​​​Work Smarter, Not Harder: How Internal Auditors Can Capitalize on Data Analytics for Greater Efficiency

Internal Auditor's latest winning scholarship essay examines the importance of data analytics in internal audit.

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​In today’s dynamic busine​ss environment, companies are expecting more from internal auditors than ever before. A typical audit plan covers operational, financial, information technology and SOX audits, as well as risk management, business strategy and corporate governance. There are many roles for the internal auditor to fill – risk assessor, assurance provider and trusted advisor to name a few. For this reason, it is essential for internal auditors to maximize efficiency within the internal audit functions. One way to attain increased efficiency is through the implementation of data analytics, such as data mining technology and data visualization tools. Data analytics allows an internal auditor to work smarter, not harder, by increasing productivity, adding value to the organization, and identifying emerging risks.

Increasing Productivity

Data analytics enables internal auditors to utilize automation in order to continuously monitor control processes. By automating tasks that were previously performed manually, the effort and time spent on auditing is significantly reduced. For example, “automated controls that have not changed since the previous audit would be validated without further examination” (Tysiac, 2015, p. 3). Through automation, analytics can be reused, thus reducing redundancy and duplication of effort. Consequently, automation will allow internal auditors to streamline the audit process and increase productivity.

Adding Value

Additionally, by using data analytics for audit testing, auditors can increase audit coverage and eliminate sampling risk. According to an article in the Journal of Accountancy, HP implemented continuous auditing through data analytics and was able to reduce the number and risk of journal entries because they could “identify and study trends, movements in the accounts, [and] spikes of activity during the period” (Tysiac, 2015, p. 1). As a result, HP added value to the organization by being able to act on data in real time. Data analytics provides data-driven insights into the business, thus giving internal auditors a new perspective on the business strategy.

Managing Risk

Because access to data increases with data analytics, internal auditors are able to bring the analysis closer to the decision maker. This creates a greater efficiency through “analytics that shorten the time for getting management to respond to risk” (Tysiac, 2015, p. 2). Internal auditors are able to be much more persuasive when it comes to addressing risk because they have more data to support their assertions. In order to address emerging risks within the business, internal auditors must be willing to combine traditional analysis of historical data with a forward-looking mentality. Data analytics can help with this shift and improve internal audit’s role in risk management.

Implementing Data Analytics

Capitalizing on data analytics for greater efficiency does not have to be complicated. Internal auditors can leverage data analysis tools in Excel, and simply by thinking more analytically, can structure audit problems in such a way to accomplish greater efficiency. Through successful implementation of data analytics, the internal auditor will be able to fulfill the many roles expected of internal audit, closing the gap between risk assessor, assurance provider and trusted advisor, while working smarter, not harder.

Works Cited

Tysiac, K. (2015). Driving faster decisions. Journal of Accountancy. Retrieved from
http://www.journalofaccountancy.com/issues/2015/apr/data-driven-auditing.html.

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