Data Analytics Helps to Strengthen High Audit Standards

Data Analytics Helps to Strengthen High Audit Standards

by Aswani

At present, the world is evolving at a breakneck speed, requiring us to adapt our techniques to accept technology that will help us accomplish our tasks more efficiently. Auditing, as a defensive mechanism in an organization, works with a wide range of facts and information, demanding complete concentration. This is the point where data analytics comes into the equation.

Data analytics (DA) is the practise of analyzing data sets to make conclusions about the information they comprise, with the help of increasingly sophisticated tools and software. Fundamental analytics operations are carried out using software like Excel, which is used to filter and correlate data from various sources.

In the last decade, the use of data analytics has improved audit quality. In order to satisfy the demands of companies effectively, big and mid-tier organizations have recently modified their audit strategy and methodology by incorporating data analytics for 100 percent verification on smaller audits.

DATA ANALYTICS TOOLS

It is vital to select or build data analytics tools that can be used with full data sets to check and analyze all transactions, make conclusions, and decide on the next stages of verifications. The auditor can utilize both traditional data analytics tools and more advanced approaches. The following are some examples of tools used:

  1. Excel Analytics
  2. ACL – IDEA CaseWare
  3. Software that can assist in completing analytical processes by modelling the correlation between a quantity being tested and data that is supposed to be predictive of the quantity using regression analysis.

ADVANTAGES OF USING DATA ANALYTICS

Many businesses are beginning to examine data analytics in audits as a consequence of the findings and improved adaptability and visible results. Let’s look into the advantages, which are as follows:

  • Data analytics improves audit quality since the population being examined is greater, with the goal of screening all data
  • Saves time, allowing you to focus on judgmental analysis
  • A thorough knowledge of the entity and its surroundings
  • Increased use of professional skepticism and judgement
  • More trustworthy information for users

DATA ANALYTICS IN THE AUDIT APPROACH

i) Planning the audit

An attempt will be made to examine whether the data is full, honest, and available for the necessary time during the evaluation of the data quality of the general ledger. Before proceeding, the following questions must be answered.

  • To what degree are there controls in place to ensure data completeness, integrity, and availability?
  • Journal entry testing is used to examine the underlying data
  • Is the individual in question familiar enough with the customer to conduct data extraction?

ii) Test of controls

Investigation of the data for proof of the control working as planned may be used to assess the operating efficiency of controls using data analytics. In some cases, data analytics can also be used to replace the control action.

  • Each activity/process in the underlying data is examined
  • Prepare a report
  • Analysis of Segregation of Duties (SOD)
  • Date Analysis

iii) Substantive procedures and other procedures

Applying data analytics techniques, transaction analysis of various business operations are performed.

  • Three-way connection
  • Correlation in two ways
  • Analysis of the cutoff point
  • Analyze the dates
  • Analysis of Relationships
  • Analysis of the monthly movement

In the coming years, data analytics in the audit field will be a very effective tool for learning and gaining a comprehensive understanding of the client’s business. It is high time for the audit profession to adapt to the new technologies available as data analytics can improve the way auditors perform their audits.

Buchprufer Consultants, as one of the top audit organisations, has qualified auditors on staff that are eager to assist you with audit data analytics services which will help to enhance the success of your business. We ensure top-notch, professional services that can help your organization cut down on the administrative and financial costs of running a business successfully in the long run.

If you’d ever like to collaborate with our services, don’t hesitate to reach out.