Write and audit report and do a powerpoint presentation
You are a senior auditor at the CPA firm of Aoife & Josephine, LLC. Your manager (professor) calls you into her office to discuss the use of Tableau, data analytic and visualization software, on an upcoming audit for a client. She highly suggests you learn how to use Tableau to perform data analytics on sales revenue. Further, she suggests you read the following articles to prepare for this audit: •
Cao, M., R. Chychyla, and T. Stewart. 2015. Big Data analytics in financial
statement audits.
Accounting Horizons
29 (2): 423–429. http://ezpro
xy.
umuc.edu/login?url=http://sea
rch
.eb
sco
host.com.ezproxy.umuc.edu/login.aspx?direct=true&db=bth
&AN
=103541034
&si
te=eds-live
&sc
ope=site •
Raphael, J. 2017. Rethinking the audit. Journal of Accountancy 223 (4): 28–32.
http://ezproxy.umuc.edu/login?url=http://search.ebscohost.com.ezproxy.umuc.edu/login.aspx?direct=true&db=heh&AN=122600698&site=eds-live&scope=site •
On the ICAEW Website, you may download an excellent report:
ICAEW.com. (2016).
Data analytics for external auditors
. [online] Available at: https://www.icaew.com/-/media/corporate/files/technical/iaa/tecpln14726-iaae-data-analytics
—
web-version.ashx [Accessed 13 Jul. 2019]. III. Steps to Completion Step 1:
Read the articles recommended by your manager (professor) to gain an
understanding about how big data, data analytics, and new technologies are transforming external audits. Step 2
: Read the case: Using Visualization Software in the Audit of Revenue
Transactions to Identify Anomali
es, which is posted in LEO: Contents>Course
Resources>Projects & Rubrics. Step 3
: Review resources to learn how to use Tableau in Appendix A on the last page
of this document. Collaborate with your online discussion group to learn Tableau tips. Step 4:
Complete the case requirements that start on page 35 of Using Visualization
Software in the Audit of Revenue Transactions to Identify Anomalies. Step 5:
Complete one additional requirement not included in the case; an audio-
enhanced presentation or video of yourself presenting your findings. Prepare a video or audio-enhanced PowerPoint presentation to present your findings to your manager (professor) and audit team (classmates
Page 1 of 7
I. Title: Using Visualization Software in the Audit of Revenue Transactions to
Identify Anomalies
II. Introduction:
In this project, you will use Tableau, data visualization software, to audit revenue
transactions to identify anomalies.
The project includes a group component to reflect
the collaborative nature of accountants who must work together on audit teams. You
will be randomly placed into an online discussion group in LEO. The purpose of the
online discussion group is to help one another learn how to use Tableau and make
decisions regarding the results of your data analysis. Participation in the online
discussion group is mandatory.
After collaboratively discussing the case with your colleagues (classmates) in the online
discussion group, you will write and submit an individual report written in your own
words to your boss (professor).
The project provides opportunities for you to further develop the following
competencies:
Graduate School Core Competencies:
Communication
▪ Organize document or presentation clearly in a manner that promotes
understanding and meets the requirements of the assignment.
▪ Develop coherent paragraphs or points to be internally unified and function as
part of the whole document or presentation.
▪ Provide sufficient, correctly cited support that substantiates the writer’s ideas.
▪ Tailor communications to the audience.
▪ Tailor Use sentence structure appropriate to the task, message and audience.
▪ Follow conventions of Standard Written English.
▪ Create neat and professional looking documents appropriate for the project or
presentation.
▪ Create clear oral messages.
Critical thinking
▪ Identify and clearly explain the issue, question, or problem under critical
consideration.
▪ Locate and access sufficient information to investigate the issue or problem.
▪ Evaluate the information in a logical and organized manner to determine its
value and relevance.
▪ Consider and analyze information in context to the issue or problem.
▪ Develop well-reasoned ideas, conclusions or decisions, checking them against
relevant criteria and benchmarks.
Page 2 of 7
Accounting Competencies:
Risk assessment, analysis, and management
Assess, analyze, and manage risk using appropriate frameworks, professional judgment
and skepticism for effective business management.
