Introduction

This section is designed to give new users enough information to start using CAPS.

CONTENTS

1. What is CAPS?

2. Conducting an audit using CAPS

3. How to use this Handbook to get the best out of CAPS

4. Getting Started

5. General Operating Conventions

1. WHAT IS CAPS

1.1 What is CAPS - Introduction

The idea of CAPS is to get the computer to do what it does best, leaving you free to do what you do best.

Computers are best at doing the repetitive, routine and predictable tasks of auditing. You, the auditor, are best at using your expertise, initiative and intelligence to investigate the problem areas, or high risk areas of the audit.

One of the standard problems of auditing computer-based accounts is that the auditor usually needs to be trained to understand the technical side of computers. They often need to write file interrogation programs, know about database structures, understand details of record linking, and so on.

With CAPS all that work has already been done. We have also gone that further to ‘Package it up" so little knowledge is required about CAPS to be able to use it.

Neither do you need to know much about how the Financial Package works. But you do need to know how to audit the accounts of the Financial Institution, and you must be prepared to use your imagination and initiative. That way you'll get the best out of CAPS.

CAPS includes thirteen different and independent 'audit modules'. Each module is designed to help you audit a different aspect of a Financial Institutions records. A list of the modules and a brief description of what each does, forms the main Table of Contents of this Handbook. You'll notice that each module is also described in its own Tabbed section.

As CAPS is a computer-based tool, it means your audits can be far more effective than before. For example, CAPS can easily add all balances on all the accounts in the subsidiary ledgers. Or it can perform a 100% check on the calculations of interest.

It also means you'll be able to do tests that were completely impractical before. For example, you could instruct CAPS to look through every transaction and find individual withdrawals greater than an authorised amount. And, just as important, you can be more confident CAPS will find all such transactions, rather than doing it manually.

Therefore one thing to recognise is that CAPS is going to change the way you audit Financial Institutions.

CAPS is actually very easy to 'drive'. It uses a standard 'menu operation', and you'll find the messages displayed on the screen very straightforward. However do expect a learning curve before you really know what CAPS can do and the best ways to use it.

Once you gain experience with CAPS you'll find yourself becoming much more adventurous with your auditing. You'll find you'll be able to use CAPS to audit some unusual features of the Financial Institution. Or, you might use it to carry out a special investigation for some reason.

The best thing to do is to 'give it a go’. You cannot do any harm. The worst that can happen is that you get a report you didn’t want.

1.2 How CAPS works - the philosophy

There are three things you'll need to know about CAPS. They are:

  • CAPS consists of programs and files

The 'programs' are what we have designed and written to tell the computer how to do what we want. The 'files' will contain important information about the particular Financial Institution you are auditing.

You can see a diagnosis of the programs CAPS used if you turn to Tab Section 1, CAPS UTILITIES, and look under option 4 - AUDIT MODULE RUN STATUS.

And if you look under option 5 - AUDIT FILE STATUS you'll see the expected size of the audit report in the “Count” column.

  • CAPS does not touch the Financial Institution's records.

CAPS programs are designed to only read information from the Financial Institutions computer system. They do not update or alter this information in any way.
This approach has two very important advantages:

  • It means you cannot damage the financial institutions computer records even if you are not quite sure what you are doing, or if you are 'trying something out'. (This is particularly comforting to new CAPS users!)
  • It means the Financial Institutions normal day-to-day work can continue without interruption.
  • CAPS works directly on the Financial Institution’s raw data files.

It does not work on a printout or some other copy of the files. This means you can be confident CAPS is auditing the complete and original source records of the Financial Institution.

1.3 Night Audit – Run the queued audits

This feature allows you to delay the start of the queued audits. There are two main reasons for CAPS having a 'NIGHT AUDIT' facility.

  • Many of the CAPS programs consume considerable resources, using computing power and taking a number of hours to complete. For example, the CAPS interest calculation program calculates interest on every savings or loan account. If a  Financial Institution had 40,000 accounts and CAPS calculated 10,000 accounts an hour, it could take four hours to complete. At some CAPS sites it could take longer. It is imperative that you warn your computing manager if you intend to run NIGHT AUDIT. They may require you to delay the start time until after some other critical processes have been completed.

The Financial Institution may not want you to tie up a terminal for that length of time during the day.

