Term Paper Outline Topic: Benefits of data analytics for external audit Thesis Statement: There exist benefits of data analytics for external audit. 1) The value to the audit comes from the analysis i) Using external market price to re- price investments ii) Interest and foreign exchange rates, changes in GDP, and other growth metrics can also be used in analytical procedures. 2) Data analytics could enhance audit quality i) The ability to graphically visualize results ii) Ease of use by non-specialists iii) Scale and speed 3) Data analytics work best where a business has been through a process of transformation i) Communications becoming easier ii) Audit effort being spread over the year rather than concentrated at the year end. References American Accounting Association. Auditing. [Sarasota, Fla.]: [Auditing Section of the American Accounting Association], 1981. <http://aaahq.org/ic/browse.htm>. “Memo to the Boss” Those not assigned the case should prepare a “Memo to the Boss.” While not a complete case analysis, the “Memo” should identify what you feel the main problem in the case is and make a recommendation to solve it. Do not use the space in your memo to reiterate case background or facts. Assume your reader (i.e. me) is familiar with this information. Focus instead on what you feel the main issue is (see “Issue identification” above for hints on this) and what you think the organization should do. Include only one issue and one recommended course of action. If I see more than one, I will only consider the first, even if your second will solve the problems of the world! Memos should be no more than one page (note that I will stop reading after one page—be succinct!), double spaced, in 12-point font with one-inch margins. The memo must be submitted to Blackboard by class time on the due date (no paper copies, please). You may wish to print out a copy or otherwise jot down your ideas to share during the class discussion. Memos will be graded on a 1, 2, or 3 basis where 1 is a check minus (you didn’t clearly identify the issue and/or recommendation; you didn’t follow directions), 2 a check (you identified an issue and/or recommendation but not in a particularly insightful manner; you didn’t follow all directions), and 3 a check plus (you clearly and thoughtfully identified the issue and recommendation; you followed all directions). Benefits of Data Analytics for External Audit Benefits of Data Analytics for External Audit Data analytics has emerged as an essential contributor in the field of auditing. The contribution of data analytics is diverse weighed on the basis of application with various forms of data used in auditing both internally and on an external basis. However, data analytics is a wider area of study with big data inclusive. Pence (2014) defines big data to include a vast form of information with a higher level of complexity and variety. The speed at which the data is analyzed and delivered is.

1. Term Paper Outline
Topic: Benefits of data analytics for external audit
Thesis Statement: There exist benefits of data analytics for
external audit.
1) The value to the audit comes from the analysis
i) Using external market price to re- price investments
ii) Interest and foreign exchange rates, changes in GDP, and
other growth metrics can also be used in analytical procedures.
2) Data analytics could enhance audit quality
i) The ability to graphically visualize results
ii) Ease of use by non-specialists
iii) Scale and speed
3) Data analytics work best where a business has been through a
process of transformation
i) Communications becoming easier
ii) Audit effort being spread over the year rather than
concentrated at the year end.
References
American Accounting Association. Auditing. [Sarasota, Fla.]:
[Auditing Section of the American Accounting Association],
1981. <http://aaahq.org/ic/browse.htm>.
“Memo to the Boss”
Those not assigned the case should prepare a “Memo to the
Boss.” While not a complete case analysis, the “Memo” should
identify what you feel the main problem in the case is and make
a recommendation to solve it. Do not use the space in your
memo to reiterate case background or facts. Assume your
reader (i.e. me) is familiar with this information. Focus instead
on what you feel the main issue is (see “Issue identification”

2. above for hints on this) and what you think the organization
should do. Include only one issue and one recommended course
of action. If I see more than one, I will only consider the first,
even if your second will solve the problems of the world!
Memos should be no more than one page (note that I will stop
reading after one page—be succinct!), double spaced, in 12-
point font with one-inch margins. The memo must be submitted
to Blackboard by class time on the due date (no paper copies,
please). You may wish to print out a copy or otherwise jot
down your ideas to share during the class discussion. Memos
will be graded on a 1, 2, or 3 basis where 1 is a check minus
(you didn’t clearly identify the issue and/or recommendation;
you didn’t follow directions), 2 a check (you identified an issue
and/or recommendation but not in a particularly insightful
manner; you didn’t follow all directions), and 3 a check plus
(you clearly and thoughtfully identified the issue and
recommendation; you followed all directions).
Benefits of Data Analytics for External Audit

