Need More Data Analytics in Audit

Part 1 of an article at AuditNet notes that audit teams need to increase their use of technology, specifically data analytics, to continue adding value to their companies. The author contends that data analytics can provide more assurance at a lower cost than the traditional cyclical approach to auditing (while I noticed the author, John Verver,  is a VP of  ACL Services and has a vested interest in this, I agree with him).

The article is a bit long, so you may want to skip to the 3rd heading titled The role of technology. Several benefits of using data analytics are listed, but I’ll just comment on 3 of them:

  • Audit and testing of 100% of transactions – you’re more likely to find anomalies and identify trends. After analyzing a couple months of timecard  adjustments, I found that many managers needed more training using the timecard software, as they entered the same transactions  3 or more times.
  • Freeing audit resources to focus on new risk areas – automation saves so much time that you can actually get to your audit “wish list.”
  • It’s more fun! – OK, this wasn’t in the article, but it’s true. I found script writing very fulfilling as I was constantly learning new ways to wring usable information out of the data.

Successfully implementing data analytics, as the article describes, takes “time, skill, and resources,” management support, and a plan. In my experience, too few companies use data analytics at all. Many companies that use data analytics seem to use it sparingly to do an audit here or there, but few use it to tackle the same tasks on an ongoing basis for long-term review. Other companies that use data analytics heavily (and robustly) on the financial side have given little thought to using it on the IT audit side.

Part of the problem is that the technology is not easy for non-technical staff to learn, and without constant use, the skills are even harder to retain. The more automated and advanced the scripts are, the more this is true.

Too often data analytics ends up being the domain of a few instead of a standard practice across the audit department. But the investment will provide greater assurance, time saved (eventually) when doing repetitive audits, and additional insight into the data. And fun!

For another ITaudit post regarding data analytics, see Teach Yourself ACL.

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Filed under ACL, Audit, Data Analytics

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