  • Some audit steps (like 'Loan Arrears' for example) must be run after the Financial Institution has run its end of day program called 'Finish'. This is normally run just before closing.

We have designed CAPS with what we have called a 'NIGHT AUDIT' utility. It's very simple. During the day you'll be generating instructions to CAPS telling it which audits you wish to run. CAPS does not do the work immediately. The audits are queued until you use the 'NIGHT AUDIT' utility to tell it when to start. You'll usually want it to do the processing overnight, when the institution is closed and computer usage is low. This is explained in more detail in Section 1 CAPS UTILITIES, Option 2 - NIGHT AUDIT.

1.4 Test Mode and Live Mode

As we have already said, many of the CAPS programs may take a number of hours to complete, and are therefore usually run overnight using the 'NIGHT AUDIT' utility. But you would find it very frustrating and inconvenient if you set a CAPS program running overnight, and next morning found that the program had not run properly, or that you had made a mistake setting it up. You would have to wait yet another day before you could get the results.

It would be much better if you could 'try it out' first.

That is exactly what the 'Test Mode' is for. It lets you 'try the audit' on a small sample of accounts giving you the result in seconds, rather than hours.
Once you are sure the test will work properly, you can ask CAPS to do the audit in 'Live Mode'  (which means doing the full audit on all the accounts rather than just a small sample).

For example, if you make a mistake entering interest rates, CAPS will calculate an interest discrepancy for every account - and there could be thousands! Far better to spend a couple of minutes trialing in 'Test Mode' on a couple of hundred accounts first. You would then quickly discover the mistake!

You might also find 'Test Mode' a useful audit tool on its own. For example, if you only want to quickly select a small sample of accounts or transactions, you could use Test Mode to do it. You may also audit specific accounts for: Cheque Clearance, Loan Arrears, Loans Interest, Savings Interest, Overdraft Interest, Investment Interest, Circularisation statements, and G/L account examination.

1.5 Passwords and User Management

CAPS has been designed for two levels of user. They are 'User level' and 'Manager level'. When you log on to CAPS you have to tell CAPS your name and your password. This is how CAPS knows whether you are a 'User' or a 'Manager'.

'Managers' may use everything in CAPS, including adding new users and assigning their 'Level'.

'Users' may use everything except the following;

Utilities Option 3.1 - LIST ALL USERS
Utilities Option 3.2 - DELETE A USER
Utilities Option 3.3 - ADD A NEW USER TO THE SYSTEM
Utilities Option 3.4 - CHANGE PASSWORD SEEDS
Utilities Option 7.3 - CLEAN LOG FILE

This structure has a number of advantages, for example:

  • It allows audit managers to monitor the progress of staff involved in using CAPS, without the staff being able to delete or alter the log file records of their activities.
  • It can be useful when both the external and internal auditors are using the system because it allows one party to take full responsibility for monitoring user access to the system.

Each user has two passwords. One password allows them to log into CAPS. The other allows them to print reports. This useful security precaution prevents unauthorised outsiders from printing reports even if they gain access to CAPS.

2. CONDUCTING AN AUDIT USING CAPS

2.1 Planning the audit

Before you can properly plan how you are going to carry out an audit using CAPS you'll obviously need to know what CAPS does and how it can help you.
That is why we have designed this handbook to make it easy for you to get a basic understanding of what each CAPS audit module does. You should spend a little time reading the 'Introduction' section of each audit module before trying to plan your first CAPS audit.

On the next couple of pages is an example of how and when you might want to use the audit modules to audit the records of an average Financial Institution. Note that internal auditors are going to use CAPS differently to external auditors.

An External Auditor might use this general audit plan to audit an average Financial Institution:

OCTOBER

  • Transactions Audit Module to check July to September transactions.
  • Interest Audit Module to check July to September interest calculations.
  • Dormancy Audit Module to do your quarterly review of dormancy.
  • Arrears Audit Module to check calculation of loan arrears.
  • General Ledger Module to produce a profile and select and examine ledger accounts.
  • Incompatible Duties Module to check on segregation of duties.

