This paper proposes the Contract Analytics Framework (CAF), which provides guidance for incorporating textual analysis into audits of large numbers of contracts. Contracts are used extensively in auditing for risk assessment, analytical procedures, substantive testing, and audit review. While material contracts are carefully examined to assess financial implications, contracts perceived to be low risk are typically audited using standard sampling techniques. This proposed CAF facilitates effective and efficient audit analyses on full populations of contracts. We identify and describe six functional areas in the CAF: (1) Document Management, (2) Content Identification, (3) Cutoff Testing, (4) Record Confirmation, (5) Term Verification, and (6) Additional Audit Tasks. Based on auditing standards, we discuss the application of the CAF in the audit stages of risk assessment, substantive tests, and review. The framework is then implemented on a group of reinsurance contracts to demonstrate the feasibility of auditing full populations of contracts.
JEL Classifications: M42; C88; O39.