More and more auditors are using data analytics in audit to improve their internal audit programs and processes as well as deliver a more business-centric audit function that can focus on higher-priority risks. ACCA, the global body for professional accountants, notes that “businesses are finding increasingly sophisticated and timely methods to utilize data analytics to enhance their operations.” Show
Whether your audit team monitors and assesses risk daily or reports aggregated risks to your board and stakeholders, data analytics can play a crucial role. Harnessing data analytics via an appropriate audit management solution can support you in transforming audit into a more focused, efficient, value-led function. The Role of Data Analytics in the Audit ProcessAs internal audit teams seek to transform their functions from reactive, reporting-led assurance to trusted business advisors and partners, there is a central role for data analytics in audit. This change in focus and perception demands an agile function, proactive rather than reactive. This reimagining of the internal audit team and how they approach their audits will see the entire audit lifecycle evolve into a value-driven process. One that moves from isolated data-gathering and analysis to organization-wide oversight, employing next-generation analysis and reporting software that can provide assurance on financials and compliance – freeing up auditors to focus on other risks. “How do we save time without reducing the level of assurance?” said Tom Keaton, Director of Internal Audit at Crown Castle. “You need to start with the financials, which are going to be easier to automate. Then connect data across systems to give new insights.” 9 Benefits of Data Analytics for Internal AuditorsData analytics and auditing are natural partners for numerous reasons. For internal auditors, the ability to use data analytics delivers nine tangible and significant benefits. Data Analytics in Audit Benefits:
Challenges of Harnessing Data Analytics for AuditorsIt’s clear, then, that data analytics in audit has significant potential to improve the robustness of audits while smoothing the process and delivering a business-oriented approach to audits. There can be challenges along the way when looking to harness data analytics. 3 Challenges of Utilizing Data Analytics
How Does Technology Help?Technology fundamentally underpins auditors’ ability to harness big data and employ data analytics in audit. The ICAEW notes that the growth in the use of data analytics as “an indispensable element of the internal audit toolset” has been enabled by “fast-evolving technologies that generate-increasing amounts of data.” Making the right decision about the technology your organization uses to support data analytics for audit can be the difference between success and failure. Let’s explore some of the considerations. 5 Questions To Ask When Buying a Data Analytics for Auditors SolutionThere are some fundamental questions to ask when investing in a solution to deliver data analytics in audit. 1) Analytics Designed to Detect RiskToo many audit management solutions are built without input from the teams that will use them. Instead, you should opt for software built specifically for audit analytics, with attention to the support audit teams’ needs. Here are two factors to help you gauge whether a solution is audit-specific.
2) What Are the Additional Costs?The cost of a data analytics solution for auditors is a significant factor in your decision process. If your chosen solution doesn’t do everything you need, you may have to invest in multiple purchases to get your desired outcome. It’s also vital to evaluate the costs of a solution that uses third-party analytics tools (which we look at in more detail below). Additional costs around connectivity and additional tools needed to bolt on third-party analytics tools can be significant, with organizations having to spend up to $100,000 on top of the audit management solution they are already paying for. 3) Does the Software Provider Have a Service That Can Set Up Your Scripts?When we break down data analytics in audit, typically 80% of the work is around accessing, normalizing and cleaning data, and only 20% comprises analysis. Your approach should reflect this in terms of resources, time and focus. However, many audit teams don’t have the in-house expertise to access, normalize, and clean their data or advise on how to automate it. When you look for a software provider, it’s essential to choose a company that can set up the scripts you need to do this within the solution. 4) Can the Solution Grow with Your Company?Your organization is evolving strategically. In tandem, your audit department is maturing, with growing responsibilities and a shift from the tick-box to the consultative. Your chosen data analysis and auditing solution need to adapt to the development of your organization and audit function. Questions around scalability that you should ask include:
As CAE or head of audit, streamlining and efficiency are your watchwords. Avoiding silos and integrating your risk management with your GRC strategy and ESG solutions will support your organization-wide audit capability and risk management strategy. As a result, your audit function can demonstrate more purpose-driven, efficient and strategic leadership. A solution that can grow with you as your audit program matures can help to future-proof your program and ensure it won’t hit a growth ceiling. And if your chosen solution can solve many use cases, both traditional and non-traditional — for instance, audit, risk and compliance — you create a more risk-aware culture within your entire organization. 5) Does the Tool Empower You to Focus on the Important Work and Fewer Mundane Tasks?A tool that uses automation can dramatically improve day-to-day work — and, therefore, job satisfaction — for internal auditors and audit managers. Automating data analytics in audit using dynamic, automated workflows reduces repetitive “grunt” work and streamlines processes. It also minimizes human error, reducing the need for rework. Doing this, and enabling continuous testing, rather than sampling via substantive analytical procedures, enables internal audit teams to explore what HAS gone wrong, rather than what could go wrong — and, as a result, drive continuous improvement. The analytics behind the tool powers this analytical, investigative approach. Give due consideration to this, and you will accelerate the audit team’s ability to act as a trusted advisor, delivering continuous assurance and insights from organizational data. When looking for a tool that enables data analytics in audit, ask whether your chosen solution supports you in focusing your energy on more strategic and critical business risks and analysis.