JANUARY

  • Transactions Audit Module to check October to December transactions.
  • Interest Audit Module to check October to December interest calculations.
  • Dormancy Audit Module to do your quarterly review of dormancy.
  • Arrears Audit Module to check calculation of loan arrears.
  • Biographical Audit Module to check standing information on file.
  • Balances Audit Module to print out a 'profile' of balances and to carry out special tests looking for unusual balances on accounts.
  • General Ledger Module to produce a profile and select and examine ledger accounts, review the first six months results and budget figures.
  •  Incompatible Duties Module to check on segregation of duties. Conduct special branch and operator reviews.

APRIL

  • Transactions Audit Module to check January to March transactions.
  • Interest Audit Module to check January to March interest calculations.
  • Dormancy Audit Module to perform your quarterly review of dormancy.
  • Arrears Audit Module to check calculation of loan arrears.
  • General Ledger Module to produce a profile and select and examine ledger accounts.
  • Incompatible Duties Module to check on segregation of duties.

JUNE/JULY

  • Transactions Audit Module to check April to June transactions.
  • Interest Audit Module to check April to June interest calculations, and check the total interest income and expense for the financial year to the profit and loss account.
  • Dormancy Audit Module to do your quarterly review of dormancy.
  • Arrears Audit Module to check calculation of loan arrears and to assist the check of provision for bad and doubtful debts.
  • Biographical Audit Module to re-check standing information on file.
  • Balances Audit Module to print out a 'profile' of the balances, check the additions on the ledger and select a sample of accounts for third party confirmation and detailed audit investigation.
  • Term Deposit Module to check interest calculations and the balance sheet interest accrual.
  • General Ledger Module to produce a profile and select and examine ledger accounts, review the second six months results, check prior years balances and budget figures.
  • Incompatible Duties Module to check on segregation of duties. Conduct branch and operator reviews.

An Internal Auditor might use this general audit plan to audit an average Financial Institution:

Daily or Weekly

  • Transactions Audit Module - looking for unusual or unauthorised transactions

At the end of each month

  • Loan Arrears Audit Module
  • Interest Audit Module
  • Term Deposit Audit Module - looking for unusual interest rates
  • Dormancy Audit Module
  • General Ledger Module to produce a profile and select and examine ledger accounts
  • Incompatible Duties Module to check on segregation of duties

Every three months

  • Biographical Audit Module.
  • Transactions Audit Module - selecting samples for testing.
  • Balances Audit Module - selecting samples for testing and circularisation.
  • General Ledger Module to produce a profile and select and examine ledger accounts, review each quarter.
  • Incompatible Duties Module to check on segregation of duties, conduct special branch and operator reviews.

Note: That this plan is not designed for internal auditors who are auditing under the direction of external auditors.

2.2 Liaison with the Computer Department

What you'll need to do

It's generally acknowledged to be a good idea for you (as an external auditor) to keep in close contact with your clients. But it's not often done as regularly as it could be.

As an external auditor you'll find one of the advantages of CAPS is that it forces you to keep in closer contact with your Financial Institution client. This is because:

  • The effectiveness of some of the CAPS tests will be destroyed if the Financial Institution’s computer department purges transactions from the system without letting you know. You will need plenty of warning (at least two weeks) so you can arrange to do all the necessary audit tests before the purge takes place. So, even if you have asked them to let you know, you'll probably want to keep in touch - just in case!
  • For the same reason, you are more likely to carry out regular interim audits to keep the CAPS files up to date. This is good audit practice, but it also highlights problems sooner, and gives you a better chance to advise your client constructively. And it means questions are more likely to be about current topics, rather than something forgotten about nine months previously.
    • Your CAPS files are stored on the Financial Institution’s computer system at all times. So you are going to be directly concerned if the Financial Institution upgrades or changes to its computing equipment. You'll need to make sure the computer department discusses any such plans with you before it goes ahead. Contact the CAPS Support Manager to discuss.
  • From time to time the Financial Package is upgraded and enhanced. Whenever this happens we alter CAPS to take account of the changes. You'll need to know if the Financial Institution installs an upgraded version of the Financial Package, because you'll have to make arrangements with us to install the matching version of CAPS. Contact the CAPS Support Manager to discuss.
  • CAPS programs do not need the whole computer system to themselves. The Financial Institution’s programs can be running at the same time. However it is recommended that CAPS programs should not be running when the computer has a heavy processing load. So you'll need to arrange with the computer department which night, or weekend, is most suitable for running the CAPS audits (via NIGHT AUDIT).