3. Benefits of Data Analytics for External Audit
Data analytics has emerged as an essential contributor in the
field of auditing. The contribution of data analytics is diverse
weighed on the basis of application with various forms of data
used in auditing both internally and on an external basis.
However, data analytics is a wider area of study with big data
inclusive. Pence (2014) defines big data to include a vast form
of information with a higher level of complexity and variety.
The speed at which the data is analyzed and delivered is also
part of the definition of big data as it relies on a high level of
technology to handle the data within a shorter time than would
have occurred using the traditional data handling approaches.
For this reason, data analytics have benefited external audit in a
number of ways including an improvement in value, an
enhancement of audit quality and ensuring the process of
transformation is possible and achievable. Comment by
Microsoft Office 用户: Not sure what this sentence
means...consider revising.
Comment by Microsoft Office 用户: This is unclear.
Comment by Microsoft Office 用户: To whom? What value?
First, the ability of auditors to attain an additional value to
audit emanates from the presence of data analytics which
enables the possibilities of using external market prices to re-
price investments. The ability to adjust prices as above
emanates from the increased ability of the auditors to handle
vast volumes of data at a faster rate and hence improving the
level of accuracy. Data analytics boasts of improved processes
and systems that external auditors rely on in their work to attain
the required results. Reliance on exceptions and outliers in
auditing has proven possible through the process of auditing
with big data analytics providing avenues of improvement and
attainment of this objective (Kogan, Vasarhelyi &
Appelbau, 2017, May 25). The resulting information obtained is
what is used in repricing of investments to ensure the returns
are adequate and a true and fair reflection of the investment.

4. The process involved in auditing also includes encounters with
data presented on the interest and foreign exchange rates of the
country. Changes in GDP of an economy and other growth
metrics are also part of the data presented in companies and
contribute towards the success of companies. However, the
decision-making process is based on the ability to choose from
a number of options with a high degree of uncertainty which
affects the entire value of the processes and operations of the
enterprise. External auditors have relied on data analytics to
examine historical data on the above and hence reducing the
margin of error or failure that the organization encounters. A
reduced margin of error enables external auditors therefore add
value to the entire process as reduced costs of errors are evident
with improved performance and quality. Therefore, data
analytics helps in adding value to the audit process and
enhancing the results obtained in the process. Comment by
Microsoft Office 用户: This sounds very specific, but I’m not
entirely sure I understand what point you are trying to make.
Consider revising and more broadly discussing the value
proposition of DA for external audit.
Comment by Microsoft Office 用户: What required results?
Comment by Microsoft Office 用户: Again, this is a very
specific case. Might be better as a “for example,” rather than a
focal point of the paragraph.
Comment by Microsoft Office 用户: Overall, this paragraph
is very nebulous. Try to clarify your point throughout. I’m still
not sure what you mean by “improvement in value”.
Secondly, relying on data analytics may help external auditors
enhance the quality of their audit work entirely with improved
abilities such as visualization of graphics, and simplicity for use
by non-specialists in this area. The implementation of data
analytics in audit work has enabled the development of
visualization for the work presented in various forms including
graphs, and tables (EY Reporting, 2015, April 1). The data
handled by auditors involves various forms of presentation with

