banking system is highly effective.
Unauthorized payments can be hidden from the Bank Ledger because a mischievous accountant could hide a
payment under another name. But they cannot hide it from the web-banking system.
Unfortunately, the level of information detail you can download from the web-banking system greatly varies
from system or country. For instance:
- Limit of time: some web-banking services restrict the download period to 3 months only.
- Batch records: in some web-banking system, only the total of a batch payment is shown, although it
includes many payments to various suppliers. In such case, you can only use the web-banking
download to review sundry transactions.
- Data shown: date, amount, and the bank account number; some web-banking systems show the
payee name, others don’t.
- For payments made by cheques, the web-banking system will most often only show the cheque
number and not the recipient who cashed it in. There is not much you can do here, except if you
perform a forensic review by comparing the web-banking records of cheque payments with any log
or record of cheque numbers.
You must be very paranoid when reviewing the web-banking system. A disgruntled accountant may spend a
few hours “playing” with the system to find out weaknesses. For instance, some web-banking systems allow
the user to change the payee name. The Manager will approve a payment shown to be made to a large
supplier, not knowing that he actually approves a payment made to the bank account of an employee.
Consequently, the download you obtain may have the same data, therefore with such system you should do
your testing based on the bank account number and not the payee name.
Web-banking transactions may sometimes show the invoice reference numbers entered for a payment, but
those are usually unreliable and difficult to read (as not following a formal pattern).
In theory you could do much of the A/P testing using the web-banking records, except that the web-banking
do not show the account or cost code to which the invoice was recorded.
Note however that with the increased implementation of electronic invoicing, the importance of web-
banking and its usefulness will increase and you should keep abreast of the latest developments.

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XI. AUDIT DOCUMENTATION
49. Drilling down the Pivot Tables
The preceding Chapter covered in depth the way to discover potential exceptions: suppliers with costs
allocated on “strange” cost codes, payroll monthly costs higher than usual, months where the sales do not
match the G/L records, etc. But the Pivot by definition shows a total amount which is often made of various
transactions. So, how do you “drill down” the Pivot to those transactions?
Here is a little magic wand which will definitively impress your ignorant colleagues: when you want to
investigate an amount on a Pivot, simply double-click on it. Like a magician commanding Excel to do what
others can’t imagine, you will make the following happen:
- A new sheet is created;

- In that sheet, there is a copy of your Source data with only the transactions which make up that
amount.
This impressive feature is called the Pivot Drill Down. The alternative is to say to your ignorant Boss that “we
need 2 days to review those transactions now”, use the drill down to highlight the transactions in one hour,
and play the rest of the time on Facebook.
The only issue is that the newly created sheet lacks any formatting: amounts are shown in general format,
columns widths are random… but do not complain.
For example: I double-

click that higher than
usual month of payroll.
A new sheet is created

just before my Pivot.
The new sheet shows
the 2 transactions
which make this cost
for the month.
So you can easily document here the documentation of your review of those 2 transactions.

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If you do not need this sheet anymore, you should delete it. Drilling down is highly effective and amusing,
and your workbook may end up with many of those sheets. To quickly delete a sheet, I recommend to install
on your toolbar the following icon: .
50. Documenting in the Source
Basics of Source documentation
So you have highlighted potential exceptions in the Pivot, and drilled down to see the transactions which
make this exception. You can then review these exceptions in detail by tracing back to the source document
(original invoice, evidence of payment, approved J/E with supporting documents).
The easiest way is to document that review in the sheets coming from the drill down. The problem is that
you will end up with many different sheets. Also, you may perform duplicate testing because yourself, or a
member of the Audit Team, will not know that a specific transaction was already highlighted and reviewed in
another testing.
The best way is therefore to document the review of a transaction in the Source Data. I simply add 3
columns to the right of the table which you can complete when you review a specific transaction:
1) Sample reference: write here a sample reference; I like to combine in the reference the letter of the
sheet which contains the Pivot (for instance: A. Supplier Review, B Cost Code Review) and a
sequential number. You will end up with A01, A02… A14, B01, B02… B05, C01, C02… and you know
that the A01 to A14 refer to the testing sheet A. Supplier Review, the B01 to B05 refer to the Cost
Code Review, etc.
2) Sample value: simple formula
a. for the A/P, Sales and A/R files: =IF([Sample Ref]<>"",[Amount LC],"")
b. for the G/L file, it is better to have 2 columns with the sample value for the Debit, and for
the Credit, therefore: =IF([Sample Ref]<>"",[Dt],"")
3) The Comment column, where you can explain what you have reviewed, and your conclusion.
Complicating factors
The problem with documenting in the Source is that you must first find there the transaction. When you drill
down a Pivot, you can immediately see the transaction you want to investigate. But then, you must go back
to the Source sheet, and search for the document number, J/E session, or amount, using either the auto-
filter or the simple Ctrl-Find. It looks easy and it will take you 30 seconds. When you have 200 transactions to
find, this takes 100 minutes, and you will end up with the brain of a dried chestnut.
This is where Visual Basic can intervene. I have designed some VBA routines which automatically find the
transaction in the source document. Just select the document number cell in the pivot drill-down sheet, click
Ctrl-M and Excel will automatically open the Source sheet, find the transaction, and insert the right Sample
reference… all this in 2 seconds. This is a bit complex and out of the scope of this book, but I can easily
include this in any consultation work.