2.3 General Sequence of running each module

We have designed CAPS so that each time you use an audit module to conduct an audit, you follow the menu options in that audit module step by step, completing step 1 before moving on to step 2, and so on.

We have tried to design the CAPS audit modules to be as similar to each other as possible. This makes it easier for you to understand and use CAPS.
However you should note that each audit module is different. So you'll be well advised to refer to the appropriate section in this handbook before trying to use a module.

You might also note that some audit modules can take two or three days to complete, because one or more of the menu options might need to be run overnight. You should try to take this into account when planning your audit visit.

2.4 Housekeeping and clearing audit files

Now that you have read this far, you'll understand that CAPS is a special package which is physically installed on the Financial Institutions computer. It physically takes up space on the disk. You'll also realise that some CAPS programs copy information from the Financial Institutions computer files, and store it in its own files, thus putting a 'snapshot' of that information under your control.

Therefore the CAPS files take up disk space. If the Financial Institution has ample spare disk space and spare computing power, this is not a problem. However, if it does not have much to spare, your audit files may be taking up valuable space.

Therefore it is a courtesy to the Financial Institution’s computer department to clear all your audit files when you no longer need them. The other reason to clear the files is for security reasons. If the test results have been printed onto paper and the data then removed from the system there is no way it can be inspected or tampered with.

Other than the above two reasons there is no need to clear the data off the system between audits. Each audit will clear the previous results as part of its initialisation procedure automatically.

To clear the files choose the 'Clear Audit Files' menu option on each audit module menu. Note that this does not delete any Data Capture files containing information CAPS might need to carry over to the next audit, nor does it delete any of your parameter data.

Technical Note

CAPS has been designed to be self-contained so that, in emergencies, its programs and files can be removed from the system when not in use and stored on tape. To do this the Technical staff need to use the 'Account Save' facility which is available on the Pick operating system. You will need help from the computer system operator to do this, as this procedure is outside the scope of this handbook.

3. HOW TO USE THIS HANDBOOK TO GET THE BEST OUT OF CAPS

  
3.1 Main Menu - and Main Table of Contents

If you log into CAPS and look at the CAPS Main Menu, you'll notice that it is arranged like the Main Table of Contents for this handbook. For example, TRANSACTIONS AUDIT is option 3 on the Main Menu. It is also Tab Section 3 in this handbook.

This makes it easy to find the right section in the handbook if you are working on the system. It also makes it easy to find your way round the system after reading about an audit module in the handbook.

If you now look at the main Table of Contents, you'll notice this handbook is split into two parts.

Part A contains this introduction which you'll probably only need to read once or twice. It also contains the instructions on how, why and when to use the CAPS utilities. You'll probably need to refer to these quite regularly - particularly if you are a new CAPS user.

Part B explains all the individual audit modules. To make it easy for you to use, you'll notice that each module is documented in the same standard way. We'll explain the standards on the next page.

Notice that each tabbed section has its own Table of Contents. This means that the main Table of Contents does not get cluttered with too much detail.
Notice also that each page within a tabbed section is given a page number on the bottom of each page.

3.2 The Audit Modules

Each Audit Module in this handbook is documented in a standard way like this:

Section 1 - Introduction to the module

We suggest you read this first section before trying to plan or carry out any audit using CAPS. It is separated into three sub-sections:

  • Description of audit tests performed by this module.
    This lists the tests, explains the reasons for the tests, explains why you might want to do them, explains briefly what the tests do and what form the results are in, and suggests some of the audit weaknesses that might be discovered by the tests.
  • Suggested sequence and frequency of using this module.
    This explains when you would use this module, the sequence of events you would normally move through, how long it might take to complete, how you would plan the tests, and gives suggestions on what you'll need to organise before you start.
  • Essential Financial Package information
    This sub-section is only included if it's needed. It briefly explains any important but not obvious information you'll need to know about how the Financial Package works before you can properly do the audit tests.

Section 2 - Operating Instructions

You'll notice the contents of this section exactly match the audit menu steps for each audit module. For example, section 3.1 in the Transaction Audit module is called 'Input Parameters'. This is the same as selecting menu option 3 on the Transactions Audit Menu, and then selecting menu option 1 from the resulting Parameters Menu.

