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Global consulting firm Protiviti recently released its 2019 Internal Audit Capabilities and Needs Survey, which revealed that while most internal audit groups consider advanced analytics as a high-level value, the use of these tools remains in its early stages. Audit groups are making analytics a top priority, but many know they are not leveraging them sufficiently throughout the audit process. Both internal and external auditors need to embrace analytics quickly to keep up with the rapid pace of the digital transformation.
We asked three data analytics experts to weigh in on why professionals are lagging in their adoption and use of data analytics and asked them what advice they have for building and sustaining a successful program.
“There are a lot of senior people in audit that don’t appreciate what analytics will do for them,” said Scott Jones, president and CEO of Key Performance Initiatives, Inc. “It’s human nature to resist change and stick to our old, familiar audit programs.”
Jones spent more than 40 years in leadership, including helping Elbit Systems of America establish a data analytics practice where he served as Senior Director of Internal Audit and Director of Quality Management.
“Without support from leaders, junior auditors don’t use analytics, even though they may be more comfortable with it, they tend to do what they are told.”
Jones also believes there is little demand for analytics from audit committees and senior leadership.
“They have all heard and read about data analytics, but they don’t have a clear idea what they should ask for or expect to see.”
“While there may be some reluctance to spend money on software and training, IDEA is easy to “sell” to senior management. It has a low cost of entry and the interface is so intuitive that anyone familiar with Windows can get started with minimal training.”
As a consultant, Jones takes a unit operations approach where he starts his clients with small, simple operations, then increases the complexity as users become more familiar with the tool.
“Simple operations will raise questions that additional analyses can answer. Just go for it!”
Upstream Academy guides accounting firms to high performance, including helping clients develop a formal methodology for integrating data analytics into their work. Jeremy Clopton, director at Upstream, believes the slow adoption rate extends beyond internal audit.
“It is a business issue. Data analytics is new, takes time to learn, and in the world of internal audit may not have an immediate ROI. Because of this, it is difficult to convince management, leaders, and others in an organization of the need to change the audit methodology to incorporate analytics. To me, it almost always comes down to either an organization’s or a team’s unwillingness to change.”
Clopton gained extensive experience in data analytics, fraud prevention and business intelligence. He is widely known in the audit industry for going above and beyond in helping clients determine what they need for future success.
While Clopton views analytics as an investment, he admits ROI may not always be quantifiable. The real benefit of analytics is a more effective audit, above all else. Efficiency can equate to cost savings in terms of covering more ground and using less staff by automating repeatable processes.
“Pick one audit area that is data-heavy and evaluate how analytics could improve that audit. Don’t pick an area that will take months to complete, pick something meaningful where you can have an impact in a much shorter amount of time. From there, you can use your success to build momentum and implement broader change.”
Upstream is helping CPA firms take a, “leave nothing to chance” approach to building a data analytics service line by hosting quick-start boot camps. The next event will be held in Chicago June 15-17, 2020. To learn more, visit Launching Data Analytics Boot Camp.
“Building a successful data analytics program looks like scaffolding,” says Leslie Kirsch, director of Central Analytics at Withum Smith+Brown. “It’s hard to get started without a support system in place to build upon.”
Kirsch was first introduced to data analytics while working at the U.S. Government Accountability Office (GAO). She was responsible for architecting and operationalizing Withum’s Data Analytics Center of Excellence and has provided dozens of new analysts with hands-on training and coaching.
As a former internal auditor, she has a first-hand understanding of the fear auditors carry about making a mistake.
“In my experience, internal auditors are not necessarily afraid of new technology. We care a lot about quality and fully understand what’s at stake if we get it wrong. Going it alone is not a reasonable expectation. To be successful and build your confidence, you need a support system in place – someone to help you engineer solid scaffolding that will make you self sufficient down the road.”
When working with clients or firm staff to get them started with data analytics, Kirsch starts with the fundamentals.
“We aim for quick wins. Take what you’re doing now and determine how to make it faster. Look for areas for improvement and learn along the way. Before long, you’ll have a firm foundation of skills.”
For example, she often starts with the extract, transfer, and load (ETL) process. She helps users define what processes they use to get the data, clean up ugly data sets, learn what data types are needed, perform joins, etc. This exercise builds technical skills that serve as building blocks for new analysts.
“Learning a new software application is not just about which buttons to click. It’s about conceptualizing the analysis, which is something most auditors already know how to do. Just because you’re using a new software doesn’t mean you can’t design an analytic.”
Although data analytics has been available for 30+ years, audit functions need to embrace and expand their use of it and other digital initiatives or risk becoming obsolete. Advanced technologies are reshaping the audit profession – prepare to lead the future of audit.
Let your team of experts guide you in building and optimizing data analytics. Visit our Services page or contact [email protected] to get started.
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