1.

the Data Analysis Cycle:

Ans
1. Evaluation and Analysis:
Objective: Understand the entire
business and specific units for
evaluation.
Steps:
->Identify potential fraud risks and
warning signs.
->Break down the organization to focus
on specific areas.
->Collaborate with the team to
brainstorm potential risk areas.
->Create a list of red flags and
symptoms of fraud.
Why: This sets the stage by
understanding the business and
recognizing potential fraud risks.

2. Software and Technology:

Objective: Use tools to analyze data
based on identified warning signs.
Steps:
->Use software and tools to collect
and analyze data.
->Perform tests targeting specific
areas of concern.
->Implement continuous monitoring for
ongoing risk assessment.
Why: Technology helps analyze data
efficiently, identifies anomalies, and
supports ongoing monitoring.

3. Audit and Investigative:

Objective: Verify findings,
investigate further, and take
necessary actions.
Steps:
->Follow the audit trail, review
documents, and interview staff.
->Determine if more resources are
needed for a detailed audit.
->Use technology to find and quantify
fraudulent transactions.
->Implement additional procedures
based on investigation results.
Why: Confirms fraud suspicions, takes
corrective actions, and adjusts future
monitoring.

In simpler terms, it's like detective

work. First, you learn about the
business and potential risks. Then,
you use special tools to analyze data
for anything suspicious. If you find
something fishy, you dive deeper, talk
to people, and figure out the details.
Finally, you adjust your methods to
catch fraud and prevent it from
happening again. It's an ongoing
process to stay ahead of potential
issues.

2. obtaining data files for analysis.

Ans
**1. Importance of Data:
Data is the foundation for any
analysis, like pieces of a puzzle that
reveal the bigger picture.
Before diving into analysis, it's
crucial to gather data in a format
suitable for examination.

**2. Data Challenges:

Some business systems, like SAP, have
extensive tables, making data
retrieval complex.
Data might have errors or require
reorganization for effective analysis.

**3. Defining Audit Objectives:

Understanding audit goals guides the
type of data needed.
For routine financial audits, data
from accounting systems suffices.
Fraud audits demand additional data,
such as access logs and HR records.

**4. Choosing IDEA for Analysis:

IDEA shines when dealing with a large
volume of transactions.
Consider the costs involved, balancing
benefits against resource investment.

**5. Determining Data Requirements:

Identifying the business system,
software, and specific files/fields
necessary for analysis.
Considering the hardware, operating
systems, and software in use.

**6. Navigating the Data Dictionary:

For smaller packages, obtaining all
available data is simpler.
For larger datasets, selecting
relevant fields prevents overwhelming
amounts of data.

**7. Key Considerations in Data

Selection:
Factors like volume, ease of download,
master files, and understanding flags
and codes.
Special attention to date fields, and
a "when in doubt, include and
document" approach.

**8. File Formats and Transfer

Methods:
Choosing the right file format and
transfer method is critical for
efficient data handling.
Various methods, such as direct
connection, internet transfer, FTP
servers, or removable media, have
different considerations.

**9. Additional Factors:

Exploring where the data is located,
whether it's archived or live, its
readability, retention period, and
estimated file sizes.
Each of these factors influences the
strategy for obtaining and handling
data.

**10. Making a Data Request:

Writing a formal request specifying
required parameters, file format, and
transfer method.
Including details like the expected
date for data availability and
verification items enhances the
precision of the data received.

In essence, obtaining and preparing

data for analysis is a meticulous
process that involves considering
various aspects to ensure the quality
and relevance of the information
gathered. It's about setting the stage
for meaningful insights to emerge from
the data analysis.

3. Performing the Audit: A Detailed

Overview
ANS
1. Obtaining Test Files:
->To avoid time-consuming efforts,
start by obtaining test files with a
limited number of records.
->This allows validation of desired
fields, layout, readability, and tests
data transfer methods.
->If successful, the client can
provide the full dataset with an
expanded date range.

2. IDEA Import:
Once test files are acquired, import
the data into IDEA for further
analysis.

3. Data Quality Assessment:

->Evaluate data quality based on
accuracy, integrity, completeness,
validity, consistency, and uniformity.
->Completeness and uniformity indicate
a well-designed data request.
Irregularities like incomplete data
may cause nonuniformity, affecting
analysis.

