Internal auditors are becoming more aware of the power of data analytics and how it can help them find anomalies and highlight trends. Indeed, by incorporating data-analytics tools into their auditing practice, internal auditors are able to manage risk continuously and in real time, according to experts during a Pricewaterhouse Coopers webinar “The Internal Audit Analytics Conundrum: Finding Your Path With Data.”
“When you talk about analytics, it can mean different things to different people,” explained Duncan Barnard, managing director of risk assurance at PwC. But even if the definition of data analytics is fluid, companies know that it’s important. In fact, according to a PwC study, which surveyed 1,700 internal-audit leaders, CFOs and CEOs, 85 percent said data analytics is important to strengthening audit coverage, and yet only 31 percent of respondents are using data analytics regularly.
Data analytics enables auditors to do more with less, explains Vikas Agarwal, PwC’s managing director of data analytics. Indeed, if companies make the investment in data-analytic tools up front, they’ll see a greater return on their effort, he adds.
For internal auditors, the challenge is turning that data from disparate sources (financial, compliance, unstructured data like email, etc.) into meaningful information, Barnard says. However, when data analytics is applied to auditing practices, it can increase risk coverage, make the audit cycle more efficient, offer real-time data, help auditors manage risk and build a more collaborative organization.
Payroll-services company Paychex launched a pilot program to explore what data analytics can do for its audit operations. “A couple of years ago, we were getting asked to do more with less and looking for more value-added audits,” Sean Miller, the firm’s director of internal audit, explained during the webinar. When he reviewed the company’s auditing process, it wasn’t effective or efficient. Data analytics tools seemed like the best solution.
But he ran into some cultural barriers when implementing the tools. The idea was new to the company and employees were hesitant to adopt it. Miller also had to figure out how to sell the investment to senior management as well as the audit team. The goal of the pilot program is to ease the company into data anlaytics, he says.