1. 16th World Continuous Auditing Symposium Continuous Auditing Process using Cross References and Key Performance Indicators Washington Lopes da Silva

2. 16th World Continuous Auditing Symposium Agenda 1.Objective 2.Current Situation 3.Proposed Situation 4.Cross References 5.Key Performance Indicators 6.Conclusion 7.Recommendation

3. 16th World Continuous Auditing Symposium Objectives 1

4. 16th World Continuous Auditing Symposium Objectives To propose Improvements in the Continuous Auditing Process To reduce the number of false positives To facilitate the auditing analysis To provide a more intelligent Continuous Auditing routine To monitor the credit risks associated to clients with total negative balance

5. 16th World Continuous Auditing Symposium Current Situation 2

6. 16th World Continuous Auditing Symposium Current Situation Data extraction from the legacy systems is processed in the mainframe environment, using a special software to create reports (FOCUS) It reads the sequential files from the “current account system” Exceptions are analyzed, checked and sent by e-mail to the audited areas who are responsible for finding the proper solutions Exceptions can only be detected 5 days after they happen We can only define one parameter to capture the exceptions

7. 16th World Continuous Auditing Symposium Proposed Situation 3

8. 16th World Continuous Auditing Symposium Proposed Situation Data extraction from the legacy systems is processed in the Data Warehouse environment, using a new flexible IT architecture Creation of a Data Mart with clients credit information Creation of a cross reference between clients credit information and “the current account system” Reduction of the number of false positives as well as the time for auditing analysis Detection of exceptions only 1 day after they happen Definition of many parameters to make the cross reference and capture the exceptions Creation of Key Performance Indicators

9. 16th World Continuous Auditing Symposium Cross Reference Parameters 4

10. 16th World Continuous Auditing Symposium Cross References Credit System CLIENT´S NET BALANCE Cross References Renegotiation System Behaviour Scoring System Mortgage System Investment System Current Account System

11. 16th World Continuous Auditing Symposium Key Performance Indicators 4

12. 16th World Continuous Auditing Symposium Key Performance Indicators by branch a) Excess amount b) The least, average, the highest and total excess amount c) Excess index / Result d) Excess index / clean portfolio e) Excess index / bad debts accrual f) Excess index monthly growth (amounts and quantities) g) Excess index / Limit h) Excess index / Excess total loss (amounts) i) Excess index / total loss

13. 16th World Continuous Auditing Symposium Conclusion 5

14. 16th World Continuous Auditing Symposium Conclusion The improvements of this new process will impact tremendously the Continuous Auditing, bringing up: a) More effectiveness in controlling frauds and financial losses b) Timeless of auditing analysis c) Increase in the assertive auditing actions through a more effective risk mapping d) More independence to the auditors performance in their analysis e) Increase in the confidence of auditing data handling

15. 16th World Continuous Auditing Symposium Recommendation 6

16. 16th World Continuous Auditing Symposium Recommendation Continuous Auditing Implementation process should be spread all over the organization until reaching all risk areas, as Accounting, Treasury, Credit, and others where there is a possibility of no compliance.

17. 16th World Continuous Auditing Symposium Thank You! Washington Lopes Washington.lopes@unibanco.com.br