Reporting
Identify the appropriate content and communicate clearly and objectively to the intended
audience the work performed and the results as governed by professional standards,
required by law or dictated by the business environment.
Technology and tools
Identify and utilize relevant technology and tools to analyze data, efficiently and
effectively perform assigned tasks as well as support other competencies.
Business Competencies:
Governance perspective
Understand the legal and regulatory environments affecting an organization and their
effects on an organization’s operations, internal controls and enterprise risk
management. Recognize an organization’s social and environmental responsibilities.
Professional Competencies:
Professional behavior
Practice in a manner that is consistent with the character and high standards set by the
AICPA, the accounting profession, and TGS Accounting degree programs.
Demonstrate a work ethic and respect for diversity, as well as a commitment to
continuously acquire new personal and professional skills and knowledge.
Decision making
Objectively identify and critically assess issues and use professional judgment to
develop appropriate decision models, identify and analyze the costs and benefits of
alternative courses of action and recommend optimal solutions.
Collaboration
Work productively with diverse individuals in a variety of roles, with multiple interests in
outcome to achieve acceptable and optimal results.
Page 3 of 7
Scenario:
You are a senior auditor at the CPA firm of Aoife & Josephine, LLC. Your manager
(professor) calls you into her office to discuss the use of Tableau, data analytic and
visualization software, on an upcoming audit for a client. She highly suggests you learn
how to use Tableau to perform data analytics on sales revenue. Further, she suggests
you read the following articles to prepare for this audit:
• Cao, M., R. Chychyla, and T. Stewart. 2015. Big Data analytics in financial
statement audits. Accounting Horizons 29 (2): 423–429.
http://ezproxy.umuc.edu/login?url=http://search.ebscohost.com.ezproxy.umuc.ed
u/login.aspx?direct=true&db=bth&AN=103541034&site=eds-live&scope=site
• Raphael, J. 2017. Rethinking the audit. Journal of Accountancy 223 (4): 28–32.
http://ezproxy.umuc.edu/login?url=http://search.ebscohost.com.ezproxy.umuc.ed
u/login.aspx?direct=true&db=heh&AN=122600698&site=eds-live&scope=site
• On the ICAEW Website, you may download an excellent report:
ICAEW.com. (2016). Data analytics for external auditors. [online] Available at:
https://www.icaew.com/-/media/corporate/files/technical/iaa/tecpln14726-iaae-
data-analytics—web-version.ashx [Accessed 13 Jul. 2019].
III. Steps to Completion
Step 1: Read the articles recommended by your manager (professor) to gain an
understanding about how big data, data analytics, and new technologies are
transforming external audits.
Step 2: Read the case: Using Visualization Software in the Audit of Revenue
Transactions to Identify Anomalies, which is posted in LEO: Contents>Course
Resources>Projects & Rubrics.
Step 3: Review resources to learn how to use Tableau in Appendix A on the last page
of this document. Collaborate with your online discussion group to learn Tableau tips.
Step 4: Complete the case requirements that start on page 35 of Using Visualization
Software in the Audit of Revenue Transactions to Identify Anomalies.
Step 5: Complete one additional requirement not included in the case; an audio-
enhanced presentation or video of yourself presenting your findings.
Prepare a video or audio-enhanced PowerPoint presentation to present your
findings to your manager (professor) and audit team (classmates).
Prepare a Power Point presentation that includes the following:
▪ Graphs, tables, and other data visualization tools to explain your findings
▪ Speakers notes must be placed under each slide. Use the speaker’s notes to
create either a/an:
http://ezproxy.umuc.edu/login?url=http://search.ebscohost.com.ezproxy.umuc.edu/login.aspx?direct=true&db=bth&AN=103541034&site=eds-live&scope=site
http://ezproxy.umuc.edu/login?url=http://search.ebscohost.com.ezproxy.umuc.edu/login.aspx?direct=true&db=bth&AN=103541034&site=eds-live&scope=site
http://ezproxy.umuc.edu/login?url=http://search.ebscohost.com.ezproxy.umuc.edu/login.aspx?direct=true&db=heh&AN=122600698&site=eds-live&scope=site
http://ezproxy.umuc.edu/login?url=http://search.ebscohost.com.ezproxy.umuc.edu/login.aspx?direct=true&db=heh&AN=122600698&site=eds-live&scope=site
Page 4 of 7
1. Audio enhanced PPT presentation with accurate transcription (or accurate
Closed Captioning) that you will present to your boss and colleagues,
OR
2. Video of yourself presenting the content of your slide to your boss (professor)
and colleagues (classmates). You may use your cell phone to create the
video file.
