Auditing is a process thrown around often, but you may be wondering what auditing is, and why it’s important.
First and foremost, auditing is the process whereby you hire a licensed third party to review your financial statements. They will decide how accurate they are, and whether they can be relied on with certainty.
By auditing your accounts, the auditor is putting their name on the line by saying your statements are accurate, which is why it’s so important they are correct, and that businesses don’t hide any information during the process.
But why is data important in auditing?
The Role Of Data Analytics In Finance
As each year goes by, the role of data analytics in finance is growing. As technology evolves, more and more industries are using AI and machine learning to assist with their goals. And finance is no different.
The role of finance corporations has long been to predict market trends and eliminate risks. Thanks to big data and data analytics, the finance industry can take things one step further.
Data analysts have a deep technical knowledge of programming, code, and algorithms. These skills mean that they have the skills to interpret and analyze data to solve problems. Data analysts can be used in the finance industry to detect fraud or mismanagement of resources to reduce the likelihood of audits, operational shutdowns, or criminal activity.
By detecting patterns, correlations, and fluctuations, data analytics can be useful for auditors when it comes to making sure that the audits are free of red flags and are as accurate as possible.
How Are Data Analytics Becoming An Integral Part Of Auditing?
In recent years, data analytics have become an integral part of the auditing process, made possible by data analytics software. In fact, according to RSM Global, an external consultancy advisor for businesses, “Data analytics software can assist in interrogating and extracting data from multiple sources in a simple and easy manner. Auditors can then run custom analyses, tailored to their client’s specific risk profiles, with efficiency.”
Specially designed data analytics software can therefore help auditors in three ways:
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Increasing Productivity
Firstly, data analytics software can increase productivity. As much of the process can be automated, this saves time when handling large volumes of data, leaving more time for the auditors to do other things.
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Added Insights
As the software can work with large volumes of data quickly, it can also quickly link data together, offering a more unified approach. This also helps identify any anomalies or patterns that need further investigation.
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Software Drives Up Quality
Having a machine helping you to audit businesses acts as a safety net for the audit. A good data analytics platform will improve consistency and errors across the board or can even check the results. Both of which would be extremely time-consuming and in some instances, not possible.
The Bottom Line
Although AI and big data can seem scary at first, they can be extremely useful in the auditing process. In fact, they have been proven to be extremely useful to drive up standards of auditing, meaning that data analytics software is now a must-have for many auditing firms.
If you haven’t already, perhaps it’s time to say “yes” to big data.
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