Audit Workbench in Dynamics 365 Finance and Operations

In Dynamics 365 Finance and Operations, maintaining compliance and ensuring the accuracy of financial transactions are critical for business operations. One of the key tools designed to enhance these processes is the Audit Workbench.
While previous discussions introduced various audit capabilities within the system, this article focuses specifically on how Audit Workbench automates transaction monitoring, detects inconsistencies, and streamlines resolution processes to improve financial oversight.

Let’s explore how this module functions and why it is essential for maintaining transparency and compliance.

How Audit Workbench Functions

The Audit Workbench module operates as a structured framework for detecting and managing transactional irregularities. It follows a systematic approach to ensure compliance and accountability:

• Defining Audit Policies: Businesses can create customized audit policies that specify the criteria for identifying potential discrepancies.
• Monitoring Transactions: The system continuously scans financial and operational transactions, identifying patterns that deviate from established policies.
• Flagging Irregularities: Transactions that do not align with predefined criteria are marked for further investigation.
• Facilitating Audits: Auditors and compliance officers can conduct in-depth reviews of flagged transactions to assess risks and determine necessary actions.
• Tracking Resolutions: The module enables businesses to document corrective actions and track resolutions, ensuring compliance measures are followed.
• Providing Analytical Insights: Through reports and data-driven insights, businesses can refine their audit strategies and enhance decision-making.

By integrating automation into audit workflows, Audit Workbench minimizes manual effort, reduces financial risks, and strengthens regulatory compliance. For organizations leveraging Dynamics 365 Finance and Operations, this tool provides a proactive approach to maintaining financial integrity and operational efficiency.

Types of Audit Queries in Dynamics 365 Finance and Operations

When configuring an audit policy rule in Dynamics 365 Finance and Operations, the first step is selecting the appropriate rule type. This choice determines the specific auditing method that will be applied.

The audit query examines the source document related to the rule, identifying key details such as the legal entity, transaction date, and other relevant parameters necessary for selecting records to audit. Additionally, the type of query chosen influences the default fields that appear when setting up queries within the Audit Policy Rule or when navigating the query page.

By selecting the right audit query type, businesses can streamline compliance processes, ensure accurate data evaluation, and enhance audit efficiency within their financial operations.

By leveraging these query types, organizations can create effective audit policies, reduce financial risks, and maintain regulatory compliance within Dynamics 365 Finance and Operations.

Real-World Scenarios for Audit Queries in Dynamics 365 Finance and Operations

Once audit queries are set up, the next step is applying them to real-world scenarios. By using different query types, organizations can create targeted rules that help detect anomalies, enforce compliance, and enhance data accuracy. Below are practical examples demonstrating how each query type can be used effectively in Dynamics 365 Finance and Operations.

List Search Query Use Cases

• Identify purchase orders with delivery dates that have already passed to ensure vendors are notified and delivery schedules are updated.
• Flag vendor invoices with extended payment terms exceeding 90 days to verify compliance with company financial policies.
• Highlight expense reports where the total claimed amount surpasses $5,000, prompting further managerial review.

Keyword Search Query Use Cases

• Detect vendor invoices containing the term "urgent" in the description, signaling rushed or high-priority transactions that require additional review.
• Identify expense reports that mention "gift", ensuring they meet corporate guidelines and receive necessary approvals.
• Flag purchase orders including the word "custom" to verify they align with approved procurement and budgeting policies.

Duplicate Query Use Cases

• Detect vendor invoices that share the same invoice number, amount, and vendor, preventing accidental overpayments or fraudulent entries.
• Identify purchase orders that are duplicated with identical vendor, total amount, and delivery date, reducing errors caused by multiple submissions.
• Flag expense reports submitted by the same employee for the same trip or event, ensuring duplicate reimbursements are avoided.

Sampling Query Use Cases

• Randomly select 5% of purchase orders from the last quarter for audit, maintaining oversight while reducing manual review efforts.
• Extract a 10% sample of vendor invoices exceeding $50,000 to confirm they have been properly documented and authorized.
• Select a randomized set of expense reports from a specific department to conduct an internal compliance check.

Aggregate Query Use Cases

• Identify vendor payments where the total amount transferred to a single vendor in a month exceeds $1,000,000, signaling the need for further review.
• Flag purchase orders where total spending with a single vendor over a quarter surpasses $2,000,000, ensuring compliance with procurement policies.
• Monitor expense reports where an individual employee’s total expenses for a month exceed $10,000, ensuring adherence to travel and spending limits.

