By Arjun Ruparelia

 

One of the best ways to increase the effectiveness of your internal audit department is to ensure that your auditors are well-versed in data analytics and have access to the best data analytics tools. 

 

Individuals with sound knowledge of this important technology can help improve your organization’s efficiency, identify and eliminate areas of revenue leakage, and improve regulatory compliance. 

 

Learning the basic principles (and tools) of data analytics can be valuable for internal auditors as well as their employers. They can improve their earning potential, enhance job security, and ensure faster career progression within their organization by gaining data analysis skills. 

 

Internal auditors with knowledge and experience of data analytics are in demand across industries. Applying their data analysis know-how allows them to examine large data sets (comprising millions of transactions) at a time, automate routine and repetitive parts of the audit process, and identify key trends in financial data. They can also play a key role in reducing the risk of fraud by a significant margin.

 

How Data Analytics Revolutionizes Audits 

 

A key benefit of data analytics is that it offers an alternative to sampling. Previously, internal auditors relied on analyzing a few sample transactions – out of millions – to identify instances of non-compliance, revenue leak, potentially fraudulent activity, and other problems.

 

These sample transactions were selected at random to minimize bias. Internal auditors used sampling because manually examining a large data set would consume too much time to be feasible.

 

However, while sampling was certainly useful for internal auditors back in the day, it also left room for error. There was always the risk of overlooking key data points, since the entire data set was not examined.

 

For instance, when using the sampling method for internal auditing, it’s easy to miss the fact that an unusually large number of transactions were entered on a weekend, although the entity being audited is only open for business during weekdays.

 

Such mistakes can occur because audit sampling does not examine 100 percent of the items within a class of transactions.

 

An internal auditor trained in data analytics can use specialized software to test the entire data set, easily flagging the weekend transactions as unusual, and prompting the audit team to investigate further.

 

Such financial insight can be invaluable for businesses in improving operational efficiency and reducing fraud risk. This is why businesses are willing to pay a premium for internal auditors with data analysis experience.

 

Companies that provide their internal audit department with data analysis training will benefit from:

 

• Better profiling of customer data, leading to reduction in bad debts and higher overall sales
• Identification of operational inefficiencies and redundancies, leading to waste minimization 
• Automation of routine auditing tasks, so that the internal audit department can focus on complex, high-value analysis of financial trends within the company 

 

Data Analysis Training Strategies

 

Most internal audit departments are thinly stretched, which limits their ability to properly train their auditors in data analytics. This problem can be solved by starting slowly and gradually building data analysis skills, preferably through practical problem-solving. 

 

Here are some of the steps you can take to help your internal auditors develop the data analysis skills they need:

 

• Select a few of your technology-inclined internal auditors and encourage them to participate in projects that will expose them to data-rich environments, such as accounts payable and supplier lists. This will allow them to get used to working with vast amounts of data to find trends and isolate the answers to their questions. 

 

• If you are using a data analytics tool, encourage your chosen internal auditors to use it on projects they are familiar with and where they have easy access to data. Purchasing Cards (P-Cards), accounts payable, travel and expense reporting, and payroll are some of the areas where your internal auditors can put their new data analysis skills and tools to work. 

 

• Assign tasks that will require the use of data analytics to a chosen group of auditors while also generating some return on investment. For instance, you can ask them to use data analytics software to determine if there is any revenue leak in the AP sub-ledger. This will provide internal auditors with a concrete and practical reason to learn data analytics, and drive them forward.

 

• Arrange for the internal audit department to receive specialized training in data analytics. A 2017 report by the Institute of Internal Auditors concluded that formal data analytics training – through courses, webinars, and conferences – helps internal auditors gain confidence in their new skills. Courses and certifications that show how to use data analytics in internal audits, fraud detection, etc. might be useful for this purpose.

 

Data Analytics Training Resources for Internal Auditors

 

One of the best training programs for internal auditors wishing to learn data analytics is provided by CaseWare IDEA, an internationally recognized provider of data analytics software designed for audit teams and accounting firms. We provide on-site, instructor-led classroom training to help internal auditors:

 

• Automate routine auditing tasks.
• Earn CPE credits.
• Grow their careers and earning potential.
• Improve the bottom line of the company.

 

Apart from the on-site classroom-based training program, IDEA also offers a wide range of tutorial videos and certifications, including the Certified IDEAScript Expert (CISE) and the Certified IDEA Data Analyst (CIDA) certifications. 

 

These certifications help internal auditors gain recognition within their organization and industry, as well as making them more valuable to their employers.