Each menu option is explained in a standard format which has three phases:

  • The name of the menu option and a brief description of the menu option. If you are new to CAPS you'll find it useful to scan through these brief descriptions before planning to use an audit module. It won't take long, and it will give you a good overview of the module.
  • The screen prompts, and explanations.
    This explains step-by-step exactly what happens when you use CAPS, and explains each of the questions CAPS asks you, and the effect of different answers. You won't need to read this part. It's designed as a reference to help you when you are entering details of the tests you want to carry out.
  • The result of running the menu option.
    Usually, a CAPS file is generated, or a printout is produced, or a file is cleared. Do not worry too much about this when you start using CAPS. You will find it interesting and useful after a little more experience.

Section 3 - Further Technical Information

If there is any technical information about the module which may be useful for a deeper understanding of its audit implications it will be included here. Audit modules are very straightforward, thus this section is not always included.

3.3 Glossary of terms used

Account levels

Sometimes referred to as Account Types or Products. The Financial Package has three ledgers, LOANS, SAVINGS, and INVESTMENTS. Each ledger contains any number of member’s accounts. These accounts can be grouped in any way convenient to the Financial Institution. These groups are called 'account levels'. For example, account level 'L1' could contain all loan accounts secured by a first mortgage.

Default
To save you time and make it easier to operate, CAPS will often anticipate your answer to a question it asks. It will actually enter the expected answer for you. This is called a 'default'. If you agree with CAPS default just press (RETURN) to accept it. Otherwise enter the answer you choose. Note that CAPS always defaults to the 'safest' answer - the one which won't alter or delete any information.

Data Capture
In some cases CAPS needs to take a copy of part of the Financial Institutions accounting records as they exist at a point in time. It keeps this as a starting point or opening balance for the subsequent audit some time later. This starting point copy is called a 'Data Capture'.

Error Messages
If you enter information incorrectly an error message will be displayed on the bottom left of the screen.

Profile
CAPS gives you profiles - for instance, a 'Balances Profile' (which is a statistical summary of all the balances on members accounts), and a 'Transactions Profile' (which is a statistical summary of transactions made between any two dates).

Prompt Help message
These are displayed on the bottom left of the screen. These are designed to tell you the form the input should take, as you move through the prompts of a parameter input screen.

Purge
Transactions have to be 'purged' from the computer system by the Financial Institution from time to time. This simply means chosen transactions are deleted by the Financial Institution’s Technical staff (thus regaining disk space) and appropriate carry forward balances are calculated.

Transaction code/type
The Financial Package allows the Financial Institution to define different transaction codes. The F.I.  does this by allocating a code to each transaction. (see TRANSACTION AUDIT - section 3 for more details).

TCL – The Command Level
When you have exited CAPS and are prompted by the Operating System for a command. Usually, the prompt symbol is ‘>’.

4. GETTING STARTED

4.1 How to get started with CAPS

Log On instructions
CAPS must have been properly installed and tested on the Financial Institution's computer system by a qualified CAPS system installer. This process normally takes about two hours.

You must have been assigned a terminal by the Financial Institution. It does not need to be any special terminal, nor does it have to be the same terminal you used the last time you worked with CAPS.

Here's what you do:

1. Login Please

Type in the Login Code (and password) to login on the machine.
This will be given to you when CAPS is installed. If the Financial Institution also has a password set up you will also have to enter the password.

2. Ensure you are in the proper computer account from which to run CAPS.

3. At the Command prompt, type ‘CAPS’

Once logged onto the machine, AWA and Prime computers will then reply with a colon (:), Universe Operating Systems will reply with a 'greater than' sign (>). You should reply by typing ‘CAPS’ and press [Enter].

4. CAPS User Name

Type in your user name
The system shows you the CAPS logo and asks for your 'user name'. Note that you are now under the control of the CAPS programs. You should have been given a 'user name' by the CAPS installation representative. If you don't know it you won't be able to proceed. Note: If the CAPS  banner is improperly displayed, see the section “How to set up for different terminals”.

