How quality as well as quantity of data can help auditors

Data analysis is often important if you want to improve the quality of the insights you gain from the routine data you collect in your audits. But to maximize value, users need to be able to interpret the results, translate that information into business outcomes, and communicate the results in a way that others can use and understand.

Analyzing the data is not enough. Organizations also need to use data to facilitate people’s work and help teams operate efficiently. Data analysis in audits may sound cold and harsh at first, but when a company identifies key use cases and practices data analysis correctly, it can strengthen the human element of the organization. Basically, a data-driven culture is essentially people-focused. It’s about taking advantage of big data to make a small difference in the work of auditors and freeing teams to do what they’re best at.

Use data automation to benefit people

Most auditors and analysts are busy people. The time it takes to calculate numbers and explore the data can be daunting. Spreadsheets generated by human effort can have three main error types. Mechanical (input, input, copy / paste error), logical (improper or inaccurate formula and algorithmic calculation flaws), and omission (data is simply not embedded). The error on its own may look small, but it is not important. For example, an annual audit of Oregon’s financial statements and programs found $ 6.4 billion in unintended accounting errors during 2020.

According to a Harvard Business Review survey, only 3% of your organization’s data meet basic data quality standards, and 47% of newly created data records have at least one serious error. This means that if a company creates millions of records each day, the number of bad data records can grow rapidly.

However, tools that incorporate the most advanced methods available can reduce the time it takes to perform an analysis while allowing organizations to address new risks and gain insights faster.

For example, the process of booking, getting approvals, and uploading journal entries using an automated workflow can get the right information and adjust your account daily instead of waiting until the end of the month. Data automation helps eliminate stressful and time-consuming monthly, quarterly, and year-end accounting processes. Busy auditors can spend more time on complex processes that require expert judgment and develop new service lines and projects to grow their business.

Use data automation to improve accuracy

In addition, automation can be used to transform the digital workforce to quickly and accurately interpret all company data, leading to stronger decision making within the finance department and the board of directors. Good communication and data sharing help auditors identify financial reporting issues faster by the end of the year and help companies continue to be aware of accounting failures.

In a data-driven culture, you can not only rely on data from within, but also combine it with datasets from other sources. For example, satellite images of parking lots outside retail stores can measure customer numbers and inventory turnover, and product reviews can predict sales and potential recalls. These are non-traditional data points, but companies can use them to gain timely insights to help key people work more effectively.

Make predictions using data automation

Data transformations help you learn where you are heading and understand where you went. This helps identify new risks and enables auditors to effectively target responses. Data transformations can help you create predictive analytics, understand historical data and budget, or identify outliers this year that require additional research.

An important tool for this is visual data. When auditors visualize data through charts or complete dashboards, they can communicate risks and outcomes to clients and gain a more effective and realistic understanding of the outcomes. With client dashboards, auditors can understand client needs, identify high-risk areas, and focus quickly rather than looking for valuable time to analyze the right information. I can do it.

Data visualization software complements Excel and other audit applications to provide companies with risk assessment, substantive testing, and client communication. Connecting to the data is quick and easy, and you can update the process quarterly or yearly.

Adaptation to the use of data in auditing a data-driven culture

When culture is driven by data, audit teams can harness the power of that data to analyze business processes, test internal controls, and identify risks in real time. This is a type of audit that promotes quality financial reporting, gives investors confidence and confidence in the market, and promotes employee satisfaction and well-being by saving time and energy.

Beverley McCarthy is the CPA and Program Manager for the following strategic insights: MindBridgeShe brings in a data-driven mindset and is strengthening the way companies leverage AI.