5. each having a varying degree of complexity. Users of the data
presented in audit also vary in level pf skills and abilities in
handling, understanding and interpreting audit reports. The high
complexity of data collected in majority of cases is deciphered
by use of simple tools and formats in presenting the results
easing the work for the auditors in turn improving the overall
quality presented. Also, the numerical nature of the data
presented in audit reports proves complex for non-specialists to
understand and handle or implement in their activities. The use
of data analytics has made it possible for non-specialist users to
obtain the information adequately, store it in reliable formats
and present it to handlers with ease for auditing. The possible
distortion of data due to complexity would affect the results and
hence data analytics is important in the organization setting.
External auditors may not present a full-time availability within
the organization and hence the need to have efficient systems in
place to help in the data collection process. Data analytics have
presented these possibilities hence providing the required
quality audits irrespective of the mode in which the data is
collected and the persons involved. Comment by Microsoft
Office 用户: There are a lot of ways in which DA can improve
quality other than visualization. Why focus on this aspect
Comment by Microsoft Office 用户: But the performance of
analytics requires some level of specialized skills, correct?
You’re focusing on a value of the potential output, but should
also talk about the process to perform analytics and how they
integrate into the external audit process.
Comment by Microsoft Office 用户: But these are important
considerations, and some of the key challenges that analytics
implementation present. You should highlight the challenges in
this space as to not take for granted the complexities.
Still under quality audits, the use of data analytics has enabled
scaling and speed in handling audit works. Scaling is important
in the auditing process as it helps in identification of data
considered necessary for the process and that which is not. The

6. ability to handle data and ensure reliable reporting is enhanced
by the level of technology used in data analytics without which
scaling in auditing would prove a difficult task. The work of
external auditors involves handling data collected by other
parties other than the auditor and hence is exposed to a number
of mistakes and errors that may require examining and
eliminating prior to presenting the results. Also, reliance on
data analytics enables external auditors handle work with an
enhanced speed to reduce delays in presentation whilst
maintaining the quality of the yielding reports. The vast volume
of data handled by auditors requires an efficient system that
eases handling with improved speeds that do not affect the level
of accuracy and quality of reports. Data analytics has enabled
both scaling and speed to improve the quality of audits.
External auditors have also gained a deeper insight into the
works by employing data analytics. Murphy and Tysiac (2015,
April 13) affirm to the need for external auditors to have a
deeper understanding of the business prior to conducting audits.
A deeper insight into the business emanates from reliable data
on the company which is presented by data analytics.
Understanding the company entirely enhances the auditing
process in turn producing quality audits that provide solutions
to problems faced by companies. Therefore, data analytics in
external auditing enables scaling of data, enhanced speeds in
handling the same besides enabling auditors gain a deeper
insight into the business. Comment by Microsoft Office 用户:
How do auditors get assurance that the data they rely upon is
complete and accurate? How do they handle the risk of mistakes
and errors?
Comment by Microsoft Office 用户: What does this mean?
Unclear. Also, the next sentence seems to duplicative with this
one.
Comment by Microsoft Office 用户: What does this mean?
Comment by Microsoft Office 用户: s this really the focus?
Is it more that a sound understanding of the company allows for
effective planning and scoping of analytics? Think about

7. potential negative outcomes if analytics are executed without
such knowledge.
During the process of transformation in businesses, data
analytics works in enabling an ease in communication for all
parties involved in the audit process. External auditors
requiring support from internal staff in handling their audit
responsibilities. Communication in accounting is the backbone
to accuracy and an improvement in the performance of the
company as those involved in the processes take part in
contributing towards achievement of the set results. External
auditors interact with parties including internal accountants,
management and other staff within the organization in handling
audit responsibilities. Chan et al. (2018) define continuous
audits as a set of automated tasks and activities in auditing
performed by computers in real-time. The ability of the entire
process to function adequately is enhanced by the presence of
trained personnel that contribute towards the process. External
auditors rely on these to make decisions and effectively handle
the audit process. Communication between these parties is
important to enable external auditors understand the data held
by the automated systems. Also, the reports presented by
auditors is a form of communication to various groups including
shareholders and other stakeholders of the company. Ensuring
effective communication on the same is also important with
presentation of reports that adequately cover the needed aspects
of the audit work. External auditors are in position to attain this
due to the process of transformation enforced by adoption of
data analytics in the process which includes automation of
processes.Comment by Microsoft Office 用户: The opening of
this paragraph is unclear
Comment by Microsoft Office 用户: Why are you getting
into continuous auditing? It is relevant but needs to be better
introduced. As it stands, CA seems to come out of left field.
Comment by Microsoft Office 用户: If I understand
correctly, I think you can summarize the point of this paragraph

