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Big Data and The Roles in Auditing

Just like a storm, big data is the new wave that is taking over company operations. Big data is a term that describes the large volume of data – both structured and unstructured – that inundates a business on a day-to-day basis. But it’s not the amount of data that is important. It is what organizations will do with the data that matters. Big data can be analyzed for insights that lead to better decisions and strategic business moves. Businesses that are able to leverage the volume, variety and velocity of big data can make better decisions, reduce operational costs, and keep up with evolving customer demands. Big data is being used in a lot of different sectors, such as manufacturing, banking, and many more. The ability of companies to collect and analyze data in real-time is a valuable asset that drives growth. Geoffrey Moore, an American organizational theorist, management consultant, and author once said, “Without big data, you are blind and deaf and in the middle of a freeway”

 

Unfortunately, the auditing industry has been left behind when it comes to big data. Both internal and external auditors haven’t fully leveraged real-time data insights to manage compliance and ensure that businesses are harnessing the full value of their potential. 

There are multiple uses cases for big data in auditing. Big data and analytics are enabling auditors to identify financial reporting, fraud and operational business risks better and tailor their approach to deliver a more relevant audit. By collecting information regarding past events, predictive and prescriptive analytics can be used to estimate the likelihood of future outcomes. Furthermore, auditors and other stakeholders will have a higher level of confidence when it comes to analyzing the effectiveness of specific company operations.

 

Benefits of Using Big Data in Auditing

Future auditors, many stakeholders don’t view the auditing process as applicable during big data analytics. However, real-time data analysis can be applied in many different ways to benefit auditors. Auditors can use big data to expand the scope of their projects and draw comparisons over larger populations of data.

Because of the data involves the use of automation and artificial intelligence, big data can be processed in larger volumes and higher velocity to uncover valuable insights for auditors. For example, previous cases of non-compliance, current policy changes, and fraud can be identified and used to guide the focus of both internal and external auditors.

Big data is helping financial auditors to streamline the reporting process and detect fraud. These professionals can identify business risks in time and conduct more relevant and accurate audits.

Big data also allows you to automate multiple portions of the auditing process. Human error is a common reason why businesses fall out of compliance or spend too much on audit-related requirements. By automating manual and repetitive tasks, auditors can set up various controls in advance and monitor how well a company is adhering to established guidelines.    

 

How Big Data Can be Used to Streamline Auditing

 

The applications of big data in auditing are widespread. However, many companies haven’t figured out how to fully leverage the power of big data to make auditing more accurate, more reliable, and less costly.

The best way of taking the next step in big data is by starting on the right foot. You need to be able to collect, aggregate, and analyze data in a manner that provides valuable insights. You also need to devote adequate resources to the support of internal auditing tasks. For example, providing access to critical data and collaborating with multiple departments will help auditors prepare more accurate, dependable, and timely reports.

 

Follow this steps if leveraging big data for auditing is your primary objective :

 

 

  • Start with an end goal

 

Even before setting up algorithms or statistical models for analyzing audit data, you should first determine what your end goals are. Senior management and internal auditing staff should be involved when making decisions regarding an internal audit.

 

 

  • Develop teams with adequate resources and technical skills

 

The next step is to identify any gaps in infrastructure and manpower. You may need to hire talent that can analyze data in real-time and help manage large information silos. You should be prepared to provide adequate support, including training and robust methodologies that can be repeated multiple times down the road.

Reference :

https://www.ey.com/en_gl/assurance/how-big-data-and-analytics-are-transforming-the-audit

BI https://www.analyticsinsight.net/the-role-of-big-data-in-auditing-and-analytics/