When data analytics comes to mind, it always seems somehow a daunting concept, and perhaps quite a challenging one - which is true to a certain extent. One might suggest that unless you are a fully matured organisation with immense support from senior management, you may be running out options here.
Is that true? Perhaps not.
The general principle of data analytics is to spot trends and expectations. Yes, software could do it faster and maybe better when dealing with massive amounts of raw data. But the same goal can be achieved through other methods as well – simply the all mighty spreadsheet. In fact, some typical examples for using data analytics can almost all be performed through a spreadsheet.
Examples of compliance related internal audit engagements might include:
Other examples of use in fraud, risk assessment, detection and investigation could include:
Further examples in operational performance related review may include:
These are just some of the examples where the simple spreadsheet can be utilised for data analytics. In addition, with a bit of spreadsheet training on ‘macros’ for example even more tasks can be performed by using a spreadsheet only. After all, data analytics may not be such an exclusive club.
Whilst it may be true to say that use of data analytics is an acquired skill it is certainly a skill worth acquiring in enabling internal audit to strengthen its assurance to the Board and Audit Committee. It helps identify trends, common themes and weakness and therefore supports management to improve internal control.
Perhaps a question we as internal audit should ask ourselves is whether data analytics a tool for first or second lines of defence rather than internal audit as the third line or is it a tool that all three lines of defence should be using to improve the internal control environment across the organisation?
Read our research report Data analytics: Is it time to take the first step?