8. to focus on how DA for external audit allows for enhanced
communication regarding firm risk between the auditor and
auditee. Also, once established in a sustainable and repeatable
way, the tools allow for fewer manual activities in audit
processes, which improve coordination with the client. If this is
the case, you should state these points more clearly.
Lastly, the process of transformation enforced by data analytics
also enables the spread of audit effort over the year rather than
concentrating it at the end of the year. The efficiency of the
auditing process is in the ability of the process to take into
account activities within the company throughout the year and
not that which occur at the end of the year alone. Examining the
data as it occurs daily in the audit process contributes towards
an improved ability to monitor the process and ensure adequate
handling of the data generated and reported daily within the
organization. The vast nature of transactions handled by
companies increases the level of complication that auditors may
face at the year end while handling audit responsibilities. In
addition to the above, external auditors in most cases handle
auditing work at the end of the year for the company and hence
if not relying on efficient systems may pay attention to the data
collected at the end of the year ignoring the daily data gathered
on a regular. Data analytics ensures that the spread of the data
is over the entire year and hence improving the results obtained
as the external auditors have an enhanced level of accuracy and
reliability due to the process transformation with a higher
degree of automation and accuracy. A business that has entirely
undergone the transformation in its data analytics aspects
presents a reliable process however, compared to that still
undergoing the same. Comment by Microsoft Office 用户:
Again, try to stay away from the esoteric descriptions and get to
the point directly. If you’re view is that DA allows auditors to
alleviate resource constraints in busy season by spreading work
out over the year, say that, and then explain how
Comment by Microsoft Office 用户: Sentence is too long

9. and seems to cut off in the end.
Comment by Microsoft Office 用户: still unclear on what
you mean by transformation after reading this. The focus of the
paper is on the use of DA by the auditor, not directly by the
client, correct?
The implementation of data analytics has enhanced the audit
process allowing external auditors attain a higher degree of
efficiency and reliability on their work. External auditors have
benefitted from the improvement in value that data analytics
brings to the organization including market price use in
repricing of investments while also factoring in other data needs
including interest rates, foreign exchange rates and changes in
GDP. Data analytics has also enhanced the quality of audits
performed by external auditors as revealed by the improvement
in presentation with visualization a factor, simplicity, scaling
and speed. Lastly, data analytics have enabled external auditors
improve the communication in the audit process and spread
their efforts through the entire year and not the year end as the
complete transformation in processes through data analytics
enhanced audits. Data analytics has therefore, significantly
improved the external audits. Comment by Microsoft Office
用户: These are the types of direct and clear sentences that you
should strive for throughout the paper.
Comment by Microsoft Office 用户: Overall, you raise
some good points, but the writing style is generally wordier
than necessary, and you should focus on conciseness and clarity
in the next version with the help of the Writing Center
(http://www.temple.edu/writingctr/). I would like to see some
evidence that you visited the writing center (they can send me
an email confirmation).
References Comment by Microsoft Office 用户: you should
strive for 10 references. Also, you can make this page single
spaced.

10. Chan, D. Y., Chiu, V., & Vasarhelyi, M. A. (2018). New
Perspective: Data Analytics as a Precursor to Audit
Automation. Continuous Auditing, 315-322. doi:10.1108/978-1-
78743-413-420181016
EY Reporting. (2015, April 1). How big data and analytics are
transforming the audit. Retrieved from
https://www.ey.com/en_gl/assurance/how-big-data-and-
analytics-are-transforming-the-audit
Kogan, A., Vasarhelyi, M. A., & Appelbau, D. (2017, May 25).
Introduction to Data Analysis for Auditors and Accountants -
The CPA Journal. Retrieved from
https://www.cpajournal.com/2017/02/16/introduction-to-data-
analysis-for-auditors-and-accountants/
Murphy, M. L., & Tysiac, K. (2015, April 13). Data analytics
helps auditors gain deep insight. Retrieved from
https://www.journalofaccountancy.com/issues/2015/apr/data-
analytics-for-auditors.html
Pence, H. E. (2014). What is Big Data and Why is it
Important? Journal of Educational Technology Systems, 43(2),
159-171. doi:10.2190/et.43.2.d
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