ACHIEVING A ROBUST

DATA ANALYTICS
PROGRAM GUIDE
DEFINITIONS AND TERMINOLOGY (1/2)

Data Analysis

1 The extraction of data from a company’s information system in order to perform data
selection, classification, ordering, filtering, translation and other functions to provide
meaningful information about business processes.

Data Mining

1 An advanced form of data analysis that results in the modeling of existing data in order
to better predict future trends.

Summary

1 Data analysis provides a look into what has happened in the past.
Data mining provides a look into what may happen in the future.

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DEFINITIONS AND TERMINOLOGY (2/2)

Continuous Auditing

1 A method used by auditors to perform audit-related activities on a continuous basis.

Activities range from continuous control assessment to continuous risk assessment.
Technology plays a key role in making it a viable option through automation.

Continuous Monitoring

1 A process that management puts in place to ensure that its policies and procedures
are adhered to and that business processes are operating effectively. Continuous
monitoring typically involves automated continuous testing of all transactions within a
given business process area against a suite of control rules.

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REASONS FOR USING ANALYTICS

• Transform a flood of data into profitable information.

• Facilitate risk identification, measurement and profiling.
• Increase testing quality:
− Test 100% of populations instead of sampling.
− Provide true error rates rather than error estimates.
− Highlight unnoticed trends and factors through conventional audit
techniques.
• Increase productivity and efficiency.
• Give value-added suggestions to management (e.g., provide an analysis of
cost-saving opportunities).

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ANALYTICS IN THE AUDIT PROCESS

Data Analysis Steps

Execute
Process
Facilitate Data Analysis Analyze Audits
Data Data
Risk Audit Plan Analysis Validate Conduct Deliver Analytics
Assessment (Calendar) Data Data Analysis Results Results
Request Conduct
Ad Hoc
Analyses

T-90 T-20 T-10 T-0

Data analytics results will

Process Audit be used to modify the
Notifications scope components and
testing requirements of the
process audit (as
necessary).

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PROCESSES TO ANALYZE
Review analytics in and
around the accounting and
finance areas of an
organization, including:
• Financial statements
• Forecast accuracy
• Cash flow
• Receivables
• Debt covenants
• Procurement
Review analytics providing
key management insights
into business operations in
areas such as:
• Customer behavior
• Customer churn
• Sourcing
• Process efficiency
• Operational research
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Review analytics to evaluate
the capture, recording,
invoicing and collection of
revenue-generating activities
in highly regulated or
otherwise complex
industries, such as:
• Communications
Financial Revenue
• Healthcare
• Financial services
• Energy
Operations IT
Review analytics providing
insights into the configuration
and operations of IT
applications, infrastructure
and processes, such as:
• Security
• Application configurations
• Service levels
• Performance and incidents
TECHNOLOGY CONSIDERATIONS

The following basic requirements represent some of the considerations that you should
evaluate when determining which technologies to deploy to support the adoption and use of
analytics solutions within your department.
• Easy to use

• Economical

• Possesses visual presentation capability

• Supports ad hoc analytics

• Supports assurance and consulting needs

• Supports centralized distribution of analytics

• Be made viable to management as an ongoing solution

• Can be used on company technology standards (laptops and servers)

• Supports a center of excellence model for Level 2 support

• Supports multiple sources of information in variable format

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COMMON PITFALLS

• Systems are not well understood, and IT does not have the ability to retrieve the data required.

• Information can not be captured in a manageable format.

• Internal audit processes cannot support the time required to perform analytics.

• Internal audit does not have the tools necessary to work with the data provided.

• Internal audit personnel are not appropriately trained.

• It is difficult to find/train and retain personnel with the right skill set.

• Internal audit does not have the staff levels to support dedicating someone to analytics.

• The results of analytics are not readily manageable/actionable.

• The impact of analytics is not effectively communicated to management.