audit analytics
ComplianceFinanceTax & Accounting10/12/2020 9:46:00 PM

How is data analytics used in auditing?

The term Data Analytics is a generic term that means quite obviously, the analysis of data.  Hence the term gets used within the world of auditing in many ways.  At TeamMate we refer to data analytics, or Audit Analytics, to mean the analysis of data related to the audit.  After all, the analysis of the business processes that we audit is the core of what audit does. 

Audit Analytics, as I’ve defined it, really should be a core component of any audit methodology.  One thing I’ve noticed from living through this pandemic is that people want to have data to support their opinions.  We can get counts of infections and unfortunately deaths.  We can then further analyze the data to look at it from a myriad of demographics including location, age, race, sex, other health factors, and other ways.  When we can show how data supports our opinion, we then feel justified in our opinion.

Similarly, data provides justifiable support for our audit findings.  Our findings are so much stronger when we can say that we looked at 100% of the data and found X, Y, and Z.  This is so much stronger than sampling, which is why we generally don’t point out in our reports that we sampled, and certainly stronger than other work such as interviewing alone.

However, the challenge audit teams face is that they have been led to believe for many years that the ONLY way to perform Audit Analytics is through individuals with specialized data analysis skills and tools that require strong technical skills.  Organizations with this thinking tend to be able to do very deep analysis, but they lack capacity so they can’t go very broad, resulting in most audits going without any data analytics at all.

data analytics
The graphic shows these teams have approximately 25% of their audits covered with analytics.  Another 25% where analytics aren’t applicable to the audit since they are not supported by transactional data.  This leaves a gaping hole where 50% of their audits could be supported by data analytics, but they are not due to capacity constraints.

Increasing the size of the data analytics team by 3x isn’t feasible.  However, raising the bar for other members of the Audit team to perform some analytics is feasible, if they have easy to use tools that they know how to use.  At TeamMate we know this to be true because have data to back this up!  Our TeamMate Analytics customers have told us that they are applying value-added analytics to more audits because they have

  1. Made it a priority
  2. Provided an easy to use tool
  3. Provided appropriate training

Additionally, we have organizations that have reported increased job satisfaction from their auditors, and faster than expected adoption, because the auditors want to do the best job they can, and TeamMate Analytics allows them to do Audit Analytics that they could not perform previously.  More than just a generic BI or visualization tool, TeamMate Analytics is specifically designed for Audit Analytics for all auditors.

Audit Analytics can and should be a part of every audit, and a part of every auditor’s skillset.

To learn more about TeamMate Analytics, click on the link below.

Ken Petersen
Associate Director, Product Management
Ken has over 25 years of experience in developing and implementing systems and working with data in a variety of capacities while working for both Fortune 500 and entrepreneurial software development companies. Since 2002 Ken’s focus has been on the Governance, Risk, and Compliance space helping numerous customers across multiple industries implement software solutions to satisfy various compliance needs including audit and SOX.
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