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More than 125 IDEA users, partners and CaseWare representatives gathered in Houston on November 1-2 to learn new strategies for implementing and growing their use of data analytics. It was also an opportunity to celebrate the 25th anniversary of Audimation Services, Inc., which has helped countless audit, accounting and financial professionals use data analytics to achieve higher levels of efficiency and effectiveness.
From the hands-on training sessions to sessions led by IDEA experts, and inspiring keynote presentations, the conference covered a lot of ground. For those who couldn’t join us, we wanted to share a few key takeaways. Plus, don’t miss out on the next IDEA User Conference, which will be held September 18-21, 2018 in Denver, CO.
Data analytics can be integrated into the entire audit lifecycle, but to truly be successful, you’ll need to build it into the structure of audit plan and use it to help focus on specific areas. IDEA should be used as part of the risk assessment process to look at materiality for original scope and help scope out areas that require more in-depth testing. There are many features within IDEA that can be used to sift through the data and focus on anomalies that rise to the top including Field Statistics, Fuzzy Matching, Discover and Benford’s Law. While not every red flag will lead to a multi-million-dollar infraction, they can help engage management in discussions about processes that need to be addressed. Additionally, the new visualization features within IDEA turn findings into images, which can be included in the audit report.
One of the biggest challenges is keeping pace with both the business and potential risks. It’s no longer enough to develop a test and check the box. As new fraud schemes emerge every day, your tests should evolve with those changes. Building a standardized and sustainable data analytics program takes tools, time, budget and support from management – all worthwhile investments for preventing fraud and reducing risks.
Gathering data from different sources and using it to deliver the information they didn’t have before can be…well…a bit intimidating. It’s a delicate dance between remaining independent and helping business units take part in the analysis process, but it can be done! Engaging IT, business unit managers and data gatekeepers in the process give everyone an opportunity to exchange ideas and work together to prevent revenue losses, prevent fraud and strengthen controls. Support from the audit committee goes a long way in helping prevent roadblocks along the way. Internal networking with everyone from junior-level staff that may have hidden talents to the business unit managers, who have everything to gain from the use of data analytics to gain meaningful insights, can help raise internal audit’s value within the organization.
LyondellBasell is one of the largest plastics, chemical and refining companies in the world with annual revenues of $29+ billion and offices spanning 18 countries. With a stellar safety record and companywide commitment to mitigating risk, it’s no surprise the data analytics team is expanding their use of IDEA into new areas. They began using IDEA on an ad-hoc basis and have used it to prevent global anti-corruption and fraud. They have standardized their audit process by using scripts and custom functions to cover more ground and rank transactions based on risk levels. While designing a test to catch everything is difficult, they are using sophisticated visualization and BI tools in addition to IDEA to help them fine tune their audits. So, what’s the key to their success? They spend about 90% of their time identifying where the data exists and preparing it for analysis. The more accurate the data, the better the output.
Visualization is certainly having its moment in the audit spotlight these days. Images and graphs have been used to quickly communicate complex information for years. When staring at rows and columns of data, not much “jumps out” at the viewer, but with the new data visualization tools built into IDEA, the end-user (and key stakeholders) get a clear story to draw conclusions from that they wouldn’t have seen otherwise. Chevron’s Data Resource Manager is using data visualization to evaluate risks, plan and scope audits, conduct fieldwork and communicate findings. Pie charts with product value data help her see materiality across multiple locations to help prioritize, plan and scope audit engagements. When you have a finite amount of time and resources, the patterns, spikes, and trends can help guide you in the right direction.
The University of Texas System is as big as Texas with three types of institutions, each with their audit plan, budget, Chief Audit Executive, audit committee and ERP system. When upper management wanted to provide a centralized data analytics service among a decentralized structure of groups, the obstacle course was set. Priority number one was helping those who needed help. Priority number two was creating tools and resources across the various systems to help them “own” their own audits. After a few starts and stops, the plan shifted to include a mix of consulting, SharePoint resources, training, tools and cross-system sharing. A key driver in the success of the program was support from management. From adequate budget to support travel and tools to patience, support and even some cheerleading, the top-down backing of using data analytics made a difference in how the use of IDEA was rolled out across the organization. Some auditors are starting to share their best practices with others via virtual lunch-and-learns, and the UT System has even shared their approach with other higher education institutions to help them launch their own data analytics service groups.
Change is an inevitable part of business. Suzie Jones with Training Resources & Consulting, LLC has experienced many changes during her 40-year career in the financial industry. While change should not cause disruption, it can quickly turn into a crisis if not handled properly. Her keynote address provided some advice for inspiring your team through times of transition, disruption, and crisis. Suzie invited everyone to think about their company culture – Is it exciting, supporting, fun, engaging, innovative? How do unexpected changes such as mergers and acquisitions, outsourcing, budget cuts, layoffs or office closures affect morale? How do you keep the team motivated and inspired when everyone is worried about their own jobs? While we can’t prevent changes or disruption, we have four levers of control we can “pull on” during a crisis to stave off disruption:
Management’s Behavior –Management’s attitude directly impacts the team’s reaction. Leaders should grow and mentor their teams, which builds loyalty and trust. Have an open-door policy. Walk the halls without an agenda…and talk about something other than work. Celebrate success now. Thank each other publicly.
Control the Message – Good news travels fast, and bad news travels at the speed of light. That negative ripple effect can send everyone into a tailspin if not handled correctly. Seek out the “natural” leaders within groups of people and communicate with them. Don’t allow misinformation to spread.
Transparency – It’s better to discuss the inevitable upfront than allow employees to make their own assumptions about their fate. There may be times when someone’s role will change, but the news can be presented in an assuring way. It’s also important to help staff exit with dignity if their role is eliminated. The key is upfront, clear communication to prevent the feeling of uncertainty.
Control the Culture Everyday – People buy into the values of a company. Major culture changes can often lead to the loss of good employees who no longer feel the company reflects their own values. Management needs to ensure every change, and communication that accompanies it fits within the culture of the company.
If all else fails, Suzie recommends to “just breathe.” Take everything in stride and know that things have a way of working out for the best. She left us with these parting thoughts: Respect is earned. Honesty is appreciated. Trust is gained. Loyalty is returned.
Stay tuned for more highlights and detailed takeaways from the IDEA Innovations Conference, which will appear in an upcoming IDEA Newsletter. We thank our expert IDEA users for sharing their best practices, insights, and advice with their peers.