FSG3.

1 — Data discoveries — Identify SCOTs

Purpose:
The purpose of this facilitator supplemental guide is to provide you with guidance to generate the relevant reports in the GL Analyzer that you will need to demonstrate the
data observations and insights participants should have found in Activity 1 — Data discoveries — Identify SCOTs. This supplemental guide also provides an explanation for each
insight or unusual observation and why these should be noted as observations by the participant. This guide will help you to run the debrief of this activity.

Preparing to facilitate:
Before facilitating the debrief for Activity 1 — Data Discoveries — Identify SCOTs, you should practice generating the reports and identifying the observations in the data on
your own to make sure you are comfortable with the GL Analyzer and observations. It is also recommended that you open the reports in advance as it might be time
consuming to run the reports while in class. You could use pre-generated GLA reports to save your time when preparing to facilitate this Activity but it is strongly
recommended for facilitators to practice using live GA Analyzer before the class. Please refer to Att1 to FSG3.1_2020 - NextWave Media GLA.

During the debrief:

While facilitating this debrief, it is required that you generate reports in the live tool and walk through these reports to demonstrate the data observations that should have
been identified by participants. It is also recommended that you ask participants to present their data observations in front of the class using either your generated reports or
their own computers.

Note that the learners have already seen the Leadsheet and made data observations in Challenge 2, Understand the business. When learners investigate beyond the Income
Statement and Balance Sheet as part of the UTB, they are already beginning to understand the SCOT. In this challenge, you can reiterate that participants may be seeing
observations they have already seen, and ensure participants understand how the same or similar data observations can also help in understanding the SCOT. This is a great
way to reinforce the iterative nature of the audit.

The purpose of this debrief is to generate useful insights from GL Analyzer and allow participants to practice and gain more confidence interpreting GL Analyzer analyses.
Please refer to debrief points presented at the end of this document.

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Suggested observations and insights from GL Analyzer

Participants are given the following clues in the ILP — this directs participants on which reports they should generate in order to find the data discoveries. This table also
includes a quick reference for how to run each report so you can help participants as they are in the tool. If you need more detailed instructions on how to run the reports,
please refer to FSG2.3 – Using automated techniques in Challenge 2.

Data Discovery Clues

GL Analyzer Report Clue How to run the report

Activity Sheet — The Activity sheet within the General Ledger Analyzer shows the To run this report, perform the following:
Revenue detailed activity information for one or more selected GL
 On the “Home” tab, click Analyze Income Statement
accounts or financial statement captions. It can be generated
from the Balance sheet, Income statement or Lead sheet  On the “Income Statement” report, click the Activity hyperlink beside the
worksheets. Review this analysis to obtain an understanding of Revenue line item
the sources impacting the accounts and the trend of activity
over time. The details are in the source codes.

Leadsheet — This report allows you to compare the balances and accounts in To run this report, perform the following:
Revenue the current year to the prior year.
 On the “Home” tab, click Analyze Income Statement
 On the “Income Statement” report, click the Lead hyperlink beside the
Revenue account
Activity Sheet — Drilling down into new findings on the Activity Sheet can help To run this report, perform the following:
Revenue identify what classes of transactions support which GL accounts.
 On the “Home” tab, click Analyze Income Statement
 On the “Income Statement” report, click the Lead hyperlink beside the
Revenue account
 On the “Lead Sheet” report, click the Multi-Activity hyperlink at the
bottom of the report
 Select the desired accounts
 Click the “Generate” button

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Data Discovery Clues

GL Analyzer Report Clue How to run the report

Other Side of JE — The Activity Sheet can tell you lot… but sometimes you have to To run this report, perform the following:
Subscription look at the story from the other side to confirm.
 On the “Home” tab, click Analyze Income Statement
Revenue
 On the “Income Statement” report, click the Activity hyperlink beside the
Revenue account
 On the “Activity Sheet”, click the Other Side of JE hyperlink
Process Map Look closely between PY and CY movements. Combine your To run this report, perform the following:
investigation with previously held client meetings and the
 On the “Home” tab, click Process Map
impact of new processes.

Source Trend Map What sources from the process map would you like to
investigate a bit further? Drill into source trend map and see
what you will learn.
To run this report, perform the following:
 On the “Home” tab, click Process Map
 On the “Source Process Map”, click a source code hyperlink (i.e. PAYW) to
drill into the source trend map.

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Data discoveries and screenshots

Income Statement Observation for Small business sales:

 In the Revenue Leadsheet, there are three new Small business GL accounts in the
Subscription sales account class with material interim balances. The account names
are ‘400100 - Small business_West’, ‘400200 - Small business_ East’, and ‘400300 -
Small business_ Central’.

Did anyone identify observations that might indicate a new SCOT exists or any new
classes of transactions that did not exist in the prior year?
• We can confirm that the Small business is now reported per region i.e. West, East,
Central in CY. This might be indication of SCOT process changes that we need to
focus on in the data analysis.

Activity Sheet for Small business accounts

 In the Activity Sheet for Small business sales (400050 - Small business sales,
account 400100 - Small business _ West, 400200 - Small business _ East, 400300 -
Small business _ Central), we can see there is a new source code, SJCC, in the
current year.

 Source GJ has an immaterial net activity, along with debit and credit activities. Our
observation here might not have been possible had we not used automated
techniques. We might have performed walkthrough procedures and tested a
transaction from this activity even though it is immaterial.

Other side of JE for Small business accounts  In the other side of JE report, it indicates that the new source code SJCC is

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impacting trade receivables and other payables similar to source code SJ.

 In the other side of JE report, it indicates that manual source code GJ is impacting
trade receivables and other payables similar to PY. However, we can observe that
there are some transactions impacting revenue for Corporate sales.