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Sending the Sample file to the Auditee
This is the great advantage of efficient CAAT: when you have prepared the sample sheet, you can e-mail it to
the Auditee so that he can start collecting all the documents. The Auditee will greatly appreciate to have
time to prepare everything at his own rhythm, and the Auditor will be able to immediately start productive
review upon his/her arrival, without losing time. Your Audit Department will glow a reputation of
professionalism and efficiency.
Source documentation in the G/L
Journal Entries in the General Ledger are not comparable to single sales or purchase invoices. They combine
at least one debit and one credit, and often many lines. If you investigate a payroll transaction, the drill
down sheet will only show to you the line of the J/E which affects that account. But if you want to investigate
that transaction, you need the whole J/E.
As described above, you can find back the transaction in the Source by using auto-filter or Ctrl-Find. In most
cases your G/L source will be sorted by J/E number (make sure not to change the sorting!), so that if you find
one line of the J/E, all the others will be around.
This is still a time consuming job, especially if you want to make a nice presentation of the J/E sample. The
figure below shows what I am now used to prepare. It requires formatting, especially row merging. Doing it
manually for samples of around 200 transactions would be highly time consuming, but using specific VBAs
allows me to prepare it in less than an hour.

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51. Using Pivots from one audit to the other
If you have properly followed the instructions of this book, particularly the section 26 IMPORTANT: Create a
Table with your Source Data, then you can successfully use any existing Pivot file for future audits.
a) Copy the file of the existing audit to a new location, under a new name.
b) Simply overwrite the Source data with the new imported one. Make sure to not over-write on
calculated fields.
c) Make sure that the calculated fields are working well (see 34 Saving calculated fields as value).
d) Delete all values from the Sample Reference column – if you forget doing so, you will inherit from
sample references from the previous audit on some rows and you will wonder why you select this
record for your sample or why you have duplicate sample references…. A complete mess!
e) Clean up the Audit Docket and the other sheets from explanations and references to the previous
Audit. Some Auditors like to scatter comments and remarks across all sheets and pivot tables. If you
plan to re-use that Pivot workbook for future audits, it is advisable to enter comments only in the
Source sheet and the Audit Docket.
f) Refresh all Pivot Tables from the Options menu:

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You are ready to work on the new audit. All formatting will be preserved, and Pivot Tables will be
refreshed with the new data (where that data contains more or less records than the previous audit is
irrelevant, as Excel automatically redraws the table around the new data).