IV. Deliverables
▪ Report to the boss in MS Word
o Using the report template in Appendix C
o Include a reference page and cite all sources
▪ Audio-enhanced Video or PowerPoint presentation
§ As your professor, I eagerly look forward to reading your deliverables and or viewing
your presentation or video. It is fine to quote sources to illustrate or support your own
thoughts, however, every graded assessment in graduate accounting courses will be
based on the content you have thought about and you have written in your own
words. To properly guide you, I need to read your thoughts and interpretations and
observe you making presentations which demonstrate your comprehension of the
learning goals and ability to perform the competencies.
▪ Check your report for plagiarism using a free online tool, such as Grammarly,
Papers Owl, Citation Machine. Your professor will use TurnItIn.com to check all
graded assignments.
▪ Read the grading rubric before beginning the project to fully understand the
requirements; ask questions about the requirements if needed.
▪ Review.
o Developing your graduate level writing skills:
https://owl.english.purdue.edu/owl/section/1/2/
o What Constitutes Graduate Level Writing; source unknown. In LEO,
Content, Week 9.
▪ Seek feedback for submitting your final version for a grade.
o Ask a classmate, friend or family member to read your report, watch your
presentation, and share constructive feedback to help improve your final
version.
o Submit your draft Word document to the Graduate Writing Center at least
1 week before the project due date. This FREE resource can be
accessed in your LEO classroom. Make edits to your report after
reviewing feedback from the writing center tutors.
https://owl.english.purdue.edu/owl/section/1/2/
Page 5 of 7
o Submit the milestone to your professor to receive constructive feedback
and use the feedback to improve your work before submitting a final
version for grading.
▪ Submit all required files on or before the due date. Late assignment policies can
be found in the syllabus. No assignments are accepted after the last day of
class.
▪ Ask questions as needed in the weekly Ask the Professor forums.
As a reminder, your deliverables will be assessed on the following competencies:
Graduate Program Competencies:
▪ Communication
▪ Critical thinking
Accounting Competencies:
▪ Risk assessment, analysis, and management
▪ Reporting
▪ Technology and tools
Business Competencies:
▪ Governance perspective
Professional Competencies:
▪ Professional behavior
▪ Decision making
▪ Collaboration
V. Rubric:
You will find the rubric in LEO under Contents>Course Resources>Projects & Rubrics.
Page 6 of 7
Reference
Christensen, B., R. Elder, and S. Glover. 2015. Behind the numbers: Insights into large
audit firm sampling policies. Accounting Horizons 29 (1): 61–81.
https://doi.org/10.2308/acch-50921 Using Visualization Software in the Audit of
Revenue Transactions to Identify Anomalies 35 Issues in Accounting Education
Volume 33, Number 4, 2018
https://doi.org/10.2308/acch-50921
Page 7 of 7
Appendix A
Tableau Tutorials
Go to the Tableau.com Website and type Free Training Videos into the search field.
https://www.tableau.com/learn/training
The Tableau Video Library includes over 9 hours of videos:
▪ Getting Started – 3 videos
▪ Connecting to Data – 11 videos
▪ Visual Analytics – 24 videos
▪ Dashboards and Stories – 8 videos
▪ Mapping – 11 videos
▪ Calculations – 16 videos
▪ Why is Tableau Doing That? – 5 videos
▪ How To – 10 videos
Finding the more relevant video resources is an excellent opportunity for your online
discussion group to help each other learn Tableau.
https://www.tableau.com/learn/training
ISSUES IN ACCOUNTING EDUCATION American Accounting Association
Vol.
