Download Using Open Source Software in Audits

Open Source Audit Software
IIA District Conference
Durham, NC
2/27/2009
Track 1 – Internal Audit
Mike Blakley, EZ-R Stats, LLC
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Objectives
1. Open source audit
software – advantages /
disadvantages
2. Audit software
functionality of four major
software packages
3. SQLite - application in
various audit areas
2
Objectives (cont’d)
4. RAT-STATS - random
sampling
5. "R" system and its
applications
6. Cephes - basic functionality
7. Excel   open source
software
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What is open source
software?
 Source and binaries
 Languages
 Maintained by various persons
 Support / development -
volunteer basis
 Licensing - GPL, Public Domain,
etc.
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Advantages
1. Transparency
2. Portability
3. Lower cost
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Disadvantages
1. May require additional
expertise
2. No slick front-end
3. Plain packaging
4. Support?
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Objectives
1. Open source software -,
advantages/disadvantages
Next topic: Four Major Packages
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Four major packages
1. SQLite - database system
2. RAT-STATS - random sampling
system
3. R - library of statistical and plotting
routines
4. Cephes - mathematical and
statistical routines
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How Excel fits in
 Audit tests on data in SQLite
 RAT-STATS - Excel
workbooks
 R has an Excel interface
 Run R scripts from Excel
 Cephes routines can be called
directly from Excel
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Recap of objectives
 1. Open source software -,
advantages/disadvantages
 2. Four major software packages
Next topic is SQLite
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Overview
 Developed in North Carolina!
 Largest number of database installations
 Public domain
 Standards compliant - SQL92
 Very fast, written in “C”
 Zero installation
SQLite
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Example Audit uses
 Sample planning
 Population statistics
 Identification of duplicates
 Match/merge
 Benford's Law
 Same, same, different
 Data stratification
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Advantages
 Cost effective -
fast database
 No license cost
 Simple to install
 Portable
 Standards compliant
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Disadvantages
 Doesn't have every
"bell and whistle"
 Doesn't support every
functionality
 Basic system is
“command line”
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SQLite Front Ends
 Excel
 SQLite browser
 Others
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Specific audit applications
 White paper available
which explains many of
the topics
 Article in EDPACS, June
2008
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How to load data
Load using manual
"scripts"
Load with free
software
Import from Excel,
Access, text files
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Target audience
 Auditors
 Audit Managers
 Business Analysts
 Researchers
 Anyone working with large data
volumes
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Screen Shots of SQLiteBrowser
1. Identification of
duplicates
2. “Drill down” (using
where clause)
3. Population
subtotals and
basic statistics
Public domain
SQLite Database Browser
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Identification of Duplicates
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“Drill down” with where clause
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Population Statistics
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More information
 SQLite site – http://sqlite.org
 EZ-R Stats –
http://ezrstats.com
 SQLite browser
http://sqlitebrowser.sourceforge.net/
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Wrap up Objective 3
 What is SQLite?
 What audit areas can it be used?
 Data import
Next topic is Random Sampling
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RAT-STATS
 Federal HHS in San Francisco, with




assistance from several universities
Comprehensive
Widely used in the health care industry
Has withstood court challenges
Are others, such as EZ-Quant (DOD)
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Major functional areas
 1. Random number generation
 2. Sample size determination
 3. Attribute sampling
 4. Variable sampling
 5. Types of sampling
 stratified
 unrestricted
 other
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How it works
 Windows based (no Mac or
Linux)
 Simple to install
 Some documentation
 Works with Excel, Access
and text files
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Advantages
 Comprehensive
court
challenges as to validity
 Withstood
 Does all the computations
 Provides basic documentation
for work-papers
 Easy to install
 No license cost
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Disadvantages
 Only certain confidence
levels
 Little transparency (FOIA)
 Support?
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Screen Shots
1. Random numbers
2. Variable sampling
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Random numbers
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Variable sampling
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Wrap up Objective 4
 What is RAT-STATS?
 Audit Areas
 Random numbers
 Attribute sampling
 Variable sampling
Next topic is R
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 World-wide development
Statisticians
 College Professors

