In addition, internal auditors must work with the information-technology department. At Paychex, IT didn’t want to give auditors access to the data source, so Miller had to work with them and garner their support to pull the right data for audits.
Denise Cicchella, executive director and founder of Auspicium, says her construction-auditing consulting company uses data analytics on a regular basis for recalculations and trend analysis.
“As great as an auditor may be, they eventually get tired. The computer doesn’t get tired,” she says. For example, data analytics helps spot anomalies auditors may miss. If a project is 20 percent completed, but the company has been billed at 60 percent “that would raise a red flag,” she says, adding that data-analytics tools help find patterns an auditor may not be able to pick up on immediately, including such misdeeds as collusion and bid rigging.
Not only does data analytics help with more accurate recollection, it also helps find missing data, which is often an indication of an error, or even worse, fraud, she says. In fact, if used correctly, analytics can help find a needle in the haystack, validate efficient controls and effectively help navigate around complex issues. Data analytics can make information “meaningful, quick to digest and relevant,” Barnard says.
Barnard says auditors can embed data-analytics tools throughout the audit process. During risk assessment, data analytics allows for continuous monitoring so auditors can figure out key risk indicators, upload the data and use it on an ongoing basis. “People weren’t thinking about ongoing risk-assessment process, but it’s getting a lot of attention today,” he adds.
Ultimately, data analytics can permeate a company, helping it grow and mature. Miller says the practice is benefiting Paychex by putting the tools “in the hands of people that knew the business” and allowing them to do “more sophisticated work.” The audit team can be pioneers for data analytics. “Audit can serve that role [as trailblazer],” says Barnard.