33
, No. 4 DOI: 10.2308/iace-52146
November 2018
pp. 33–46
Using Visualization Software in the Audit of Revenue
Transactions to Identify Anomalies
Lauren M. Cunningham
The University of Tennessee
Sarah E. Stein
Virginia Polytechnic Institute and State University
ABSTRACT: Recent changes in the accounting profession require students to enter the workforce with technical and
critical-thinking skills using large datasets. In an audit setting, an important skill is the ability to identify anomalies and
risk factors in the client’s data. This instructional case provides students with experience using visualization to
identify anomalous transactions for further substantive testing based on relationships between financial data
(revenues) and nonfinancial data (weather patterns). Students must also create a memo for the workpaper files that
documents their findings, including recommendations for the audit team to select specific sales transactions for
substantive testing. Aside from gaining experience with Tableau visualization software, this case will improve
students’ problem-solving and analytical skills by encouraging them to work independently and to break a complex
problem into manageable pieces. This case is most applicable for implementation in undergraduate or graduate
auditing or internal auditing courses.
Keywords: audit risks; Big Data; data analytics; data visualization; identifying anomalies; revenues.
THE CASE
Company Background
You were recently promoted to audit senior at your firm, Aoife & Josephine LLP, and one of your primary clients is
Souper Bowl Inc. Souper Bowl (‘‘the company’’) is a privately held business headquartered in Maine, and has a fiscal year-end
of December 31. The company has been in business for nine years and prides itself on offering creative soups at a reasonable
price and that are made with locally sourced ingredients. The most popular soups include sweet potato corn chowder, curried
root vegetable and lentil, and maple-roasted butternut squash. Souper Bowl typically experiences increased sales during winter
months since soup hits the spot on a cold and snowy day. To further encourage sales on days when customers often avoid
venturing outside, the company provides a delivery service and guarantees that soup can be delivered to anyone no matter what
the weather. The company found this strategy to be particularly successful in 2015 when New England (including Maine)
experienced record snowfall during February and March.
Souper Bowl sells their soup at several restaurant locations throughout Maine. The company employs three managers that
direct the day-to-day operations for a group of stores that are organized by approximate geographic region: northern Maine
(Store Type 1), mid-Maine (Store Type 2), and coastal Maine (Store Type 3). Appendix A provides a map of these store
locations. Each manager knows their local market well and has the flexibility to advertise and offer promotions with the overall
goal of increasing sales year over year. If total sales at the end of the year exceed total sales from the prior year for that
manager’s set of locations (i.e., ‘‘Store Type’’), then the manager earns a monetary bonus from the company.
We appreciate the helpful and constructive feedback from Valaria P. Vendrzyk (editor), Ronald F. Premuroso (associate editor), and two anonymous
reviewers. We are also grateful to the 2016 Deloitte Foundation Trueblood Seminar for providing us with the inspiration for this case study. Lauren M.
Cunningham received financial support from the PwC INQuires Grant for the purpose of integrating technology into accounting programs.
Supplemental material can be accessed by clicking the link in Appendix C.
Editor’s note: Accepted by Valaria P. Vendrzyk.
Submitted: December 2017
Accepted: May 2018
Published Online: May 2018
33
An audit of the company is required to comply with debt covenants related to a large bank loan that the company entered
into when it began operations. Specifically, Souper Bowl must provide audited annual financial statements to the bank within
90 days of the fiscal year-end. The company must also provide unaudited quarterly financial statements to the bank within 45
days of the end of each quarter. The debt contract includes a financial covenant that requires pre-tax income in each quarter to
be greater than zero. If not met, the bank has multiple remedies at its disposal, including calling the loan such that the entire
balance is due immediately, seizing the company’s assets that are posted as collateral, or providing a waiver for the violation.
Souper Bowl’s net income for the year ended December 31, 2016 is $468,810, while net income for the prior year ended
December 31, 2015 was $825,229.
Auditing Revenues
As part of your new role as audit senior, you will be performing a large portion of the planning and testing of sales for the
2016 audit of Souper Bowl. AU-C Section 240.26 states that ‘‘when identifying and assessing the risks of material misstatement
due to fraud, the auditor should, based on a presumption that risks of fraud exist in revenue recognition, evaluate which types of
revenue, revenue transactions, or assertions give rise to such risks.’’ During planning for the audit, the partner and manager
determined that the following three management assertions represent significant risks for revenues:
(1) recorded sales occurred;
(2) sales are accurately recorded; and
(3) sales are recorded in the proper period.
