Using the the guidance on sampling, we will have a large sample to acquire data from. With ACL and the sample, we are able to use multiple types of tests to test for materiality or any other issues we might find as audit-relevant.
Tests:
- Z-Score
- Some of the tests we can use to find significance are using a Z-Score analysis. Using the Z-Score, we can find which numbers are significant and can potentially be inaccurate or fraudulent.
- Statistics
- We are able to see the range of transactions, highs and lows, the median, and the average. This just gives us an idea of what are the common numbers.
- Stratification
- Using stratification, we can find intervals and see where most of the charges occur.
- Classification
- Using classification, we are able to go through charges and test and see if those charges are potentially fraudulent.
- Either through:
- Dates
- Vendors
- Benford Analysis
- We can also use a Benford Analysis along with the Z-Score to find out which starting digits, either 1 or 2 digit tests, are statistically significant.
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