Day 12 (2 Nov 2022)

Today, I continue my CAATs practice and focus on the three-way practice. The three-way practice’s objective is to match the purchase/ sales invoice with the purchase order/ sales order together with goods received notes/ delivery listing. I learn that the document name is not standardized and that different companies might have a different name for the document, for example, normally we will call sales invoice but some companies might provide us with what they called a sales billing listing, both of the documents are acceptable considering that it has the same purpose which is to bill the customer for what they have owed. Besides, I also learn that when we are requesting relevant documents from the client for our three-way test, we might send them in the format we want, like if the client is using the SAP system, there are certain terms to represent the fields that we need, the table below list out the field names and its respective field name in SAP format.

We can contact the client and ask them to provide us with the data extracted from their system following the fields stated in the above table. After the client sent us the data that we requested, we need to take note that the file they gave us is in individual forms and what we need to do for the next step is to combine it all together into a file, it can be done using IDEA or Excel. Another thing I learn today is the three-way test is referring to the matching of an invoice with a sales order and with a delivery order, it needs to have three documents, however in some cases, the client might not have these three documents, for example, he might don't have the goods received note for us, so the test that we able to do is not called three-way test, it is called as two-way test that involves the matching of the sales invoice with sales order without the involvement of goods received notes.

Coming back to my practice, after I merge the data then I do the data clearing to filter out all the fields that are unnecessary to have, then I use IDEA to join all three files. After that, I copy the generated result to the BDO-prepared excel template, which will calculate and show how many variances that have lastly I filled in the information like my initial name as preparer then who is the reviewer and when is the date I performed the test.

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Main things that have learned

• Three-way practice

• Know the difference between ‘a three-way’ test and ‘a two-way’ test

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Comment/idea/opinion

I think that that is one thing that is more challenging than conducting the test itself, which I to communicating with the client to request the required data, it is difficult if the client has no basic understanding of accounting, so I need to focus more to increase my own understanding so when dealing with a client I am able to convey my request effectively.