In prior years, the audit approach relied on random sampling to test revenues. However, the partner wanted to develop more
focused procedures in the current year to hone in on potentially riskier sales transactions. As a result, the plan is to perform
disaggregated sales analytics to identify unusual trends in the daily sales data with the goal of identifying sales on specific days
at specific store locations that should be subjected to substantive testing due to heightened risks. The remainder of the
population would then be sampled using a random sampling approach.1
Based on your experience from prior audits, you know that Souper Bowl’s daily sales fluctuate with temperature and snow
accumulation. To perform your revenue analytics, you request a file from the client that includes daily sales by store location
for both 2016 (current year) and 2015 (prior year). You also retrieve daily weather data from the National Oceanic and
Atmospheric Administration’s (NOAA) website for the weather centers closest to Souper Bowl’s store locations. Total revenue
for the current year ended December 31, 2016 is $18.8 million, while total revenue for the prior year ended December 31, 2015
was $19.1 million. The audit team’s workpapers include the following lead sheet for revenue testing, and the total balances for
each year agree to the trial balance and the company’s draft financial statements for 2016.
Souper Bowl Inc.
Revenue Lead Sheet
December 31, 2016
2016 2015 Change
PBC
% Change
Revenue, Store Type 1 $4,062,390.97 $4,032,383.16 $30,007.81 0.74%
Revenue, Store Type 2 9,331,175.81 9,558,584.07 (227,408.26) �2.38%
Revenue, Store Type 3 5,425,421.53 5,546,767.89 (121,346.36) �2.19%
Total Revenue $18,818,988.31 $19,137,735.12 $(318,746.81) �1.67%
Your manager stated that Tableau is a popular data visualization tool that your firm recently adopted and she instructed that
you learn how to use it to perform these sales analytics. Since she is busy overseeing the planning and testing of other audit
areas, she wants you to take the first pass and then document your results in a memo for her review. The manager wants you to
provide thoughtful analyses and a thorough exploration of the possible relationships in the data. You are eager to impress her
with your work, especially following your recent promotion to senior.
1 As noted in Christensen, Elder, and Glover (2015), most of the large accounting firms emphasize the use of specific identification testing before random
sampling to increase the efficiency and effectiveness of substantive tests. Specific identification testing, also referred to as directed sampling, is usually
used to select and test individually significant items and those items identified as having a higher risk of misstatement.
34 Cunningham and Stein
Issues in Accounting Education
Volume 33, Number 4, 2018
Requirements
1. Read the articles assigned by your instructor to gain an understanding about how Big Data, data analytics, and new
technologies are transforming external audits. After reading these articles, provide a response to the following two
questions:
a. Discuss at least three specific ways in which Big Data, data analytics, and new technologies can enhance external
audits. How does each item discussed improve the effectiveness and/or efficiency of the audit?
b. On the other hand, what challenges do auditors face when using Big Data, data analytics, and new technologies
during an audit?
2. As noted in the case, auditing standards specifically require auditors to identify revenue recognition as a fraud risk in
most audits. Based on your understanding of the company, what factors may increase the risk of fraudulent financial
reporting in Souper Bowl’s 2016 revenues?
3. Use the daily sales by location as provided by the client (2016 and 2015) and the weather data from NOAA to perform
disaggregated sales analytics in Tableau. Your goal is to develop visualizations that identify potential outliers in the
2016 daily sales data related to the significant risks identified by the partner and manager. Using the memo template in
Appendix B, document your analyses and conclusions as to the specific daily sales from certain locations that you
recommend selecting for focused substantive testing.
Note: Your conclusion needs to be precise enough to pull specific transactions—for example, you would not list the
‘‘month of March’’ in store 1010 because this would result in too many observations to feasibly test. Also, you should
not recommend testing observations from 2015. Your engagement team completed that audit in the prior year—instead,
you are using 2015 data as a component of your baseline prediction for 2016.