Discover More Essential Components When Choosing Audit Management SoftwareThe five questions above are the most fundamental to ask when considering a solution to deliver data analytics for auditors. But they are not the only considerations. You need a solution that provides a single, centralized source of best practice, via templates, libraries and standard procedures. Software that includes audit planning and workflows will enable your team to plan their activity efficiently. Visibility and understanding across the entire organization are maximized by clear reporting and dashboards. _________________________ More Essential Questions and Considerations When Choosing an Audit Management Solution_________________________ Integrated Data Analytics vs Third-Party Analytics ToolsOne question auditors grapple with on data analytics for audit solutions is the “integrated vs third party data tools” debate. Some audit software uses integrated data analytics, while other companies’ software requires a third-party data analytics tool. There are some considerations for audit professionals exploring their options:
Integrated data analytics tools for auditors are far cheaper than using software that requires third-party data analytics tools and connectors. Some systems require separate licenses and arrangements for data analytics, over and above the initial cost of the audit software; the additional security protocols needed can make this very expensive. The Diligent audit management solution has data analytics inbuilt, so there are no nasty surprises in terms of extra costs for separate tools and integration technology.
If you opt for a solution that relies on third-party data analytics tools and experience problems, you must resolve the issue via the third party, not your original supplier. With a fully integrated data analytics tool, you’ll receive a more streamlined service, with all your customer support from a single source.
As mentioned above, a solution that can future-proof data analytics in audit is vital. A solution that relies on third-party data analytics software makes scalability more complex, whereas one with integrated data analytics for auditors means you only have one system to consider as your business evolves. Streamline Your Approach While Increasing AssuranceWhen exploring the benefits of data analytics for auditors — and deciding what software can support your audit transformation — you need a solution that not only decreases your workload but increases assurance and confidence. And because you need not only a workflow tool but a way to maximize the potential of data analytics in audit, you must ensure your chosen solution ticks all the boxes. Having acquired ACL Analytics through Galvanize, Diligent’s analytical capabilities are built on Audit Command Language (ACL) to provide our clients with that high level of assurance while enabling audit teams to do more with less by automating audit processes. You can dig deeper into our audit management solutions and find out how they can accelerate data analytics for auditors. Which of the following would occur during the planning stage of audit data analytics?Which of the following would occur during the planning stage of Audit Data Analytics? Auditor must determine the nature, timing, and extent of the work that will be completed as part of the ADA.
What are all of the basic steps that an auditor might use for audit data analytics ADA )?The 5-step approach includes:. Step 1) Plan the Audit Data Analytics. ... . Step 2) Access and prepare the data for the audit data analytics (ADA) ... . Step 3) Consider the relevance and reliability of the data used. ... . Step 4) Perform the ADA. ... . Step 5) Evaluate the results and come to conclusion on ADA's overall effectiveness.. What is data analytics in auditing?Audit analytics, or audit data analytics, means the intelligence generated from reviewing audit-related information, often through the use of technology. Like other types of data analytics, audit analytics typically involve analyzing large sets of numbers (but could involve text) to find actionable audit insights.
What is the effect of data analytics on audit procedures?Overall, data analytics can help improve audit quality at each stage of the audit process, leading to improved audit quality as a whole. From audit planning to testing to reporting, internal auditors can use data analytics to better understand their work and collaborate with other stakeholders.
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