Digital technologies, such as robotic process automation and advanced analytics, are helping internal audit to dramatically improve its performance and influence. Such technologies are enabling internal audit to be more proactive, strategic, effective and efficient. They allow internal auditors to test an entire population rather than just a sample of transactions, and they can lead to significant cost savings by automating routine tasks.
“As a profession, we should embrace new internal audit technologies to make us more effective and efficient.“
Four digital tools transforming the impact of internal audit
We are seeing significant positive returns from digital initiatives in internal audit, especially in the use of data analytics, process visualisation, interactive dashboards linked to data analytics as well as the merging technologies of robotics and artificial intelligence (AI).
1. Data analytics
The use of data analytics provides positive returns, beginning with the audit planning, and continues throughout the audit execution.
Beginning with the annual planning process, we determine the risk-based internal audit plan with our clients. Using data analytics, we can identify those processes, entities or regions where they have the highest risk. This enables internal audit to focus its available resources on those higher risk areas. Further benefits accrue in the audit execution where we also integrate data analytics in testing procedures.
“Data analytics is not a new topic, but as a profession, internal audit is not leveraging data analytics to its full potential.“
The biggest difference is that we are now analysing entire data populations compared with samples representing, 10-20% of the data. This represents a quantum leap in the reliability of the outcomes and provides greater insights. For these reasons, the majority (54%) of respondents in the ‘PwC 2019 State of the Internal Audit Study’, maintained that data analytics tools had provided a payoff higher than or equal to their expectations.
To what extent have your digital investments paid off at your organisation to date in the area of improved decision making through better data analytics?
Source: PwC 2019 Global Risk, Internal Audit and Compliance Survey
2. Process Visualisation
In our experience, boards and executive committees are enthusiastic about process visualisation. Although they have likely seen the material in worksheets, static texts or presentations, for many it is the first time that they have a truly clear picture of the organisation’s processes. Visualisation tools allow the information to be much more interactive, so users can drill down to examine the data in greater detail and in real time.
This enables additional insights to be drawn from internal audit reporting. For example, users often see that the processes are not as structured as they originally understood. From there, they start improving such processes and controls to increase their reliability. As a result, visualisation strengthens internal audit’s impact and influence.
3. Linking data Analytics to Interactive Dashboards
A challenge for many internal audit functions is how to present the results of data analytics in a form that is digestible and can be acted on. To strengthen impact, data analytics can be fed into interactive dashboards that provide a hands-on overview of key risk indicators. In many cases, we initially prepared such interactive dashboards for internal audit clients. As we discussed the results and dashboards with them, we found that it was a ‘must have’ for operational managers.
The main benefit of these interactive dashboards is that as a reader, you are king. You decide what is important for you on the dashboard. And if it is important, you can drill all the way down to that one transaction you want. This not only helps internal audit to fulfil its remit, but also assists operational managers in controlling their businesses.
4. Robotics and AI
Early adopters are already using robotics and AI in both their audit and business processes. According to the ‘PwC 2019 State of the Internal Audit Study’, 16% of respondents maintained that they are currently using such technologies, and an additional 33% said that they will be using them in two years’ time.