The Importance of Data Analytics within Internal Audit
Expectations for those working in internal audit are changing as the need for swifter detection of anomalies, red flags for fraud and other indicators of problems with internal controls has exposed a new generation of internal auditors. One bestowed with the wisdom of data analytics. Those professionals with data analytics experience have as a result found themselves rising through the ranks within the internal audit function.
More and more companies are applying data analytics to the majority of their audits and thus require the relevantly-skilled individuals to facilitate these projects. Among the top seven skills looked for by chief audit executives, according to the Institute of Internal Auditors’ CBOK report, data analytics has become the go-to method for creating monitoring systems designed to keep a constant check on internal auditing mainstays such as travel and expense reporting and accounts payable. Known as ‘continuous auditing’ this automated process relies heavily on analytics, showing how integral both data analytics and automation are to the internal audit function of today. The Big Four, among other accounting firms, are embracing new technology with EY most recently implementing robotic process automation to cut the costs of its internal functions and to generate new client offerings.
As the internal audit world turns towards data analytics and automation to keep up with the vastly technological landscape it has become a part of, companies are finding their search for internal auditors in possession of data analytics experience coming up short. This is particularly due to competition coming from other industries such as financial services who can afford to pay over market worth and thus driving salaries higher. Certainly, the addition of data analytics to an internal auditor’s resume will push their earning potential around 20% higher than their non-analytics peers.
Internal auditors eager to upskill and up their earnings are advised to start small in their quest to add analytics to their personal value. It’s all about being able to retrieve answers to business questions by deciphering the data and understanding how to manipulate the data to isolate the answer and thus make informed decisions rather than hazarding a guess. When it comes right down to it, data analytics is not necessarily as technical as people expect.
Excel is a great place to start for familiarising yourself with the basics of analytics, with a plethora of online resources serving to launch you on your journey into data analytical concepts and statistical analysis. Knowing you have these options on the comfort of your own computer too is important as its unlikely you’ll be afforded the training at work due to the majority of internal audit departments time-poor in being able to allocate the space for their staff to experiment with analytics if they’re unable to determine useful results.
Internal auditors looking for opportunities to play with data analytics and build their skills should try and get involved in projects that offer easy access to data in processes they already understand well. Familiarise yourself through webinars and conferences with the tools and language of data analytics, from ACL and SQL to Python, IDEA and SAS.
Protiviti’s 2017 Internal Audit Capabilities and Needs Survey which explored how audit is embracing analytics found there were still 34% of internal audit departments who were not utilising data analytics. Other factions of the audit space proffered system constraints to explain their reluctance and others weren’t sure how to locate the data. Whichever way we look at it however, the use of advanced data analytics and its proponents are paving the future of internal audit whether organisations are ready for it or not.