- Practices that have adopted analytics tools are seeing worthwhile results
- Top three considerations for practices thinking about investigating analytics for audit
- Is the cost of embracing analytics for audit engagements worth it?
While data analytics offers immense transformational possibilities, there is much more to getting the best audit results than just choosing the right software, says Sarah Butler, Head of Audit and Accounting at CaseWare Australia and New Zealand.
"To get the most out of using analytics within an audit, there is much more that you should be considering than just the selection and implementation of a software package," says Butler.
"Analytics as a topic has been around for quite a few years as an aid to auditing, and practical tools to assist have gone through a couple of improvement iterations and are now much more mainstream. We're seeing customers getting some worthwhile outcomes using data analytics for their audits."
Top three considerations
Sarah suggests the top three things that should be on the list for any practice investigating analytics are:
1. Data quality:
a. The security of data from a client is crucial. Both parties need to understand where it is stored, analysed, and who maintains the security of the data files – you, or a third party. How good is the security? Is it processed offshore?
b. Clients need to provide 'raw' data, not just financial statements or PDF copies. Ensuring the completeness of the data you receive is also a challenge – can the client provide all of the relevant ledgers? Can you confirm that all transactions are included?
c. Massaging the data into a form that is useable can also take considerable time. Look for data transformation capabilities (transforming the data for use within your chosen tool) if you’re controlling the data analyses from gathering to interpreting the results.
2. Management buy-in: Management needs to be committed to providing training and support to the team implementing and using analytics. Regularly examining the results and value for both the practice and clients helps enshrine the commitment to improving the processing of data, streamlining engagements and emphasising value to clients.
3. Key data analytics champions: Customers seem to have the most success when at least a couple of people in the practice are enthused and responsible for implementing the analytics tools and delivering value to both clients and the practice. Adequate training, management support and an affinity with data, the ability to interpret results and apply it to the right phases of an engagement, are ideally all qualities of these candidates. Some IT experience and skills would not go amiss either.
"To stay competitive, practices will need to go beyond a statutory audit and provide real client value."
Unfortunately, there is always a cost of change, but the question in many minds is, can I afford not to embrace this sort of change sooner, rather than later? CaseWare Australia and New Zealand CEO Craig Waldon says: "I think we are now well past the 'early adopter' phase of analytics tools and technology, and a lot of initial headaches with data transformation have been eased."
"In the real world, there is always likely to be a challenge around efficient data accumulation and transformation. Now is the time for practices, regardless of size, to start embracing this technology or be in danger of 'data overwhelm' and an inability to detect fraud effectively, or simply to provide great guidance to clients about business controls and risks.
Visit the CaseWare Analytics website to learn more about analytics for audit.Find out more