5.Password

Type in your password
When you have successfully entered your user name, CAPS wants you to enter your password. This is an important security measure, do not let anyone know your password or user name.
This will not be echoed on the screen, as a security precaution CAPS gives you two chances of entering your password and then automatically logs you off.
But note that CAPS records each unsuccessful login attempt. See Section 1 CAPS UTILITIES Option 7.2 - list illegal attempts.

6. Main Menu

If you entered the correct password CAPS shows you its main menu.

You may notice the menu looks unusual, or the cursor is in the wrong place. If so, it's probably because you are using a different terminal to the one CAPS last used. Refer to the next section “How to setup for different terminals”.

4.2 How to set up for different terminals

The Financial Package can be operated using a number of different terminals. We have designed CAPS so that it does not matter which type of terminal you use. It works with most terminals that use the PICK operating system.

However, different terminals can have slightly different characteristics.

What this means is that if you run CAPS on different terminal types, you may have to tell CAPS what terminal you are using. You'll know immediately if you need to, because you'll notice the initial CAPS logo will look odd, and CAPS might put the cursor in strange places on the screen. If so, type ‘END’ for the user name to return to the TCL prompt.

If you find this happening to you, then it may be necessary to change the 'emulation' on your terminal. To do this consult with your Technical support people. Use the ‘TERM’ command to set the correct terminal type. Try ‘TERM ansi’ or ‘TERM vt100’ or ‘TERM wy50’. Type ‘CAPS’ after each try to get back to the CAPS user name prompt.

5. GENERAL OPERATING CONVENTIONS

The following sections detail the general operations of the input screens. The operations on most CAPS input screens are standard and therefore this guide is applicable to most screens.

5.1 Definitions

  • Data Item: a data field to be manipulated. It is displayed on the screen with an item number in front of it, e.g. <10>. A data item can contain one piece of information only.
  • Row: a row is a group of data items, when grouped together has a special meaning. For example, the data items: General Ledger number, reference, description and amount form a transaction.
  • Window: a window is a section of the screen where rows of information are manipulated. In a window, more than one row of data can be entered. The number of rows that can be displayed within the window at one time depends on the window size, but the number of rows that can be entered through a window is generally not limited. There is one item number for the whole window and a row number for each data row within the window (eg: Transaction Selection parameter screen).
  • Record ID: is the key to a record. It does not have an item number in front of it.

5.2 Use of Keys and Conventions

The following key definitions are used to move the cursor around the screen to indicate where you want it to go. All the key strokes should be followed by a RETURN.

  • '\' (the back slash key)
    • use to delete the current data item,
    • if used at the first data item of the row within a window, the whole row will be deleted (because the first data item of a row must not be nil).
  • '!' (the exclamation mark)
    • to go back to previous data item,
    • when operating inside a window and on the first data item of a row it will take you back to the first data item in the previous row. If the current row is the first row, the cursor will jump back to the previous data item before the window,
    • !n can be used inside a window to move back n rows.
  • '+' (the plus key)
    • this key is only applicable when entering the first data item of a row within a window,
    • '+' alone will move the cursor to next row (as will the [Enter] key),
    • +n will move the cursor n rows from the cursor.
  • '^' (the caret key)
    • this key is only applicable when entering the first data item of a row within a window,
    • it adds a row before the current row.
  • '#' (the hash key)
    • move to the “Action” prompt at the bottom of the screen,
    • if this is a regular data item, #n will move to that numbered data item on the screen,
    • if this is a window prompt, #n will put the cursor to the nth row of the current window. If n is larger than the number of rows within the window, the cursor will be positioned at the row after the last row.
  • ‘*’ (the asterisk key)
    • on a window item, skip to the next data item.
  • [Enter] key only
    • to accept a default data item, if any,
    • when operating in a window and on the first data field, pressing  [Enter] only on a blank first field means move to the next data item.
  • ']' (the closing square bracket key)
    • exit from the screen immediately without saving any changes.

All the above key strokes are applicable when you are entering or editing the data items on the screen. At the bottom of each screen, there will be an “Action” prompt like the following:

'Hit <CR> to proceed, 'EX' to cancel or item ID to edit item'

You can hit the [Enter] key to accept what you have entered or changed. Or you can hit 'EX' and the [Enter] key to cancel the changes you have made. Or you can input the item number for the data prompt you wish to make further changes. The item numbers are enclosed by '<' and '>', e.g. <10> for item number 10 on a parameter screen.