 Library of statistical
routines
 Extensive plotting and
charting capabilities
 R is `GNU S’
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Major functional areas
 1. Statistical computing
 2. Graphics
 3. Linear regression and
modeling
 4. Statistical tests
 5. Time series analysis
 6. Data Classification
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How it works
 Windows, Mac or Linux
 Relatively simple to install
 Extensive documentation
 Works with



Excel, Access
text files
many databases (including SQLite)
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Audit areas
 Excellent capabilities for
regression
 Does step-wise regression
(quite costly in other packages)
 Sample planning
 Population statistics
 Charting/plotting as part of
audit planning
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Advantages
 Comprehensive
 Good charting and
plotting capabilities
 Extensive statistical
functions
 Easy to install
 No license cost
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Disadvantages
User interface
Fairly steep
learning curve
Support?
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Screen Shots
1. Stepwise regression
2. Plot - confidence/precision
intervals
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Stepwise regression
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Confidence Intervals
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Wrap up Objective 5
 What is R?
 What audit areas can it be used to
address
Next topic is Cephes
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Cephes
 Federal Department of Energy




at Oak Ridge Laboratories
Library of mathematical and
statistical routines (400+)
Adaptation of earlier versions in
FORTRAN
Translated into C and Visual
Basic
Highly reliable and extensively
tested
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Major functional areas
 1. Statistical
computing
 2. Mathematical
computations
 3. Probability
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How it works
 Windows only
 Relatively simple to install
 Extensive documentation
 Works as stand alone
routines or can be called
from Excel
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Audit areas
 Sample calculations
 Random number generation
 Sample planning
 Population statistics
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Advantages
 Reliable, extensive
testing (IEEE)
 Extensive statistical
functions
 Easy to install
 No license cost
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Disadvantages
Support ?
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Example of probability
functions
 Chi square distribution
 Complemented Chi square
 Inverse Chi square
 Normal distribution
 Inverse normal distribution
 Poisson distribution
 Inverse Poisson distribution
 Student's t distribution
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Example of Arithmetic and
Algebraic functions
 Square root
 Long integer square root
 Cube root
 Evaluate polynomial
 Round to nearest integer value
 Truncate upward to integer
 Truncate downward to integer
 Absolute value
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Screen shots
1. Calculations with Excel
VBA
2. Plot with
confidence/precision
intervals
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Calculations with Excel VBA
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Plot with
confidence/precision intervals
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Wrap up Objective 6
 What is Cephes?
 Useful for evaluation of random
samples, linear regression, etc.
Next topic is Excel as a platform
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Excel as an audit platform
 Extensive capabilities, generally
underused
 Can be integrated with open source
software
 ActiveX Data Objects (ADO)
 Visual Basic for Applications (VBA)
 Calling external routines
 COM Servers
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ActiveX Data Objects
AuditNet
"End User Database Access Using
Excel"
http://www.auditnet.org/articles/MB200803.htm
Example is use of SQLite
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Visual Basic for Applications
 Very extensive capabilities
 Entire applications written in
VBA
 Powerful audit tool
 Example library
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Calling external routines
 Can be used to build scripts
 Then executed by external
applications
 Excel - Shell command
 Provides ability to perform a variety
of tasks, such as


charting and plotting using R
running database queries
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COM Servers
 Makes routines directly accessible
to Excel using "CreateObject"
 Cephes library is an example
 Many free com servers available
 Simplifies Excel by
"compartmentalizing" program logic
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Advantages
 Already widely used
 Many "built-in" capabilities
 Macro language VBA widely
understood
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Disadvantages
Learning curve
Support?
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Wrap up Objective 7
 Excel as an audit platform
 Uses include:
 database
queries,
 running R,
 complex stat calculations
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Questions?
Contact info:
919-715-4791
[email protected]
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