1. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 1 An Overview of Risk and Compliance Analytics Solutions Wednesday, July 13, 2016

2. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 2 CPE Credits Today’s webcast is worth 1 Continuing Professional Education (CPE) credit. To be eligible for CPE credit, you must: Answer at least 3 of the 4 polling questions (during the webcast), complete the survey, and have a total viewing time of at least 50 minutes. Participants will have the opportunity to download their CPE certificate immediately following the webcast if above requirements are met. In accordance with the standards for the National Registry of CPE Sponsors, CPE credit will be granted based on a 50-minute hour. We are unable to grant CPE credit in cases where technical difficulties preclude eligibility. CPE Program Sponsorship guidelines prohibit us from issuing credit to those not verified by the technology to have satisfied the minimum requirements listed above.

3. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 3 SAVE THE DATE FEI’s 35th Annual Current Financial Reporting Issues Conference November 14-15, 2016 New York Marriott Marquis New York City Financial Executives International’s Current Financial Reporting Issues Conference is the only event created by preparers for preparers, with an actionable agenda providing insights on today’s financial reporting issues. Representatives from the U.S. Securities and Exchange Commission, the Financial Accounting Standards Board, and the Public Company Accounting Oversight Board will update you on what you should know about: non-GAAP cybersecurity the revenue recognition and leases standards and more! LEARN MORE AND REGISTER ONLINE TODAY! www.financialexecutives.org/cfri

4. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 4 Delivering daily analysis and strategies to help senior-level financial executives work better, faster and smarter. Our team of expert contributors offer analysis, tips and insights into best practices and the changing regulatory and business landscape. “responsive” and scalable design for mobile and tablet users daily.financialexecutives.org

5. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 5 FERF research is available FREE to FEI members… but is not funded by membership dues. FERF is funded by voluntary, charitable contributions from FEI Chapters  Corporations  Individuals FERF focuses on member-driven initiatives and decides on research topic areas based upon members’ interests and needs, including financial reporting, goodwill and asset impairment, compensation and technology. www.ferf.org/reports

6. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 6 Polling Question 1 Which of the following best describes your title? CFO Controller Auditor Other

7. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 7 AGENDA Welcome and Introductions Internal Auditors’ Use of Analytics Risk and Compliance Analytics Solutions External Auditors’ Use of Analytics Staffing Challenges The Future of Analytics Q&A

8. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 8 Webcast Presenters Introductions Shana Murik, RR Donnelley Bill Sinnett, Chief Operating Officer, Research, FEI/FERF Moderator Michael Cangemi, President, Cangemi Company, LLC Panelists Hank Roberts, Director – Internal Audit, Shaw Industries Group Bob Cuthbertson, Chief Operating Officer, CaseWare IDEA, Inc. Roshan Ramlukan, Principal, Global Assurance, Ernst & Young LLP

9. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 9 Michael P. Cangemi, an author and business advisor, is a former CFO and then President, CEO and Director of Etienne Aigner Inc. and CEO of Financial Executives International. He is a Senior Fellow of the Rutgers University Continuous Assurance LAB, serves on the FEI Committee on Finance & Technology and is the author of author of Managing the Audit Function,3 rd Edition (Wiley). Michael has had a successful career with a long term significant focus on finance and technology. His career progressed from accountant/ auditor to CAE, to CFO, CEO, and Board member and Audit Committee Chair. He has a significant focus on Continuous Monitoring and Analytics for GRC and Business Process Improvement. He served in numerous professional capacities, including the COSO Board, international president of ISACA, IIA Board of Research Advisors and editor in chief of the ISACA JOURNAL (1987-2007). Michael P. Cangemi FERF Research Co-Author and Moderator

10. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 10 Hank Roberts Director, Internal Audit  Shaw Industries Group Shaw is a subsidiary of Berkshire Hathaway and is the world’s largest carpet manufacturer with approximately 22,000 employees worldwide. Shaw is headquartered in Dalton, Georgia. Hank has over 15 years of audit experience at Shaw and is responsible for the daily operations of the audit department. The audit function at Shaw partners with the business to develop analytics to best serve the needs of the business and help strengthen the overall control environment.

11. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 11 Bob Cuthbertson, CPA, CA, CITP Chief Operating Officer  CaseWare Analytics Bob Cuthbertson brings a wealth of accounting, auditing and technology experience to his role as Chief Operating Officer at CaseWare Analytics. Prior to starting the analytics division of CaseWare in 2000, initially as CaseWare IDEA Inc., Mr. Cuthbertson was Vice President, Professional Services, of The Canadian Institute of Chartered Accountants (CICA). Mr. Cuthbertson is also a CPA (Ontario) with a specialty in Information Technology (CITP), granted by AICPA, and holds a Bachelor of Commerce degree from Queen’s University School of Business. Since joining the CaseWare Group as founding employee of its analytics division, the company has expanded in the Netherlands, China and Latin America through regional sales centers, and now has a customer base of close to a quarter million users in 90 countries and in 16 languages.

12. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 12 Roshan Ramlukan Audit Transformation Analytics Leader  Global Assurance Roshan Ramlukan leads EY’s Assurance Analytics initiative, and is focused on the integrating Big Data and Analytics into the Audit. He manages a cross-functional team responsible for designing and deploying an operational model to enable data capture, analytics delivery and analytics integration for EY globally. Roshan previously led the EY’s Americas Analytics practice and was focused on delivering innovative solutions to enhance business value through data driven performance and risk management. He has over 20 years of experience providing Analytics, Business Intelligence and Information Management services to Fortune 100 Companies. He has worked with several companies to leverage analytics to enhance business decision making around key business strategies. He has focused on using analytics to deliver measurable business outcomes in the areas of revenue enhancement, cost reduction and risk mitigation. Roshan has significant experience designing and implementing financial/operational management reporting systems, and using advanced analytics to address key business issues or identify valuable business opportunities. Roshan has worked closely with C-level executives and senior management to decompose complex business problems and design of innovative solutions. His functional and technical experience included advanced analytics, enterprise data management and business modeling.

13. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 13 Can Audits be More Effective? Recent FEI CFIT and CGRC Discussions: The cost of compliance is growing and financial executives question the effectiveness of internal control audits Auditing standards were written before today’s technologies were invented and PCAOB inspections are challenging for PAs Audit Firms are expanding use of “cutting-edge technologies” (WSJ 3-8-16)

14. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 14 Data Analytics and Financial Compliance: How Technology is Changing Audit and Business Systems Are auditors making effective use of technologies available – including the use of automated monitoring and analytics? Interviews of internal and external auditors Interviews of vendors of monitoring and analytics software Note: This builds on 2011 FERF research report “ The Benefits of Continuous Monitoring”

15. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 15 Polling Question 2 What do you consider to be the largest obstacle / challenge to implementing a data analytics program? Time resources Cost to implement Executive buy-in/support Data integrity/ability to obtain solid data

16. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 16 Use of Technology by Internal Audit 2015 survey of IIA members found the use of software tools for data mining increased by 14 percent from 2006. However, fewer than 4 out of 10 chief audit executives (CAEs) worldwide feel their departments’ use of technology is appropriate or better. (Source: Cangemi, Michael. Staying a Step Ahead: Internal Audit’s Use of Technology, IIA Research Foundation, August 2015 )

17. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 17 Internal Auditors’ Use of Analytics Research Highlights: Audit quality is the primary goal Detection of duplicate payments is easy Analytics can be used to identify risks Internal auditors want to partner with the business BUT There is a staffing challenge

18. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 18 Management Conundrum Many surveys of company management say they want more from internal audit. IIA survey data, “8 out of 10 CAEs (Chief Audit Executives) worldwide believe assurance of internal controls is one of the top ways to add value.” And only 5 out of 10 CAEs say business improvement demonstrates internal audit is adding value. IA is in a good position to not only use tech but also to recommend the expanded use of continuous monitoring and analytics by operations.

19. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 19 Analytics Vendors Many software solutions are available with analytics: some generalized and some with a specific focus: Visualization, BI, Data Mining FERF interviewed three with GRC focus: Oversight Systems: Insights on Demand ACL CaseWare Analytics – speaking today

20. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 20 Data Analytics: Functionality and Advancements in Technology Why Auditors Use Data Analytics What do auditors need: Data Acquisition Extraction Analysis Productivity Continuous Audit

21. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 21 Our software solutions are built on a foundation of industry best practices and expertise, enabling audit, compliance and finance professionals to assess risk, uncover trends and provide the intelligence needed to make informed decisions. IDEA – Data Analysis Software CaseWare Monitor A Few Words About CaseWare Analytics

22. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 22 Customers Highlights: – Top 10 global public accounting firms – Global licenses with 3 of the top 6 – 75% of the top 100 US accounting firms – Government auditors for 9 of the 15 largest economies – Blue chip corporate customers across all business segments Users in three principal market segments: CPA FirmsCorporations Government

23. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 23 Why Auditors Use Data Analytics Risk assessment Internal control validation Substantive testing Advisory, investigations and other special assignments “Until the auditing standards are updated, there is little incentive for an auditor to use data analysis beyond understanding a business and assessing risks” -2013 Updating Audit Standards: Enabling Audit Data Analysis Bill Titera, EY (retired)

24. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 24 How IDEA works for auditors

25. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 25 Polling Question 3 What analytics software does your company use? ACL CaseWare Oversight Other None

26. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 26 How IDEA works for auditors Data Acquisition – Import – read only access (ensures data integrity) From SAP to QuickBooks, txt to PDF, ODBC Data request Control totals, Read-only data integrity A word about the AICPA Audit Data Standard Extraction – Equation Editor Normal math functions, plus “@” functions for numeric, text, date and time fields - shortcuts – Add Virtual or calculated fields – Search key words – “Exceptional exceptions” research

27. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 27 How IDEA works for auditors Analysis – Discover – new [screen shot] – Visualize – new [screen shot] – Age – date, time – File Statistics – File Append, Join, Compare – Summarization, stratification – Pivot table – Sequencing – gaps, duplicates Fuzzy match – Statistical analysis Benford’s Law Correlation, Trend, Time

28. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 28 How IDEA works for auditors Productivity – History – audit trail – Project overview – Smart Analyzer – Automation – Collaboration

29. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 29 Continuous Audit

30. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 30 Continuous Audit Exception management workflow Dashboards Remediation Role of the internal auditor Reliance by the external auditor

31. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 31 Polling Question 4 Does your external auditor use a data analytics solution? Yes No Don’t know

32. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 32 Continuous Monitoring Enterprise wide solution that allows business to monitor risks and controls. Remediation is automated and analytics are continuous. Automated Analytics Customized Remediation Process Improvement

33. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 33 Bob Cuthbertson Chief Operating Officer www.casewareanalytics.com 800-265-IDEA| bob.cuthbertson@caseware.com

34. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 34 External Auditors’ Use of Analytics Research Highlights: Audit quality is the primary goal Audit firms need to differentiate themselves BUT There is a talent shortage

35. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 35 Staffing Challenge Our interviews revealed a number of issues related to staffing for automated audits. Internal audit needs people who: – Know how to audit, – Understand work processes, and – Have expertise in technology or an interest in learning to use new software solutions. Each panelist to comment of issues facing them and solutions.

36. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 36 The Future of Analytics Research Highlights: Audits of the future will look very different Machine learning and artificial intelligence will eliminate manual work Robotic Process Automation will be used for routine audit work

37. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 37 ARE THERE ANY QUESTIONS FOR TODAY’S PRESENTERS?

38. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 38 Contact person Bill Sinnett, Chief Operating Officer, Research www.ferf.org (973) 765-1004 | bsinnett@financialexecutives.org

39. www.financialexecutives.org | 877.359.1070 connecting senior-level financial executives since 1931 slide 39 FOR YOUR PARTICIPATION DURING THIS WEBCAST