Alert Driven Process Integration and Exception Handing: A Case Study on Audit Confirmation with Web Service

1. Alert Driven Process Integration and Exception Handing: A Case Study on Audit Confirmation with Web Service

2. Introduction • Limited adoption of contemporary IT in audit profession • Some audit software packages: but • each audit assignment have its own characteristics • auditors device an audit planning for each assignment • costly • cannot handle cross-organizational collaboration / process automation • Not many audit firms adopt such audit software

3. Case Study:Audit Confirmation Process Client’s Debtors/Creditors Enquiry for the confirmation balance Request for balance confirmation Confirm re-sent of confirmation System Auditor Updated the AR/AP report Updated information Report for balance not yet confirmed Balance input Report of client seeking help CPA Firm’s Clients Seek help Admin. Staff

4. Typical Problems in Auditing Profession • Quite difficult to collect adequate confirmations on time for a reliable audit process • required by professional auditing guidelines • HKICPA - HKSA 500 and HKSA 505 • especially if a client’s business partners are from overseas • Alternative and less precise methods to verify the account balances • check purchase order, invoices, delivery note, shipping documents, and receipt/payment of outstanding balances • often manual and much more time-consuming • audit fee of an assignment is based on working time

5. Solution Approach Overview • Monitoring of the overall audit process • Alerts management for monitoring and logging • Timeliness • Management of communications • Exception handling • Web services • Integrate processes and information • improve communications • Alert-driven Audit Management System (ADAMS)

6. System Architecture Clients Clients’ Business Partners Auditors on mobile Bank Internet Client Accounts Alert Status Information Management Monitor System System Balance Confirmation Collaboration Process System Enactor Web Services Interface ECA Rules, Scheduling Rules, Access Administration Event Event Repository, Event Subsciption System Adapter List Timer Job and Assignment Requirement Monitoring Enforcer System

7. Example Exception Handling Samples Selection At least one sample selected One sample or more than one sample selected No. of Sample Selected Normal Process More than one sample No sample selected Only one sample selected Condition Rearrangement by senior manager Error made in the balance input process Ask client to re-input the balance Yes No Send message to senior manager and select samples manually

8. Other Example Exceptions • Extremely low confirmation response rate • Daily response report to the auditor for monitoring • Send the reminder alert (including automated fax) to business partners • Adjust the dates to send reminder

9. Web Services Based Integration • Interfaces different process enactment systems, enforcement system, and exception handling • Offers a unified platform for both manual and programmatic interfaces • Automates the data and process integration of the ADAMS with their existing accounting systems

10. Key Web Services for Clients

11. Key Web Services for Client’s Debtors/Creditors

12. Conclusion • ADAMS effectively manages the workflow auditing process • Automating existing workflow to achieve timeliness • Application of alert mechanism and Web services • Integrates processes and data among different parties • Effective decision making and exception handling can be achieved

13. Future Work • More integration: Link up to the bank systems • Detailed performance evaluation of the system • Compare the response time and service quality to the existing practice • Use questionnaires to evaluate the satisfaction of various stakeholders • Security and privacy issues • Apply to another professional practices such as solicitors firm

14. Question and Answer Thank you!