Data analytics are increasingly making their mark on the audit world, as they can help auditors find actionable audit insights throughout their work. The rise of audit analytics software is also making it easier for auditors to analyze large data sets and generate data analytics on their own, rather than only data scientists or related experts being able to do so.
In this article, we’ll dive more into some of the top benefits of data analytics for internal audit, including:
- Better risk management
- Greater assurance
- Enhanced efficiency
- Clearer reporting
- Improved audit quality
1) Better risk management
One of the top benefits of using data analytics for internal audit is that they can improve risk management throughout an organization. Trying to review all data manually typically isn’t feasible, whether you’re trying to analyze accounting practices to spot financial risks, IT records to identify cybersecurity risks, or pretty much anything else.
When an auditor then uses limited data sampling methods to compensate for what would otherwise be information overload, that can leave risk management gaps. Within a full data set, there might be unrealized yet important outliers. Data analytics for internal audit can help you spot and understand these risks by quickly reviewing large quantities of data.
2) Greater assurance
Related to improving risk management, another benefit of data analytics for internal audit is that they can be used to provide greater assurance, including combined assurance. Data analytics can provide a more systematic, complete review of business processes that make it easy to see whether findings from different departments align.
For example, an internal audit team might use data analytics to review financial data such as transaction logs to see if there are any anomalies. These results can easily be shared with other departments, such as enterprise risk management (ERM) and compliance, to see if the findings are in sync.
Using audit analytics software makes it particularly easy to visualize and compare results. In contrast, with sampling or other more manual, limited processes, you might not know if you missed something that would indicate whether the audit findings align with ERM’s results.
3) Enhanced efficiency
Not only can data analytics for internal audit improve risk management and assurance, but they can also save time. Trying to review hundreds of thousands of data entries in Excel, for example, can be incredibly time-consuming, to the point that this analysis often isn’t even attempted.
Yet audit analytics software like TeamMate Analytics can review over 1 million rows of data and already has a library of over 150 built-in tests that you can run instantly. From there, the findings can easily be presented in a visual format. Altogether, an internal auditor can use data analytics and audit analytics software to improve their efficiency in terms of planning, conducting and presenting an audit.
4) Clearer reporting
Data analytics can also be used to facilitate more digestible, impactful reports. In particular, using audit analytics software can help your audit function create data visualizations, such as charts and graphs, that clearly communicate audit findings.
Without data analytics, internal auditors might have to communicate via lengthy tables and wordy explanations, which overwhelm the audience. But with data analytics, you can create clear reports for senior management, the audit committee or other stakeholders, helping them get the most out of presentations.
5) Improved audit quality
Overall, data analytics can help improve audit quality at each stage of the audit process, leading to improved audit quality as a whole. From audit planning to testing to reporting, internal auditors can use data analytics to better understand their work and collaborate with other stakeholders.
More specifically, data analytics can be used to more systematically and efficiently conduct audit procedures such as Benford’s testing, stratification, Monetary Unit Sampling, and gap and duplicate detection.
Get more out of your analytics with audit software
As these examples show, data analytics can provide several benefits to your internal audit function, both in terms of optimizing your audit methodology and improving audit results. Ideally, internal audit teams can use audit analytics software to get the most out of data analytics, rather than using a more general analytics tool that does not necessarily align with audit methodologies and processes.
Audit analytics software like TeamMate Analytics can help audit teams easily generate data analytics that provide these types of benefits. The tool runs on Microsoft Excel, which helps audit team members generate audit analytics following familiar workflows, rather than leaving analytics solely in the hands of a data science experts.