Big Data and improving data analytics has been a noteworthy topic for businesses across many industries, but what does it mean and how does it apply to your audit? Data analytics is defined as the process of examining data sets in order to draw conclusions about the information they contain.
Internally, data analytics are being used, across all industries, to increase revenues, improve operational efficiencies, monitor product quality, output forecasting, predict maintenance, and react faster to market trends. These improvements can ultimately lead to gaining a competitive edge over the competition.
Externally, data analytics can be utilized by your financial statement auditors to more effectively and efficiently plan an audit that identifies areas of risk and allocates resources appropriately. By focusing on areas that matter to management and the financial statement users, the audit team can engage in and provide meaningful discussion points that could directly fall to the bottom line.
As technology becomes more vital to business operations, there is a growing need for businesses and auditors to collect and understand this data. Understanding the capabilities and limitations of your business’s IT environment is a good start to identifying useful reports and metrics. Once management has identified key reports and indicators, your audit team can begin to recognize the various relationships in the data sets.
A few examples of how auditors can utilize this data are:
- performing more comprehensive and predictable substantive control tests
- acquiring a more thorough understanding of the business to design a more customized audit or potentially identifying areas with an increased risk of fraud
Businesses must embrace the constantly changing environment and utilize everything technology continues to offer. Communicating with your auditor about data collection and analysis can greatly increase the audit quality, unlock hidden values for your business and lead to more relevant business insights.
If you have any questions or would like to know more please contact your local Blue & Co. representative.