Can Sustainable Data Analytics Bridge the Internal Auditing Divide?
Short Takes...on Analytics
|Posted by Neil White, Principal, Deloitte & Touche LLP|
While many financial and auditing executives know the benefits of continuous monitoring (CM) and continuous auditing (CA), few outside of finance understand the potential value of these programs at an enterprise level. With risk, regulatory and compliance issues top of mind, CM and CA can create real value with real benefits.
Some of the confusion over these programs may be due to various definitions of the terms. CM allows management to continually review business processes to determine adherence to – and deviations from – expected levels of effectiveness and performance. CA allows internal audit to continually gather and review data from processes that supports auditing activities. CM can help organizations improve financial and operating controls and more rapid decision-making, ultimately reducing ongoing compliance costs. CA helps businesses achieve a robust, effective auditing process with shortened audit cycles and an increased level of risk mitigation.
If there is tremendous value, why haven’t many organizations adopted these approaches?
Funding is a big issue. Questions of return on investment frequently surface, especially since it’s difficult to evaluate the intangible value of enhanced risk management. And since many organizations have had challenges with IT-based enterprise resource planning implementations, they can be wary of programs that divert time and resources to implement. This has resulted in many executives asking, is there a better way to leverage automation to address risk while also increasing overall business value in a more “right-sized” way?
Bridging the Divide
The gap between potential and reality has led businesses to look for an alternative – one that starts simple and builds on achievements, one that focuses on helping businesses make decisions more accurately, objectively and economically.
Sustainable data analytics can bridge the divide using rapid prototyping, repeatable solutions and lowering cost of development.
It leverages a variety of technology platforms to realize the power of analytics to help organizations achieve low cost, sustainable solutions that improve risk management efficiency and effectiveness. Enterprises that achieve their goals with sustainable data analytics have several factors in common:
- A dedicated analytics team
- An operating model across the audit, compliance, or finance team
- Enhanced training and awareness
- Refined audit and business processes that integrate heuristic analytics
- A sounds strategy and vision encompassing people, process and technology
The Data is in the Detail
While sustainable data analytics may be the effective alternative for internal audit, enterprises still should pay attention to their data. Data drives the insights that fuel the benefits from any analytics program. In order to achieve value, your business should understand both the data it has and the data it lacks. This knowledge helps prioritize efforts to collect what’s missing for future analyses and enhancements.
Encouraging and promoting a culture of innovation is a strong first step to consider for sustainable data analytics. Be willing to test different approaches and areas of the business. Learn from results and try new approaches based on what is learned. Don’t be shy and above all, be willing to cross the CM/CA chasm to reach the value on the other side.
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