Introducing data analytics into the audit function is a journey that HIAs need to embark on only after considering the specifics of their organization: its size; the industry it operates in; and engagement from the board/audit committee. HIAs need to determine how the use of data analytics will assist them in meeting their strategic needs.
They also need to determine which specific areas of the audit population analytics can be used in rather than incorporating it into the audit plan without a clear purpose or strategy. As with most areas of internal audit, HIAs must ensure their department has the right mix of people, process, technology, and structure to realize the greatest benefits from data analytics.
Without some team members who are conversant in data analytics, internal audit may not know which data sources to secure; Without the right process, the data that the department obtains may be incomplete or compromised; and Without the right technology, internal audit may lack tools to retrieve data or glean insights.
Audit teams who decide to introduce data analytics into their functions need to do two things first, define the function's data analytics objectives, the primary goals of data analytics for HIAs are more efficient, enhanced assurance and stronger monitoring capabilities across the business. Second, evaluate what skillsets and technology will be required to achieve those goals and assess where you will be on the data analytics maturity journey.
The ability to uncover trends in large volumes of data enables the internal auditor to provide greater insight. However, this alone is not enough; internal auditors must still use their softer skills such as talking to the business and techniques such as root cause analysis to explore what is causing those trends. One of the ways which could enable internal auditors to provide more insight could be to incorporate data analytics into their audit methodology.
Credit: Data analytics – is it time to take the first step? by Chartered Institute of Internal Auditors (April 2017)