Applying Data Analytics – Benefits and Challenges for the Annual Audit

Key Takeaways:

• Service delivery models demand that auditors demonstrate their efforts are directed principally to potential risks and anomalies and areas of higher risk.
• Boards that derive the most value from audits that leverage data analytics are those that have pretty specific views of what constitute outliers or anomalies for the business and that understand the auditors’ demonstrations of how their analytic tools can quickly surface and identify risks and patterns that may not be immediately apparent through traditional audit methods.
• Boards have potential opportunities to enhance both the value of the audit as well as the reporting information provided by management – e.g., address disparate systems, enhance limited data hygiene and inexact controls around data.
• Greater scrutiny of information, including relevant controls over data and data integrity, requires auditors to focus on modernizing their professionals’ experience, as well as audit technology development, as they are the agents of change in enhancing audit quality.
• Boards should be asking their auditors to show them the value that data analytics is providing and become better informed as to: how difficult is the data to extract; how much cleansing is necessary; does it reconcile; how well is it controlled; etc.