REFERENCE
Christensen, B., R. Elder, and S. Glover. 2015. Behind the numbers: Insights into large audit firm sampling policies. Accounting Horizons
29 (1): 61–81. https://doi.org/10.2308/acch-50921
Using Visualization Software in the Audit of Revenue Transactions to Identify Anomalies 35
Issues in Accounting Education
Volume 33, Number 4, 2018
https://doi.org/10.2308/acch-50921
APPENDIX A
Map of Store Locations for Souper Bowl Inc.
36 Cunningham and Stein
Issues in Accounting Education
Volume 33, Number 4, 2018
APPENDIX B
Example Memo Template*
Souper Bowl Inc.—December 31, 2016
Disaggregated Revenue Analytics
Purpose: The purpose of this memo is to document plausible trends and expectations for disaggregated revenue data and to
identify specific days and locations that warrant further substantive investigation.
Data: We obtained a listing of daily sales by location from the client’s IT system. We tested the details for mathematical
accuracy, as summarized in the table below:
Total Sales, 2015 Total Sales, 2016
Store Type 1 $ $
Store Type 2 $ $
Store Type 3 $ $
Total $ $
Procedures: Based on our risk assessment process, we identified the following assertions as significant risks related to
revenues/sales:
� Recorded sales occurred.
� Sales are accurately recorded.
� Sales are recorded in the proper period.
Because Souper Bowl’s operations are solely in the state of Maine, we obtained disaggregated data that reports daily sales
by store location and Store Type. Based on discussions with management and our review of the board of director minutes, we
are unaware of any new store locations or other major changes to operations during the year. Therefore, we expect the prior
year’s revenues to be a reasonable baseline expectation for this year’s revenues (e.g., similar seasonal trends). Because the
business can also be impacted by weather conditions, which vary by year, we also perform analyses that consider changes in
weather patterns to predict expected changes from the prior year’s sales. We performed several analytics to identify unusual
trends as compared to the prior year’s sales, taking weather conditions into consideration. The purpose of these analytics is to
identify specific observations (or specific sets of observations) to select for further substantive testing. The analytics that we
performed are as follows:
� Visualization Analysis #1: Title
[Provide a description of the relationship you expected to observe in the data, along with screenshots of the
visualization results. Clearly identify (using circles, arrows, etc.) the part of the visualization that leads you to believe
that a specific location/day is an anomaly. Ensure that all tables and graphics are properly labeled (x axis, y axis,
etc.).]
* Results: [In each of the ‘‘Results’’ sections, include a brief summary of your findings so that your manager can
see (in words) the way that you interpret the visualization screenshots.]
� Visualization Analysis #2: Title
* Results:
� [The number of analyses that you perform is up to you. Remember that you want to impress your manager, but you also
know that the manager’s time is valuable. Therefore, each analysis that you report should offer new information and
conclusions (e.g., avoid repeating the same type of analysis with different coloring, shapes, etc., if the conclusions
drawn are the same.)
Conclusion: Based on the procedures described above, the audit team will pull supporting sales information to substantively
test transactions from the following locations and days:
� This section of the memo can be achieved by using lists or tables, but regardless of the style of presentation, it should
clearly describe which item(s) you are recommending that the audit team look into further (based on all the analyses
above). For each item, you should reference which analysis # the item comes from. The item should be a specific
location on a specific day, or a sample of certain days from a set of observations that exhibit the same unusual trend
based on your analyses above (e.g., if you identify an unusual relationship for Q4 for location #1001, but you cannot
identify one specific day or set of days that is driving the unusual relationship, you may choose to sample from Q4
Using Visualization Software in the Audit of Revenue Transactions to Identify Anomalies 37
Issues in Accounting Education
Volume 33, Number 4, 2018
instead). Remember that it takes time and resources to test each selection, so be strategic in your selections and include
justification for your decisions in this section of the memo.
* NOTE: Appendix B is available as a downloadable Word document, see Appendix C for the link.
APPENDIX C
iace-52146_Example Memo Template: http://dx.doi.org/10.2308/iace-52146.s01
38 Cunningham and Stein
Issues in Accounting Education
Volume 33, Number 4, 2018
http://dx.doi.org/10.2308/iace-52146.s01