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XII. WHAT’S NEXT?
If you managed to the end of this book, you already have a very good idea about how CAAT can change your
audit life, and how to start implementing new Pivot auditing techniques. Just don’t be overwhelmed, and go
gradually: Pivot requires experience and welcomes teamwork. You can start with simple statistics pivot, and
then you create more complex calculated fields and pivots focused on investigating potential exceptions,
using this Book as an example.
This Book explained to you the basics of important and organizing data, creating calculated fields, using
filters, creating simple and more complex pivots, drilling down the data, and documenting your
investigation. It provides techniques which allow you to review the whole population and extract meaningful
samples instead on relying on luck to find out issues.
In case the data of all your company offices is centralized, then you can start implementing “continuous
auditing”. Potential is exciting: you could imagine a quarterly review of all transactions, highlight exceptions,
and just ask the territory to send explanations (subject to your scrutiny). You require immediate reply to
recent transactions, which is much more efficient than coming every 3 years and investigating a transaction
of 1 or 2 years old. The Auditee might be at trouble to find out the correct documentation or explain what
happened when the transaction is old (especially as Pivot Auditing will allow you to focus on “strange”
transactions) and it is much more efficient to run frequent reviews and look at recent transactions.
Pivot is fun to use and much faster than many traditional audit techniques. It is still joyful, until you want to
use it day and night for continuous monitoring. Then it quickly becomes overwhelmingly tedious, and prone
to your own errors. You should not spend all your energy on designing the Pivot of 20 offices every quarter.
This is where VBA (Visual Basic) comes to play. VBA can automate the process of importing the data,
restructuring it, creating and checking calculating fields, creating and updating pivot tables, and even
highlighting in red colour potential exceptions.
However programming in VBA is no picnic, and I would never attempt to issue a book about it addressed to
the Audit community. But this is my objective for this coming year 2013, to design a full VBA based
continuous monitoring Pivot system.
Wishing you Happy 2013 audit wishes,

Guia Practica Caat Excel

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 Tutorial: Use the Text To Column to import CSV files ....................................................................... 17

31. A particular case: Concatenate.......................................................................................................... 42

 Precautions with partial payments.................................................................................................... 80

Attribution-Non Commercial-No Derivs 3.0 Unported (CC BY-NC-ND 3.0)

CAAT Excel 2010 Practical Guide 1 © Jean-Louis Vergaert, 2013

ABOUT THE AUTHOR

Jean-Louis Vergaert has audited about 60 territories during about 20

In addition to travelling and auditing different control environments

CAAT Excel 2010 Practical Guide 2 © Jean-Louis Vergaert, 2013

II. A QUICK INTRODUCTION

1. Why this Book?

2. Who should Read this Book?

3. Contents of this Book?

CAAT Excel 2010 Practical Guide 3 © Jean-Louis Vergaert, 2013

CAAT Excel 2010 Practical Guide 4 © Jean-Louis Vergaert, 2013

5. The Meaning of CAAT

6. Is Internal Audit responsible for finding fraud?

7. Fraud auditing: internal controls versus past transactions

8. Controls and the 4 levels of Management Competence

Basic Management Competence Level

CAAT Excel 2010 Practical Guide 5 © Jean-Louis Vergaert, 2013

Competence Level under Stress or changing environment

Here CAAT can become most valuable, for instance:

CAAT Excel 2010 Practical Guide 6 © Jean-Louis Vergaert, 2013

 Analytical review will highlight periods of stress or unusual activities.

Competence and Integrity

Competence versus organized crime

CAAT Excel 2010 Practical Guide 7 © Jean-Louis Vergaert, 2013

CAAT Excel 2010 Practical Guide 8 © Jean-Louis Vergaert, 2013

IV. WHY USING EXCEL 2010?

10. Excel 2010: no limit

CAAT Excel 2010 Practical Guide 9 © Jean-Louis Vergaert, 2013

11. Dynamic filters

As an example about filtering a Client field:

All the various client names are displayed in the

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Type one word and see all the options:

12. Calculated/Computed Fields

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14. Pivot/Dynamic Tables

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15. Macros and VBAs

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17. Precautions to Take

18. The Excel mind

CAAT Excel 2010 Practical Guide 14 © Jean-Louis Vergaert, 2013

V. LET’S START TECHNICAL: DATA IMPORT

19. What data to import

You should consider the import of the following data:

20. How to extract the data

21. What type of file do you need

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22. The nitty-gritty of dates

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23. Data Import Tutorials

Tutorial: Use the Text To Column to import CSV files

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 Select “text to Columns”:

 As your file is of CSV type, select “Delimited”

 Here the separator is a quote (“), so enter it in Other

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 The wizard will specify most columns as general.

CAAT Excel 2010 Practical Guide 19 © Jean-Louis Vergaert, 2013