MAC 622 – Business Progress Case
1.1 Required
1. Assume you work for an organization that intends to use process mining to examine several of its processes. The first process you are considering is hiring a new employee to work for your large company. To get started, you must:
a. List the activities that are likely to be recorded in a database related to hiring an employee.
b. Brainstorm what types of analyses you could perform by looking at the activities and time stamps for those activities. Suggest three analyses that you could perform if this data was collected and put into a process mining dashboard. As you consider the analyses, think about analyses that would be useful to internal and external auditors, the HR Department and other groups.
2. For the scenario in the first question, consider what additional data could be added to the basic process mining data set of transaction ID, activity description and time stamp to enhance your analyses. Identify three additional pieces of data that could be added to your process mining data set and briefly explain what additional analyses or insights you would gain by adding them.
3. Use the internet to find, or brainstorm on your own, three accounting scenarios in which process mining would be useful. Be specific in describing the data needed for creating the process mining dashboards. Identify how process mining could improve the situation.
2.0 Required: Create a flowchart that documents the order-to-cash process for BWF.
3.0 Required
1. The following questions test your basic understanding of the process and the process mining visualizations. For these questions, consider all purchase orders.
a. How many sales are included in the data?
b. What is the dollar value of all sales included in the data?
c. How many different path variants are there in the given data?
d. The happy path is the most common path that transactions follow. What percent of transactions do not follow the happy path?
e. How many activities are there in the second most common path variant (note that the Process Start and Process End nodes do not count as activities)? The second most common path variant can be seen on the dashboard Variant Explorer by selecting the number 2 in the pane on the right.
f. What is the time stamp of the first activity included in the data set? What is the time stamp of the last activity included in the data set?
g. What was the dollar amount for purchase order 30333 (hint: search for 30333 in the TransactionID column)?
h. How many customers are located in the city of Coeur d’Alene, Idaho (note that the code for Idaho is ID and the system uses a space instead of an apostrophe in the name of the city, Coeur d’Alene)?
i. How many cases do not conform to the email policy during the month of January (remember the data is for the year 2021)?
2. Invoices were not emailed to customers for how many purchase orders? Exclude from the analysis orders for which the credit was denied. As a hint, this is most easily done using the Variant Explorer dashboard and filtering.
3. What is the total dollar value of the purchase orders that were not invoiced? Make sure to exclude all transactions that did not include an email activity and also those for which credit was denied.
4. How many unique customers were not invoiced (note that this is not asking about purchase orders, but unique customers)? Remember not to include transactions if credit was denied.
5. Report the transaction ID and the name of the employee for any sales invoices that were approved after the customer received the sales invoice.
6. According to BWF’s documentation, who should review all sales invoices? Use the dashboards to examine and summarize who actually reviews sales invoices. Do your findings suggest an increase in the risk of misappropriation of assets or of misstated financial reports? Do your findings suggest an increased risk of poor operating performance? Provide any recommendations based on your findings.
7. Consider the transactions you found in response to question 2 (i.e., purchase orders for which no invoice was emailed). For how many of these transactions does BWF not have record of a payment? For each nonpayment, record the transaction ID and the dollar amount of the invoice. What is the total dollar amount of all nonpayments?
8. How much longer does it take for customers to pay off their purchase if they do not receive an invoice via email? Report the following about the average number of hours it takes for the entire order-to-cash process under these two scenarios. (Hints: Exclude from the analysis any transaction where credit was denied, but do not exclude any transactions for which the review and approval of the invoice come after the payment is received. Use the Conformance dashboard to help with this analysis.)
a. The customer does not receive an invoice emailed to them.
b. The customer does receive an invoice emailed to them.
c. Report the difference between these two numbers (with a positive number indicating it takes longer for customers who do not receive an email).
9. BWF has a very tight cash situation. BWF has a line of credit that charges 14% annually. If BWF uses credit to finance any collection time, how much money is the company losing due to financing for the extra time to collect invoices? Answer the following questions to address this question (without using the dashboards).
a. What is the percentage of money lost per hour due to financing (do not round your answer and use 365 days in a year)?
b. How much money has the company lost during the time period based on the purchase orders for which customers were not sent an invoice (from question 8), and use the estimated loss (from question 3)? Round answers to the nearest penny.
c. Given the current losses for the first three months of the year, estimate how much the company is likely to lose by not sending invoices for the year because of the extended financing costs. What is your annual estimate (assume this is not a leap year and there will be no more sales during the month of March)? Round answers to the nearest penny and use the rounded answer for computations from the previous question. Also, use the number of days to compute this and not quarters (since the first quarter has fewer days).
