Hidden truth in data and the power of data analytics • How does Data Analytics Impact Audit process? • How to use Data Analytics for various types of Audit? • Practical examples of data analytics in audit – walk-through • How to build competencies and skill set for using data analytics? • Case studies of using Data Analytics for providing better assurance

1. How to empower Audit through Data Analytics?
CA. A.Rafeq, FCA CISA, CIA, CGEIT
Managing Director, Wincer Infotech Limited, Bangalore

2. Agenda
Hidden truth in data and the power of data analytics
How does Data Analytics Impact Audit process?
How to use Data Analytics at various stages/ types of Audit?
Case studies of using Data Analytics for providing better assurance
Practical examples of data analytics in audit – walk-through
How to build competencies and skill set for using data analytics?
2

3. Why?
• Age old Methodologies cannot be applied to New Age
Technologies
Who?
• New Digital platforms & Business Models require newer
perspectives
How?
• Provide Practical Actionable Insights to add Value
When?
• Upgrade skill-sets to move up to new orbit in your careers
Key message of presentation 3

4. 1. Hidden truth in data and
the power of Data Analytics
4

5. Digital Economy
When the Indian Economy is
transforming from cash to cashless
with legislation and increasing automation,
it is time to learn how Assurance can be
transformed from paper to paperless
By harnessing the power of
Data Analytics!
5

6. Race of Technology
It was initially thought that
Cars will never replace horse carriages
but eventually
Technology became so powerful that
horses could not catch up.
Technology is
Neither a Fad
Nor a Trend?

7. Where is
the data to
audit?
7

8. 8
What is our approach to
auditing digital data?

9. With manual approach,
audit tasks are tedious!
9

10. What is the
KEY to
access the
data?
10

11. Data
Analytics
11

12. Do MORE in
less Time using
Data Analytics!
12

13. Enterprises:
•Innovate or become
irrelevant.
•Evolve or dissolve.
Professionals:
•Continuous learning
or be relegated
•Innovate approach or
become irrelevant.

14. Learn, unlearn and re-learn 14

15. 15

16. 2. How does Data Analytics
Impact Audit process?
16

17. Can Data
Analytics
help?
17

18. 18

19. 19

20. 20

21. 21

22. How to
audit digital
data?
22

23. 23

24. 24

25. What is Data Analytics?
•Data Analytics is the application of:
• Knowledge
• Skills
• Tools and
• Techniques
•to audit test so as to meet audit objectives.
25

26. 26Data Analytics Software
• Excel: Spread software of Microsoft has various features useful for auditors.
• General Audit Software: Add-in for Excel with specific CAAT functions.
• General Audit Software: Data Analysis Software with specific CAAT functions
• Application Software: Standard and Ad-hoc Reporting and Query features
available or specific functionalities designed for auditors.
• Specialised Audit Software: Audit software designed to work in specific
software.

27. Data Analytics:
Multi-dimensional set of Tools
27

28. 3. How to use Data Analytics at
various stages/types of Audit?
28

29. 29

30. How can data analytics help auditors? 30

31. Paradigm shift in data analytics 31

32. What type of questions can analytics answer? 32

33. Where can Data Analytics be used in IA? 33

34. The Audit Bots are coming!
• Over the course of the industrial revolution, robots have systematically
replaced workers in the manufacturing process.
• Over the course of the now quickly evolving data revolution, data bots
will systematically replace knowledge workers in the audit, compliance
and risk management process… bad news for the traditional internal
auditor.
• Recent prediction that accountants and auditors will be replaced by
robots (data bots) faster than any profession on earth except tax advisors
and telemarketers over the next 20 years.
34

36. Data Analytics Skills
A “want” or a “necessity”
• Data is the lifeblood of
a modern enterprise.
• Data analytics is a must-
have capability for the
audit function and
widely expected to
become a big part of its
future.
36

37. 4. Case studies of using Data Analytics
for providing better assurance
37

38. US Air Force finds over $1.4 Billion
using Data Analytics
Identify areas of error and waste analyzing 100% of the population
Do root cause analysis and suggest remedial control measures
Verify and confirm compliances and provide better assurance
Create paradigm shift in how you audit using DA by bringing in a new
approach to audit of electronic information using IT.
Enhance overall productivity and do more with less
38

39. 39

40. Case Studies
• Tax Audit
• VAT/GST Audit
• Company Audit
• Internal Audit
40

41. Develop a plan for analyzing the data 41
What
• Specific objectives that should be addressed
When
• Define period of time that will be audited, and arrange with IT personnel to
secure data for that period
Where:
• Define sources of data to be analyzed
Why:
• Reason for performing the tests and analysis (Tax audit, VAT Audit, Internal
Audit,...
How:
• Types of tests performed to meet audit objectives

42. 42
Financial Statement Assertions of Audit
Completeness
• The application processes all transactions and the resulting information is complete.
Accuracy
• All transactions are processed accurately and as intended and the resulting information
is accurate.
Validity
• Only valid transactions are processed and the resulting information is valid.
Authorization
• Only appropriately authorized transactions have been processed.
Segregation of
duties
• The application provides for and supports appropriate segregation of duties and
responsibilities as defined by management.
Compliance
• All applicable compliances are complied within the required time-frame.
Cut off
• Only the transactions for the period which they belong are accounted
Controls are embedded inside IT. Use Data Analytics to evaluate this digital data

43. 5. Practical examples of
data analytics in audit – walk-through
43

44. 6. How to build competencies and skill set
for using data analytics?
44

45. Auditor: the old paradigm 45

46. Data Analytics Art or Science?
• Data Analytics as an art requires understanding of business process
and application of techniques to specific areas of control to
identify
• Conformance
• Deviations
• Exceptions
• Variances
• Start with what you know and apply it.
• Skill develops by practice (doing) not by reading (knowing).
46

47. Are our audit reports based on
• Blind trust
• Mere Hunches
• Sample reviews
• Oral discussion
• Document examination
47

48. SWOT Analysis
S W O T

49. What are our key differentiator?
• Knowledge and skill-sets
• Trained personnel
• Contacts and relationships
• Past Experience
• Technology competencies
• Best practices and standards
• Tools and Techniques
49

50. The Future will be exponentially Digital.
Future-proof your career with
Knowledge and skills of Data Analytics
to enhance value of your professional time.
Invest in learning Data Analytics
to be prepared
for the digital Future. Now!
50

51. Data Analytics
challenge:
How to access
data?
Pro-active
approach to
mitigate risks
& provide
value
Role of
CAATTs: Invest
in future now
to harvest
benefits
New Skills to
race
with/against
Technology
Summary

52. CA Abdul Rafeq
rafeq@wincaat.com
52