4. Evaluation Steps:
->Reconciliation: Verify data against
an independent source for completeness
assurance.
->Count: Ensure the total count of
records matches the expected number.
->Control Total: Sum numeric field
amounts and match against expected
totals.
->Field Statistics: Use IDEA's Field
Statistics for insights into data
integrity.
->Browse Data: Quickly scroll through
data to identify integrity issues.
Data Dump Printout: Match IDEA sample
records with the original system's
printout.

5. Cleaning Up the Data:

->Adjustments may be needed if the
received data differs from
expectations.
->Apply functions like @split and
@simplesplit for specific data
adjustments.
->Resolve issues in joining files from
different systems, such as variations
in common fields.

6. Documenting the Results:

->Document the results of the download
process for future reference.
->Note procedures for cleaning up data
and any adjustments made.
->Share the documentation with IT if
larger issues need resolution for
future data requests.

7. Efficiency Considerations:
->Efforts to fix issues depend on
their complexity; sometimes, involving
IT for rerunning jobs is more
efficient.
->Document procedures for future use,
simplifying the process for subsequent
audits.
In summary, the audit process involves
meticulous steps, from obtaining test
files to assessing data quality and
making necessary adjustments. Proper
documentation ensures a streamlined
process for future audits and enhances
the overall efficiency of the data
analysis cycle.

4. File Format Types in Data Analysis

ANS
Data analytical software supports
various file formats, and choosing the
right one is crucial. Considerations
like reliability, ease of
import/export, and the specific
circumstances guide the selection of
file formats. Here are some typical
file formats used in data analysis:

1 dBASE and Microsoft Access:

->Common formats on personal
computers.
->Easy to import with field names
included in files, eliminating the
need for additional header
definitions.

2 Microsoft Excel:
->Popular export format, simple to
import if each row represents a
separate record.
->Headers in the first row are
recognized during import, streamlining
the process.
->Save Excel files as reports or Adobe
PDF for further processing when
dealing with complex spreadsheets.

3 ODBC (Open Database Connectivity):

->Requires the appropriate ODBC driver
to connect to the data source.
->Offers flexibility in bringing data
into analytical software.
->Provides direct access to data
sources with the right driver.
4 Print Reports and Adobe PDF:
->Widely available formats.
->Useful when direct access data is
not possible.
->PDF reports are accessible from most
software packages.
->Though extra steps are involved in
importing, it eliminates the need to
define record layouts.

5 Importing PDF Files:

->Internal features like Arbutus Print
Image or IDEA’s Report Reader
facilitate PDF import.
->Third-party tools like Monarch,
ABBYY PDF Transformer, or Able2Extract
PDF Converter can convert files to
Microsoft Excel format.

Remember, the choice of file format

depends on the nature of the data, the
software used, and the ease of
integration with the data analytical
tool. Each format has its advantages
and considerations, and the selection
should align with the specific
requirements of the analysis.

5 Preparing for Data Analysis

ANS
Data Analysis using tools like IDEA
Version 9.1, it's crucial to lay the
groundwork properly. While the
examples showcase IDEA, the principles
are applicable to other data analytics
software.

Software Version and Compatibility

->The guide predominantly uses IDEA
Version 9.1.
->However, the discussed concepts are
versatile and apply to various data
analytics software.

Getting to Know Your Data

1 Understanding Your Data:
->Thoroughly familiarize yourself with
the content.
->Use tools like Control Total, Field
Statistics, Summarization,
Stratification, and Pivot Table for
insights.

2 IDEA Features for Data

Familiarization:
Control Total, Field Statistics,
Summarization, Stratification, and
->Pivot Table:
Assist in grasping data
characteristics.
Example: Exploring payment data from a
fast-food restaurant's point-of-sale
system.

Example: Field Statistics

->Analyzing numeric, date, and time
fields for insights.
->Gain an understanding of data
ranges, averages, and common patterns.

