by Paul Quealey
In an era where every click on a mouse or key stroke on a keyboard is recorded and retained, there is a never-ending amount of data that can be obtained, analysed, and interrogated.
Gone are the days when only “big data” had the value of being analysed, with platforms like ChatGPT providing the power and the tools for any data set to be analysed by any user with internet access and Excel.
Why Use Data Analytics In Auditing?
The power of data analytics and interrogation provides insights for making informed decisions.
The value for the audit and assurance industry is no exception, with data analytics enhancing the effectiveness and efficiency of the audit process. Through harnessing the potential of data analytics, auditors can uncover patterns, detect anomalies and gain a deeper understanding of transactions, enabling us to provide more accurate and valuable insights.
The Lambourne Partners Assurance team has provided valuable insights for our audit and business advisory clients through analytics over data sets. The ability to analyse large amounts of data instantaneously to identify inconsistencies or anomalies that could never be identified by manual review, or that would take days or weeks to analyse manually, is the greatest advantage of this new tool.
Examples Of Data Analytics For Our Audit & Business Advisory Clients
Analysis Of Supplier Payments
With the assistance of our data specialists within our Business Advisory team, we can analyse supplier purchases and payments to identify high risk anomalies for investigation, such as:
- Abnormal transaction frequency, which focuses on the frequency of invoicing and payment of supplier invoices
- Abnormal payment references on supplier transactions where the payment reference details is outside of the regular profile
- Abnormal payment amounts, which involves identifying transactions at a supplier level that are outside of the average invoice value for each supplier.
Utilising the above data analytics has assisted our clients in identifying duplicate supplier payments, payments made in error, and unfortunately instances of fraud.
Validation Against Secondary Systems
Most businesses operate multiple systems to capture and record customer, supplier and payroll data and transactions. Often these secondary systems integrate, either automatically or manually, into a finance system such as Xero.
Through data analytics, we analyse the data sets between the two systems to ensure there is consistency and accuracy. Often, such integrations are found to be unreliable, with our reviews identifying inconsistencies in the data between the two systems.
Errors we have identified include due to integration issues, such as configuration changes within the systems, and sometimes fraud, where transactions have been processed outside of the secondary system.
Changes To Transactions
While transactions can be processed accurately and subjected to reviews and approvals, this data can be altered.
Data analytics over audit trail information has allowed Lambourne Partners to find instances such as:
- Employee timesheet information that was altered after the processing of payroll
- Alternation of employee or supplier bank account details, with payments being directed to fraudulent bank accounts.
Limitations Of Data Analytics
Like other technological advancements, there are limitations with data analytics. These limitations can include:
- Data availability and quality
- Appropriate skills and experience to interpret, challenge and validate the data
- Regulatory compliance to protect sensitive information.
How We Can Help
The value of data analytics is not just limited to those organisations that have an annual audit completed. A number of Lambourne Partners clients have engaged us to complete data analytics, targeted reviews and testing when they are not required to be audited. These organisations have seen the value of the process, and with their focus often being on sales and marketing, the improved oversight of finance functions has provided valuable insights and recommendations.
If you believe your organisation could gain value from data analytics, or you are not receiving this adequately from your external audit process, please contact our Audit Partner, Paul Quealey, to discuss your requirements. Feel free to contact Paul below or on (02) 4969 6600 for a no obligation discussion about how Lambourne Partners can assist.