If your firm hasn’t started using audit data analytics yet, it’s time to get on board. Audit data analytics (ADAs) are a technique that can help you leverage current technologies and move toward a more data-driven approach to planning or performing an audit.
How? ADAs help you discover and analyze patterns, identify anomalies and extract other useful information from audit data through analysis, modeling and visualization. You can use ADAs to perform a variety of procedures to gather audit evidence.
What that means for you: You can focus more of your time and energy on analyzing your data, understand more of what’s happening at your client’s organization and often analyze an entire population of data instead of just a sample.
Getting started with new techniques and technologies can be overwhelming, especially if you’re comfortable with your traditional method—and you may have concerns about using ADAs while complying with audit standards. However, we have a few resources and tips to show how you can comply with the standards while performing your audits with ADAs. Get started with these five steps.
1. Talk to your client about ADAs.
Before you get knee-deep in ADAs, start with a conversation with your client. Let them know that you’re using new techniques, technologies and/or tools, so you want to get a better understanding of their systems and the data coming from those systems to help them further analyze it.
Learn more about the data they’re working with: Make sure it’s reliable, complete and accurate, and understand where the data comes from. Understand your client’s focus areas as well so that once you get into the steps below, you can figure out the most appropriate technique or tool to use to further test those areas.
2. Learn about data standardization.
When you talk to your client, see if they follow the AICPA’s audit data standards. They’re not required, but if your client does follow them, ADAs will function even more seamlessly for you.
Audit data standards are non-authoritative, uniform IT standards developed by the AICPA to increase efficiency and facilitate automation and the use of audit data analytics. Audit data standards identify the key information that auditors need and provide a common framework to standardize client data.
The end result is a repeatable process for obtaining consistent, accurate data in a usable format. When you have a standardized set of company data available, you won’t need to spend time normalizing inconsistent data sets and/or different sources of data. Instead, you can use your time to analyze that data.
If you want to learn more about what the AICPA is doing with audit data standards and audit data analytics, you can visit the audit data standards webpage or watch this video below:
You can also see the audit data standards in action by watching this next video (below). This video shows how you can apply audit data standards formatting to a data set, then use the programming language Python to create routines that will help you analyze that audit data standard-standardized data set.
3. Review the audit data analytics guide.
Now that you’ve talked with your client and learned about standardization, check out the Guide to Audit Data Analytics, which illustrates at a foundational level how you can start pulling in ADAs throughout each phase of the audit. Each chapter focuses on a specific audit area and walks you through how to incorporate ADAs step by step. The guide also touches on how you can comply with auditing standards while using ADAs.
When you’re just getting started, don’t stress about investing in any new technologies yet. You’ll also see various illustrated examples showing how ADAs can be used throughout the audit, and they’re all done in every CPA’s favorite program: Excel.
4. Use a mapping document to find opportunities for automation.
After you read through the Guide to Audit Data Analytics, you may feel more comfortable with ADAs and want to take it a step further by looking into tools to automate procedures. If that’s the case, you can download our free Audit Data Analytics to Audit Procedures Mapping Document, which is available on our audit data analytics homepage.
There are a number of tools and applications available that can help you automate certain traditional audit procedures to innovate your audit. The mapping document lists particular audit procedures and shows you which tools and applications can automate them. It also includes other helpful information for each procedure, such as applicable auditing standards, applicable audit data standards and step-by-step examples from the Guide to Audit Data Analytics.
5. Keep learning about ADAs.
Audit data analytics may seem intimidating at first, but they help you transform and innovate your audits and provide greater value to your clients—making them well worth investing the time in learning about them. If you want to find more resources and information about audit data analytics and audit data standards, visit our audit data analytics homepage.
Dorothy McQuilken, Senior Manager – Audit Data Analytics & ERM, Association of International Certified Professional Accountants
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Originally published by AICPA.org