Stratification and Summarization

Examples:
1 Tender Type Summary:
->Analyzing the number and amounts for
each payment type (e.g., cash, debit,
credit).
->Insight: Debit cards are the most
frequently used, followed by cash.
2Payment Amount Stratification:
->Understanding the distribution of
payment amounts.
Example: Uncovering transaction
patterns in debit card payments.

Pivot Table Example:

->Cross-tabulating payment types and
years for a comprehensive view.
->Uncovering trends: Cash payments
decline in 2009-2010 but rise again in
2011.
Key Guidance:
->Familiarity with data is the
cornerstone of effective analysis.
->Leveraging software features helps
profile and understand data.
->Examples illustrate how to gain
insights into transaction patterns and
trends.

This preparation phase lays the

foundation for meaningful and
effective data analysis. A solid
understanding of data characteristics
ensures subsequent analyses are
targeted and insightful.

6. Arranging and Organizing Data

ANS
Efficient data analysis often requires
restructuring data for better clarity.
For instance, having separate columns
for different payment types enhances
analysis capabilities. The process
involves extracting, manipulating, and
rejoining data.

Extracting and Reorganizing Data

1 Current Data Format:

Exemplified by the "Payment Tender
Net" file with all amounts in a single
column.

2 Extracting Relevant Fields:

Utilize tools like Direct Extraction
to separate payment types into
individual files.

3 Joining Separated Data:

Visual Connector, as illustrated in
Figure 3.16, helps in rejoining files
using a unique identifier like TXNID.

4 Achieving Desired Layout:

Result: An organized layout with
individual columns for each payment
type

Enhancing Data for Analysis

1 Combining Data from Different

Sources:
Enrich analysis by merging data from
diverse sources.
Example: Combining appointment
scheduling and accounting software
data to identify discrepancies in fee
recording.

2 Comparing Data Layouts:

Contrast the enhanced layout (Figure
3.17) with the original single-column
format (Figure 3.4).

Key Insights:
Restructuring data enhances analytical
capabilities.
Tools like Direct Extraction and
Visual Connector streamline the
process.
Combining data from disparate systems
provides comprehensive insights.

This phase transforms raw data into a

structured format conducive to
advanced analysis. The comparison
highlights the effectiveness of an
organized layout for gaining
meaningful insights.

7. Statistics and Sampling:

Understanding Data Analysis
ANS
Statistics involves a comprehensive
study of research designs, data
collection, description, analysis, and
drawing conclusions. In the context of
business systems, the primary focus is
on analyzing pre-collected data to
derive meaningful conclusions. This
understanding becomes particularly
crucial when dealing with large
datasets, often comprising millions of
records.

Types of Statistical Analysis

1 Descriptive Statistics:
->Describes information within a
dataset.
->Summarizes data, especially helpful
for large datasets.
->Involves categories, frequencies,
percentages, numerical central
tendencies, spreads, and
relationships.

2 Inferential Statistics:
->Utilizes sample statistics to make
inferences about population
parameters.
->Parameters are characteristics of
the entire population.
->Enables drawing conclusions about
the entire dataset based on a
representative sample.
->Descriptive Statistics
1 Categorical Data:
Describes qualities or characteristics
of records.
Examples: Employee division, salaried
vs. hourly.
Pivot tables are useful for
summarizing two categorical variables
simultaneously.
2 Numerical Data:
Involves counts, amounts, or
quantities in record fields.
Allows meaningful mathematical
operations.
Distinguished from categorical data
where calculations lack significance.
3 Ordinal Data:
Represents categories with a
meaningful order.
Can be analyzed categorically or, if
categories have numeric values, basic
calculations may be performed.
->Inferential Statistics
Inferential statistics use sample
statistics to draw conclusions about
population parameters.
Example: Analyzing 100 sales records
(sample) to infer purchasing patterns
for the entire population.

Key Takeaways
->Descriptive Statistics: Summarizes
and interprets data within categories
and numerical values.
->Inferential Statistics: Draws
broader conclusions about a population
based on a representative sample.

In this discussion, the focus is on

descriptive statistics, considering
both categorical and numerical data
fields. Inferential statistics are
explored further in the sampling
segment of this chapter.