Income Statement Observation for Corporate sales:

 In the Revenue Leadsheet, there is also a new GL account in the Subscription sales
account class called ‘400001 – Corporate sales’ which has a balance over TE.

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Activity Sheet for Corporate sales  In the Activity Sheet for Corporate sales (account 400001), we can see all
Corporate sales activities are manually posted to GL through source code – GJ.

Did anyone identify observations that might indicate a new SCOT exists or any new
classes of transactions that did not exist in the prior year?
• There is a new GL account for Corporate sales and all Corporate sales activities are
manually posted to the GL through source code GJ. The fact that there is a new GL
account indicates a new class of transactions. Additionally, there is material
revenue posted using a different source code than used for Small business sales,
which may indicate that there is a new SCOT for Corporate sales.

Other side of JE for Corporate sales Did anyone identify observations that might indicate a new SCOT exists or any new
classes of transactions that did not exist in the prior year?

 In the other side of JE report, it indicates that a manual source ( GJ) is used this year
and is impacting mainly trade receivables, other receivables, Output VAT, and
Small business revenue.
 Understanding the booking patterns of this new source code will drive better and
more insightful questions at the client meeting. Based on our understanding of
their existing business for small business customers, the revenue recognition class
of transactions usually impacts trade receivables and Output VAT. From what we
can observe in the Other side of JE report for Corporate Sales, the GJ source also
impacts accounts such as Other receivables and Small business revenue accounts.
It might indicate several classes of transactions that we need to further
understand.

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Income Statement Observation for Other sales partnerships:

We identified a new account used for this year - “Other sales partnerships” under
“Other Income”. As of 30 June 2020, the amount is immaterial (below TE).
Did anyone identify observations that might indicate a new SCOT exists or any new
classes of transactions that did not exist in the prior year?

 We can see that the amount of other sales partnerships income is below TE and
even extrapolated for a full year would not surpass TE. Because we were able to
use data first, we can now ask the client more directed and useful questions. We
may want to ask whether this revenue stream is expected to be material by the
end of the year.

Source Map for Revenue Observation in source map for Revenue:

 For observations related to source changes in revenue accounts, we have made
notes from the other reports: activity sheet and other side of JE. Please refer back
to previous observations.

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Source Map for Payroll
Click here to generate Trend Map
Payroll — Source PAYW Trend Map
Debrief Activity 1 — Data discoveries — Identify SCOTs
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Observation in source map for Payroll:
 There are multiple source codes that impacted the Employee costs account class in
the prior year, however in the current year there is minimal activity in the PAYE,
PAYW, and PAYC source codes. We can see there is an immaterial posting of
journal entries from these source codes in 2020 and the entries posting has
reduced more than 90% comparing with 2019.
 In addition, there is a new source code PAY that is generating nearly all of the
transactions posting to Employee costs for the current period.
To further investigate the significant fluctuation, we drill down into the Trend Map. For
example, when we investigate the PAYW (PAYW) Trend Map, we can see that there are
no journal entries posted through this source code after January 2020. Source PAYE
and PAYC have similar posting patterns with PAYW (not included in the screenshots)
 The report indicates that all of these sources have the same impact on dual
accounting relationship (payroll expense and payable).
Did anyone identify observations that might indicate a new SCOT exists or any new
classes of transactions that did not exist in the prior year?
 The change in the source codes in CY might indicate a change in the payroll SCOT.
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Refer to the debrief table below to facilitate a debrief discussion questions presented in the slides.
Debrief Question
How did you identify observations that might
indicate a new SCOT exists or any new classes
of transactions that did not exist in the prior
year?
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Debrief Point:
For Small business revenue:
 Looking at the Income Statement, we can confirm that the Small business is now reported per region
i.e., West, East, Central in CY. This might be indication of SCOT process changes that we need to focus
on in the data analysis.
For Corporate sales revenue:
 There is a new GL account for Corporate sales and all Corporate sales activities are manually posted
to the GL through source code GJ. The fact that there is a new GL account indicates a new class of
transactions. Additionally, there is material revenue posted using a different source code than used
for Small business sales, which may indicate that there is a new SCOT for Corporate sales.
 Based on our understanding of their existing business for Small business customers, the revenue
recognition class of transaction usually impacts trade receivables and Output VAT. From what we can
observe in the Other side of JE report for Corporate Sales, the GJ source also impacts accounts such
as Other receivables and Small business revenue accounts. It might indicate several classes of
transactions that we need to further understand.
For other sales partnership income:
 Looking at the Income Statement, we can see that the amount of other sales partnership income is
below TE and even extrapolated for a full year would not surpass TE. Because we were able to use
data first, we can now ask the client more directed and useful questions. We may want to ask
whether this revenue stream is expected to be material by the end of the year.
For payroll:
 Looking at the Trend Maps for payroll source codes, the change in the source codes in CY might
indicate a change in the payroll SCOT.
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Debrief Question
Did the data confirm facts and circumstances
you were expecting based on the client
background and PY knowledge? How?
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Debrief Point:
ASK: Why is confirmation with the client so important?
 Remind participants that we use a “data first” mentality when identifying SCOTs, but this does not
mean that we use data only. Confirmation with the client is still just as important as ever and allows
us to ask the better question.
 From this year’s client planning meeting minutes, we know there is a new centralized payroll
system that was successfully implemented in February 2020. We can see the source process
map shows there is a new source impacting payroll identified as ‘PAY’. The source codes ‘PAYE’,
‘PAYW’, and ‘PAYC’ which were material last year have very minimal activity in the current year.
 This is an example of how the data confirmed certain facts and events that we were expecting
based on verbal inquiries with the client. Conversely, if we did not observe this, we might want
to ask the client why there is no change in source codes, which would be unusual and
inconsistent with our expectations.
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