“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 about the use of analytics,”
Craig Waldon, CEO, CaseWare Australia & New Zealand
Why all the hype about data analytics?
What is the current state of play with new technology in the external audit marketplace in Australia?
Audits can potentially benefit greatly from data analytics. The opportunity to examine all of the transactions in a database, such as the sales ledger and payroll, and have trends and anomalies highlighted, will assist external auditors to assess risk, perform substantive procedures and review controls. Analytics has the potential to affect the quality, reliability and value of audit as a whole, by making the audit process more thorough and effective.
You may have heard how the Big 4 audit firms are successfully leveraging data analytics in their audits, as well as the copious investment being made into developing this technology further. CaseWare is also investing heavily in the new technologies of AI (Artificial Intelligence) and Machine Learning, to help those next tier and smaller firms auditing SMEs to keep up, recently releasing our CaseWareCloud Analytics product, and in the USA, our Business Insights tool.
Can the smaller end of town keep pace by maximising the opportunities of data analytics technologies?
While auditors are increasingly expected to utilise access to raw data and make it an integral part of an audit, those dealing with SMEs face the challenge of incomplete, incorrect or unclean data sets that sometimes may not be able to be imported efficiently into a range of audit tools. “With limited data available to the auditor of an SME, it cannot be expected that data analytics will be able to complete all of the substantive tests of the audit,” Waldon advises.
By being able to analyse an entire dataset instead of a sample, data analytics has the potential to contribute to a more thorough and reliable audit. On the flipside, it might also increase the complexity and length of the audit process, especially if the tests produce more outliers for the auditor to address. “The challenge for auditors of SMEs is to use analytics to improve the quality of the audit and provide greater client value-add, without increasing the cost of the audit”, says Waldon.
The CaseWareCloud Analytics product is available now. The product currently offers two types of “Point-and-click” tests:
- Transaction and process testing
- Financial metrics and account analysis
Amongst these categories is a collection of over one hundred and fifty tried and true, pre-defined tests and reports. These tests make it easy to increase productivity and improve the consistency of results by detecting potential errors, flagging risks, and summarising data.
CaseWareCloud Analytics processes and displays information so that it can be quickly and easily interpreted. First, the side-by-side graphs visually demonstrate how the data is comparable and assists in identifying transactions outside of the expected behaviour. Next, with interactive visualization, CaseWareCloud Analytics allows you to drill down to the underlying data for more detail, changing what data you see and how it’s processed. As a result, you’re able to maintain focus on interpreting and reporting on the results, rather than defining tests and trying to understand the results.
Craig Waldon | CEO CaseWare Australia & New Zealand
- Data Analytics for SME Audits: Just Hype, Help or Hindrance? - 15 April 2018
- The future of auditing – are you ready? - 15 November 2016
- Save the Date – CaseWare Australia & New Zealand Customer Conference - 21 September 2016