Conditional Query Use Cases

• Flag expense reports exceeding $5,000 that lack recorded managerial approval, ensuring compliance with expense policies.
• Identify vendor invoices past their due date where no payment is scheduled, prompting financial teams to follow up on outstanding balances.
• Detect purchase orders exceeding $100,000 that have not received senior management approval, ensuring authorization protocols are followed.

Demo – Creating an Audit Case for Duplicate Invoices

In this section, we will walk through the steps to implement Scenario 1 under the Duplicate Policy Rule, where we identify vendor invoices that have been entered multiple times with the same amount and vendor within a specific time frame.

Step 1: Setting Up the Policy Rule Type

• Navigate to Audit Workbench → Setup → Policy Rule Type.
• Configure the rule to check for duplicate invoices, ensuring that the system identifies transactions with the same amount from the same vendor.
• The batch process will use the invoice date as the reference point for detecting duplicates.

Step 2: Configuring the Audit Policy

• Go to Audit Workbench → Setup → Audit Policies.
• Create a new audit policy and name it Duplicate Invoices.
• Scroll to the bottom of the screen and add a new policy rule.
• Click on the newly created rule to modify its settings.

Step 3: Defining the Duplicate Detection Criteria

• Click on Filter to refine the selection criteria.
• Switch to the Group By tab to ensure the system groups invoices based on vendor and amount.
• Set the conditions to display all invoices from the same vendor with the same amount within a specific time period.
• Click OK to save the configuration.

Step 4: Running a Test

• Click Test to validate the rule.
• Specify a date range to test the policy’s effectiveness.
• Click Run Test and review the results.

Step 5: Automating the Duplicate Invoice Check

• Navigate to Audit Workbench → Setup → Audit Policies.
• Select the Duplicate Invoices policy and click Additional Options.
• Enter the date range for batch processing.
• Click on Batch to schedule automation.

Step 6: Configuring the Batch Job

• Define the batch job parameters to control how often the duplicate invoice check runs.
• Click OK to finalize the batch job setup.
• The system adds the batch job to the processing queue.

Once the batch job is executed, audit cases will be automatically generated in Audit Workbench → Audit Cases, allowing auditors to review and take necessary actions on detected duplicates.

Audit Case Management in Dynamics 365 Finance and Operations

Audit cases help organizations identify and resolve compliance issues by flagging transactions that do not align with internal controls or regulatory requirements, such as SOX compliance. Below is a step-by-step guide to managing these audit cases efficiently.

Step 1: Accessing and Reviewing an Audit Case

• Navigate to Audit Workbench → Audit Cases to view exceptions flagged during periodic reviews.
• Each case represents a transaction that requires further investigation.
• Select a specific case and review its details to determine the nature of the flagged anomaly.
• Change the case status to "In Progress" to indicate that the audit review has begun.

Step 2: Assigning the Case to a Responsible Party

• Allocate the case to an auditor or investigator responsible for reviewing and resolving the issue.
• Assigning ownership ensures that accountability is maintained and that the case is handled efficiently.

Step 3: Reviewing Case Details

• The assigned auditor examines the flagged transaction and its supporting documents.
• The Associations tab provides a linked view of all related records, giving a complete picture of why the case was flagged.
• Each linked record includes an ID column with hyperlinks that allow direct navigation to source documents for deeper analysis.

Step 4: Conducting a Detailed Analysis

• Investigate the flagged transaction by examining relevant data points.
• Compare details with company policies and regulatory requirements to determine if a violation has occurred.
• If necessary, communicate with relevant departments to gather additional context.

Step 5: Documenting Findings

• Record all observations, findings, and resolutions in the case log.
• Keeping a well-documented audit trail ensures transparency and future reference.

Step 6: Attaching Supporting Documentation

• If the flagged issue requires additional clarification, attach relevant supporting documents.
• For example, if a system rule flagged a duplicate invoice but built-in controls prevent duplicate entries, a knowledge article can be attached to justify why no action is needed.
• Confirm the attachment by selecting Yes when prompted.

Step 7: Closing the Audit Case

• Once the review is completed and the necessary actions have been taken, update the case status to "Closed".
• Closing the case confirms that the flagged anomaly has been addressed, completing the audit process.

Final Thoughts

The Audit Workbench in Dynamics 365 Finance and Operations provides an organized and automated approach to managing audits. By systematically identifying, analyzing, and resolving irregular transactions, it helps organizations enhance compliance, maintain financial accuracy, and ensure operational transparency.

With its ability to automate anomaly detection and case tracking, businesses can focus on strategic decision-making instead of manual auditing tasks.

Source: https://dynamics365clouderp.blogspot.com/2024/12/audit-workbench-in-dynamics-365-finance.html