Author: Andreas Ong, Technical Manager: Cloud & Data Analytics, CaseWare Australia & New Zealand
We agree with Derek Parker who stated “The accounting profession is well-placed to take advantage of the emerging data analytics revolution but it will require a redesign for many firms, as well as a major change of mindset.”
Craig Waldon CaseWare Australia & New Zealand CEO believes “The future for Data Analytics is very bright. It is increasingly becoming a significant tool for auditors to use. Smaller practitioners have an important role to play in educating and empowering clients.”
Incorporating new technology in a meaningful way into existing processes often requires a major rethink and often, a mindset or at the very least a methodology adjustment to gain the most benefit from adoption. Finding the right analytics solution to integrate into your practice to bring a better engagement experience for your clients and to empower your clients to understand their business better, is a challenge.
Data analytics is becoming more commonplace for the audit industry, as more tools and software become less specialist and more accessible. Those that choose to venture down this road will be faced with challenges and problems that we don’t even know about yet, and not all firms will be up for this challenge. But for those that persevere, it has the potential to revolutionise the way you audit and the way you interact with your clients – almost immediately.
Top 3 Considerations of a Data Analytics Solution for Audit
At CaseWare Australia & New Zealand, we believe that the success of data analytics depends on collaboration between auditors, their clients and the accounting solution providers (MYOB, Xero et al.).
For auditors, the data analytics software choice will be most effective if:
- The data analytics solution provider has a proven track record with audit and auditors. To provide the best user experience possible (relevant tests, ease of use, visual interpretation of results, guidance on what the results might mean), the analytics solution provider must be able to understand auditors’ needs and the data that is available for testing.
- Audit clients understand how utilising data analytics will be able to benefit their business. Indeed, some clients want this more than an audit report, as insights into weaknesses in their process are something that can be addressed by taking action. For example, by using analytics the auditor is able to identify weaknesses in the client’s payroll system. The auditor then works together with the client to suggest solutions that minimise the error or weakness in the future. This allows clients to save time and money by correcting this aspect of their business process or minimising the identified risk. Undertaking analytics testing on other datasets can provide similar opportunities for more meaningful and useful client audit engagements.
- A seamless data exchange between the accounting solution and the analytics solution can be enabled. The move to Cloud applications and Cloud APIs has proven to be the simplest way to achieve this. There are so many different datasets from a myriad of accounting solution providers, many stuck on odd, stand-alone PCs at the client’s premises. Obtaining the data, then massaging it into a viable form can take some time – there is potentially a trade-off at this point. Is the data likely to yield fraud, risk or similar audit concerns that will make this exercise viable for the audit, providing results that need further investigation? Currently, this is one of the bigger challenges needed to be overcome when implementing data analytics technologies for external audit engagements.
Read other articles of interest:
- Detecting Fraud with Analytics: Rounded Numbers
- What’s next for the external audit? (Data analytics, AI, Machine Learning – CAANZ Panel Discussion)
- Data Analytics for SME Audits: Help or Hindrance?
Since the first release of CaseWare Cloud Analytics in November 2017, we’ve continuously improved our ability to import data from multiple sources. Our customer service staff at CaseWare Australia & New Zealand can also work closely with our customers to assist them with their data imports from some pretty weird and wonderful accounting solutions. Once the data has been imported successfully, our customers have reaped the rewards from being able to analyse the transactions within the dataset, which has added direct value to the audit and the client’s business, and they have been able to expand their service to their client beyond a purely mandated audit requirement.
A traditional audit augmented with data analytics insights can become a significant business analysis tool, enriching the audit experience for clients, and allowing the auditor to provide an enhanced service and a more highly valued relationship.