Rutherford Cross’ Internal Audit expert, Georgina Millyard, looks at the changing role of data analytics in internal audit.
Everywhere we look, big data is making inroads into the way in which business is conducted, fundamentally changing the way organisations operate. Using effective data analytics strategies, businesses can boost efficiency and improve evaluation whilst providing reassurance to stakeholders.
This increasing digitalisation of operations is resulting in a huge upswing in the data that businesses generate on a day to day basis, therefore increasing the amount of data that audit functions must manage.
The question is, how should internal auditors work to integrate the use of analytics in order to manage this data, and do they have the skills to do so? Data analysis has the potential to be a powerful tool, allowing internal audit to add value to their organisations in new ways. However, it should not be treated as a ‘quick fix’ and internal auditors must apply skill and judgement when embedding analytics in everyday working practices.
The required changes in mind set and skillset may present barriers to working with data analytics. Key to successful integration is careful and continuous monitoring of data analytics practices, as well as the introduction of analytics techniques across the board to improve perception and generate results. It should be noted that financial and cultural barriers can also be significant, particularly when the benefits of its implementation are not immediately evident.
In reality, once integrated in working processes, analytics can be used at every stage of the audit process; from planning, audit execution – allowing improved monitoring of controls, indications or fraud and anticipating future risks, and enhancing the reporting of risk quantification.
By upskilling internal audit teams and incorporating the use of data analytics into the audit process, internal auditors can enhance the assurance provided to the board on risk and control management through continuous auditing and population testing. For this to become the ‘new normal’, it is likely that some aspects of internal audit will change. This transformation, although requiring a new outlook, is essential for internal audit to continue to be effective in the age of big data.
At Rutherford Cross, we are seeing experienced firms looking to integrate CA/ACA trainees into their analytics teams, as well as hiring experienced analytics professionals in order to plug the skills gap. However, is this combination enough to bring audit teams up to the required level or do we need to think about how to increase the number of professionals looking to enter into this field in the longer term?
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