© Den norske Revisorforening

How Audit Software can

support effective implementation of ISAs - The

Descartes System

Den norske Revisorforening/ The Norwegian Institute of Public Accountants

Introduction

• The Norwegian Institute of Public Accountants (DnR) is the professional body for public accountants in Norway.

• Approximately 3850 public accountants are members of DnR.

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Background

• Statutory audit required for all limited liability companies in Norway (approx. 230.000 – exemption from 2011 ).

• Implemented ISAs already in 1998.

• More than 50 % of statutory audits performed by SMPs.

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Background

• Public oversight for decades.

• Very few regulating amendments required due to Audit directive implementation.

• Systematic quality control/inspections since 1991.

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Background

• Only Big Firms had sophisticated audit methodologies and tools.

• Institute’s goal to give all members access to a high quality methodology supported by an IT-application for planning, performing and documenting the audit.

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About Descartes

• Descartes is a product owned by The Norwegian Institute of Public Accountants.

• The listed company Bouvet ASA is our IT partner and a Norwegian provider of consultancy and development services within information technology.

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Why “Descartes”?

• French philosopher and mathematician René Descartes (1596–1650), known for statements like: Always go forward carefully and systematically.

Do not think that something is true until you are sure of it.

Dissolve any problem as far as possible.

Increasing enumeration and control is the only path to full answers.

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About Descartes

• Descartes launched first time in 1998.

• The risk based standards in 2006.

• Clarified ISAs implemented in 2010.

• Extended version in 2011: including

ISA 805, ISRE 2400 and ISRS 4410.

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About Descartes

• More than 2900 of our members and their employees are users of Descartes. In addition there are also other users: Municipality auditors

The internal auditor department in the biggest bank in Norway (DNB Nor)

Business schools and universities in Norway and Iceland (educational purposes)

The public oversight body in Norway

The National Audit Office in Iceland

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About Descartes

• ISA compliant (Clarity from August 2010).

• Using the same expressions as in the ISAs.

• White fields/textboxes = ISA requirement.

• Support the audit work flow (phases and audit steps).

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Financial

Statement

Auditors

report

Pre

lim

en

ary

pro

ce

du

res

A B C D E

IR

IR

IC

Au

dit

pro

ce

du

res

Co

nc

lus

ion

Reasonable assurance

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Risk assessment procedures

Phases B and C

Further audit

procedures, Phase D

Identified

•Classes of transactions

•risks

•fraud factors

Identification

and testing of

controls

Substantive analytical

procedures

Tests of details

Phase E

ISA 315

ISA 240

ISA 315

ISA 240

ISA 330

ISA 330

ISA 240

INHERENT RISK X CONTROL RISK X DETECTION RISK

Phase A

Assessed risks

About Descartes

• Help the auditors with necessary documentation of the work, in compliance with ISAs.

• Flexibility regarding the extent of documentation:

Everything can be documented directly in Descartes using textboxes and checklists

Possible with attachments (all kinds of files)

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About Descartes

• Integration of the ISAs.

• Sophisticated help function (every screen image):

o purpose of the actual screen image

o link to relevant section of ISAs

o link to relevant national regulation

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About Descartes

• Scalable – very small assignments => big assignments.

• What makes it scalable?

The numbers of audit areas

How many and which procedures to perform

Extent of documentation

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About Descartes

• Follow-up for each engagement:

Engagement status

Follow-up

Significant matters

Open issues

Summary of assertions

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Skjermdump

• Engagement status

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About Descartes

• Portfolio overview - a list of all clients:

Dates of performance and review of planning, interim audit and year end audit

Date of audit report and whom signing it

All team members, review partner and experts

Hours spent on planning, interim audit and year end audit

• Can be exported to excel for further sorting and filtration.

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About Descartes - Technology

• Using modern technology (Microsoft Windows, .net and SQL).

• Simple internet based installation.

• Automatic distribution of program updates on a continuous basis.

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About Descartes - Technology

• Online and offline/synchronising:

Saves all data in a buffer memory locally

Synchronised when the database is accessible

• Data is stored in one or several databases:

Clients are shared by the users

All file types can be stored in the database as attachments

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About Descartes - Technology

• Minimum requirements for each work station (PC):

Operating system: Windows XP, Windows Vista or Windows 7

Memory: 512 MB

Disk space: 100 MB (conditional upon amount of client data)

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About Descartes - Technology

• Minimum requirements for server/database:

Operating system: Windows 2000/2003/2008 Server

Database: MSDE 2000/SQL Server 2000/SQL Server 2005/SQL Server 2008 and SQL Server 2005 Express/2008 Express (free versions)

Memory: 1024 MB

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Impacts experienced with Descartes

• Efficiency – 20 % time saved (BDO).

• Reduction of paper files (80 – 90 %).

• Recruitment – motivates young people.

• Access and security of client files.

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Descartes ensures:

• relevant information is obtained and assessed

• the required procedures are performed (risk assessment)

• important assessments are made (risk, materiality and audit evidence)

• sufficient documentation

=> effective ISA compliant SME audits

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About Descartes abroad

• Iceland and Slovenia:

Iceland – english

Slovenia - slovenian

• Co-operation with the national institutes:

National laws and regulations

Translation

Training

Technical support

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Pricing

• The yearly license fee (subscription) is currently NOK 7700 (EUR 999) for the application (incl. database). The price for an additional user is NOK 2400 (EUR 312).

• Minimum +/- 100 users.

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About Descartes abroad

• Training:

We assist the institutes with training courses

We recommend a one day course for beginners

• Support:

Web-based IT-support

Web-page

Newsletters

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Descartes

A high quality audit methodology operationalising the ISAs supported by a modern IT application is the only way to an effective quality audit fully in compliance with the ISAs.

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For more information about Descartes

• Descartes web-page:

http://descartes.bouvet.no/en

• Download the demo version

• We will be present today and tomorrow – come and visit us!

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