How to empower Audit through Data Analytics?

CA. A.Rafeq
 Agenda
Hidden truth in data and the power of data analytics

How does Data Analytics Impact Audit process?

How to use Data Analytics for various types of Audit?

Case studies of using Data Analytics for providing better assurance

Practical examples of data analytics in audit – walk-through

How to build competencies and skill set for using data analytics?
1. Hidden truth in data and the
power of Data Analytics
2. How does Data Analytics
Impact Audit process?
 What is Data Analytics?
• Data Analytics is the application of:
• Knowledge
• Skills
• Tools and
• Techniques
• to audit test so as to meet the audit objectives.
 Audit and Data Analytics
• Connect data analytics to
• Audit objectives
• Technology deployment
• Regulatory requirements and
• Organisation structure
or you may be only performing a ritual that is unrelated to its original
audit objectives.

“We are only philosophers until we begin to use numbers.”

Data Analytics: Multi-dimensional set of Tools
 Value of Traditional audit
• Traditional internal auditors simply are not valued as the
trusted advisor of senior management on matters of risk

• Analytics experts with the business savvy to ask the right

questions are.

• The traditional auditor is obsolete, and they generally don’t

yet realize it.
3. How to use Data Analytics for
various types of Audit?
Paradigm shift in data analytics

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What type of questions can analytics answer?

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Where can Data Analytics be used in IA?

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 Data Analytics Skills
A “want” or a “necessity”
• Data is the lifeblood of a
modern enterprise.

• Data analytics is a must-

have capability for the
audit function and widely
expected to become a big
part of its future.
 What story does the data tell?
• Data Analytics Thinking says every set of data has a story to
tell.
• What story you discover depends on your ability to gather
insights from information using right tools and techniques to
draw inference and analyse different elements of data in their
• Entity
• Relationship
• Totality
• Impact
• Utility

• You need to learn how to discover and narrate the story?

 The audit bots are coming!
• Over the course of the industrial revolution, robots have
systematically replaced workers in the manufacturing process.

• Over the course of the now quickly evolving data revolution,

data bots will systematically replace knowledge workers in the
audit, compliance and risk management process… bad news
for the traditional internal auditor.

• Recent prediction that accountants and auditors will be

replaced by robots (data bots) faster than any profession on
earth except tax advisors and telemarketers over the next 20
years.
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 4. Case studies of
using Data Analytics
for providing better assurance
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 Case Studies
• Tax Audit

• VAT/GST Audit

• Company Audit

• Internal Audit
 Financial Statement Assertions of Audit
• The application processes all transactions and the resulting information is complete.
Completeness
• All transactions are processed accurately and as intended and the resulting information is
Accuracy accurate.

• Only valid transactions are processed and the resulting information is valid.
Validity

• Only appropriately authorized transactions have been processed.

Authorization
• The application provides for and supports appropriate segregation of duties and responsibilities
Segregation of as defined by management.
duties
• All applicable compliances are complied within the required time-frame.
Compliance

• Only the transactions for the period which they belong are accounted
Cut off

Controls are embedded inside IT. Use Data Analytics to evaluate this digital data
 5. Practical examples of
data analytics in audit – walk-through
 6. How to build
competencies and skill set
for using data analytics?
Auditor the old paradigm

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 Data Analytics Art or Science?
• Data Analytics as an art requires understanding of
business process and application of techniques to specific
areas of control to identify
• Conformance
• Deviations
• Exceptions
• Variances

• Start with what you know and apply it.

• Skill develops by practice (doing) not by reading

(knowing).
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Are our audit reports based on
• Blind trust

• Mere Hunches

• Sample reviews

• Oral discussion

• Document examination
 SWOT Analysis

S W O T
 What are our key differentiator?
• Knowledge and skill-sets
• Trained personnel
• Contacts and relationships
• Past Experience
• Technology competencies
• Best practices and standards
• Tools and Techniques
 Value Creation Mantra for CAs
• A bar of Iron costs Rs. 250
• Made into a horseshoe, its worth is Rs. 1000
• Made into Needles, its worth is Rs. 10,000
• Made into balance springs for watches, its worth is Rs.
1,00,000

• Value of audit is not how much you know

• but how you add
• Value with your skills & expertise.
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 The Future will be exponentially Digital.
Future-proof your career with
Knowledge and skills of Data Analytics
to enhance value of your professional time.

Invest in learning Data Analytics

to be prepared
for the digital Future. Now!