10. You learn that some emails “bounce” when sent to customers, and the system records these transactions as not having been emailed an invoice. Investigate if any of the bounced purchase orders are caused by having “dirty” or problematic email data, meaning their emails were null, contained corrupt data, etc. Identify the company names and email addresses for any customers that are dirty. (Hint: For this analysis, you only need to examine customers who did not receive an email and were granted credit from question 2). Provide recommendations for improving this process so that emails do not bounce for this reason.
11. A second reason emails may bounce is a bug in the system. Bugs are errors in the system that can cause incorrect or unexpected results. They can often be identified by patterns in the results. That is, the bug usually identifies all transactions with a certain attribute as having the same error, and other transactions that don’t have this attribute will not result in that error. Identify the bug in this data. (Hint: To find the bug, investigate any unusual patterns in the activity immediately preceding the Email Sales Invoice to Customer activity, i.e., the Review and Approve Sales Invoice activity, for customers who did not receive an email and did not have any dirty email data).
4.0 Required
1. Review the narrative description included above and the flowcharts and the narrative in the appendices. Create a list of possible internal control risks that could exist in relation to the credit approval process.
2. The following questions test your basic understanding of the process. Use the dashboards that are provided to answer each question.
a. How many sales are included in the data?
b. What is the dollar value of all sales included in the data?
c. How many different path variants are there in the given data?
d. The happy path is the most common path that transactions follow. What percent of transactions do not follow the happy path?
e. How many activities are there in the sixth most common path variant (note the Process Start and Process End nodes do not count as activities)?
f. What is the time stamp of the first activity included in the data set? What is the time stamp of the last activity included in the data set?
g. For how many sales did the sales manager review and approve the sales invoice?
3. Fill out the matrix below in relation to the credit approval process only. You should include all possible variants for this process (events [activities] that occur after the Create Digital Purchase Order that related to the credit approval). The first row provides a full solution for one of the variants. The next line then lists an additional variant, but you need to fill out the number of transactions for this variant. Continue to list and describe the additional variants and the number of transactions for each. The total number of transactions listed should be 499.
Describe the variant Number of transactions
Credit Denied, Process End 45
Credit Approved, Create Picking Ticket
Total Transactions 499
4. For each variant identified in the previous question, provide a risk assessment by evaluating whether the variant increases the risk that BWF might have a result showing internal control failures, misstated financial results or possible fraud. Categorize your risk assessment as a major increase, a minor increase or no change. Then provide descriptive support of your risk assessment categorization by describing what risk you think is present and why it is or isn’t increasing. The first variant has been completed for you.
Describe the variant Risk assessment category Support for risk assessment category
5. Answer these specific internal control questions about the credit approval process.
a. Sales managers are required to review and approve transactions over $3,000. A review results in either approved or denied credit. How many transactions were over this amount? What happened to each transaction over this amount? List the transaction IDs and total dollar amount for all transactions and what happened to each transaction.
b. Who is approved to formally approve credit based on the policy? Did all transactions follow proper segregation of duties? If not, list the number of transactions, the transaction IDs and the total dollar amount of transactions that violated the segregation of duties.
c. Investigate any transactions that violated the segregation of duties. Provide any additional details that you learn about these transactions that would be useful for additional follow-up or in planning the audit.
6. For the credit approval process specifically, what additional audit procedures still might need to be conducted to provide evidence for you to draw your conclusion to support the audit opinions as a result of the process mining dashboards findings?
7. Based on your work, did you discover any additional or different risks that you had not already identified in the list you developed in Part 1 of the case?
8. For purposes of this question only, assume that your audit team’s findings discussed in this exercise represented the full year (instead of only one month). What are the potential implications for each audit report opinion?
The audit report on internal controls:
The audit report on the financial statements:
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9. Do you think the use of process mining to complete select audit procedures is something that the audit profession should pursue and could benefit from? Explain.
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MAC 622 – Business Progress Case
Required: 1.1
1. Assume you work for an organization that intends to use process mining to examine several of its processes. The first process you are considering is hiring a new employee to work for your large company. To get started, you must:
a. List the activities that are likely to be recorded in a database related to hiring an employee.
b. Brainstorm what types of analyses you could perform by looking at the activities and time stamps for those activities. Suggest three analyses that you could perform if this data was collected and put into a process mining dashboard. As you consider the analyses, think about analyses that would be useful to internal and external auditors, the HR Department
