On 23 May 2017, the Irish region of Chartered IIA held a breakfast workshop exploring the challenges and opportunities for both businesses and internal auditors offered by data analytics, following our recent research report, Data analytics: Is it time to take the first step?
Members of the audience noted that data analytics was an issue that was discussed 15 years ago and questioned the assurance that we would not be still talking about it in 15 years’ time.
Whilst there is no guarantee that internal auditors won’t be talking about data analytics in 15 years’ time, there was an acknowledgement around the table that the demands of audit committees in relation to levels of assurance have increased; the skill set and expertise within the internal audit community has also increased; and generally there was a recognition that businesses are producing more and more data that we, as internal auditors, need to utilise to enhance the assurance we provide.
Kevin Goulding, head of internal audit for Dublin Airport Authority, and one of the three case studies in our report, provided real-life examples of where he had used data analytics to benefit both the organisation and also internal audit.
One of the quick wins he discussed was duplicate invoices, which, whilst the financial impact wasn’t huge, demonstrated the value added by such an approach. Other examples of the use of data analytics included matching revenue and invoices raised with previous years to ‘red flag’ anomalies for further investigation, and using a script to pick up variances within rostered hours and actual hours worked.
For me, the key message was that this is internal audit working with the business. Internal audit writes the scripts, but the reports go to management to action. Internal audit should then follow up to ensure actions have been taken to address what are in effect weak or non-existent controls.
According to Kevin, one of the advantages of this approach is that it ensures there is regular communication with management which keeps internal audit in the loop and also raises awareness of internal audit role with management.
To me this is a win all round.
Read our research report Data analytics: Is it time to take the first step?