The headline in a recent CFO article reads “Internal auditors who incorporate data analytics will reap the benefits of real-time risk management”. The article goes on to refer to a PricewaterhouseCoopers State of the Profession Survey which highlights the gap between widespread agreement on the importance of using data analytics in audit and risk management and the actual extent of regular use.
The good news is the ever-increasing attention that data analysis is getting. This of course is not confined to the world of audit and risk – data analysis is now one of the hottest areas in which software technology is expected to make a big contribution to business and organizational success overall. It is also good to see leaders in the audit and risk professions, such as Richard Chambers from the IIA and Norman Marks, re-tweeting links to the CFO article and emphasizing the importance of data analytics.
The not-so-good news is that a PwC survey and report from 6 years ago – along with many others from the Big 4 since then – identified a similar gap between recognition of the importance of analytics and actual progress in implementation. So, why is this?
The answer seems to lie, at least partially, in some of the PwC survey data – that 71% of respondents “plan to expand use of data analytics but do not have a well developed plan.” This is part of bigger issue that I see confirmed regularly when speaking at audit and risk conferences – that the use of data analytics is not usually treated in practice as an integral and critical part of audit and risk management processes. Too often the approach is to train a few, often relatively junior, people in audit analytics software and then expect all the potential benefits to magically appear. Those organizations that achieve the most progress and the greatest benefits from the use of data analytics almost always take a different approach. The following are some of the key points that I see as common among organizations that most successfully implement an audit and risk analytics program:
At ACL we are working hard to provide increasingly effective software and services that enable a data-driven approach to audit, compliance and risk management. Technology and its specific application is certainly an important part of the solution – but however good it is, it really cannot make up for the gap between expectations around the role of analytics and actual usage. If the audit and risk professions really want to close this gap perhaps they need to look at how software technology, including data analytics, is successfully implemented elsewhere in their organization. The chances are that it is a well-planned process that addresses many of the points referred to above.
Is your organization ready to plan and then act?
(Source: ACL Blog)