Internal Audit Departments Starting to Embrace Data Analytics, Yet Many Have Far to Go to Achieve Full Potential, According to Latest Protiviti Survey
MENLO PARK, Calif., March 20, 2017 /PRNewswire/ -- The abundance of information captured in the world today and the ability to apply data analytics to assess, monitor and predict activity has many chief audit executives (CAEs) around the world rethinking traditional audit models and approaches. According to Embracing Analytics in Auditing, the 2017 Internal Audit Capabilities and Needs Survey report, released today by global consulting firm Protiviti, 66 percent of internal audit functions now employ some form of data analytics in audit processes. However, despite this positive trend, many audit departments (34 percent) do not employ data analytics as part of the audit process, thus have not started the journey to realize the significant benefits that analytics technologies and resulting insights can provide. Of those who currently use data analytics, a mere 10 percent rate their data analytics functions as quantitatively managed or optimized.
More than 900 internal audit professionals participated in Protiviti's 11th annual Internal Audit Capabilities and Needs Survey to assess data analytics capabilities and practices among internal audit functions, along with the top priorities for CAEs and internal audit professionals this year. The survey was conducted globally and the majority of the responses came from North America.
"The pace of change in our world is having a dramatic impact on how organizations operate. Internal audit professionals must be adept in applying new tools and techniques to understand and manage risk. The use of advanced data analytic techniques is the runaway winner as a best practice of the future," said Brian Christensen, executive vice president, global internal audit and financial advisory, Protiviti. "Many of the organizations that are already employing data analytics within their audit departments are beginning to experience significant value in the results. As recognition of these benefits grows, we expect to see CAEs work with management and the board of directors to make further investments to increase their data analytics capabilities, in terms of both tools and skillsets, as the practice of internal auditing shifts increasingly to analytics and continuous auditing and monitoring."
The Impact: Data Analytics and the Audit Process
Although they are in the minority amongst their peers, internal audit functions with mature, continuous monitoring and auditing programs are achieving impressive benefits. These include strengthening risk assessments; more effectively tracking fraud indicators and key operational indicators; enabling a real-time view of organizational risk; and conducting risk-based audits.
On the other end of the spectrum,according to the report, internal audit groups in the developmental stage may not know yet how to properly elevate and optimize their analytics, largely due to the lack of understanding about the benefits these capabilities can provide.
Challenges and Insights
The survey also revealed that internal audit functions face numerous challenges, such as:
- 73 percent of all organizations performing analytics say demand for data analytics has increased – even more so among organizations in the "best practices" segment
- 34 percent are planning to add analytics headcount
- Identifying where data resides is a challenge for 60 percent of organizations as are system constraints (56 percent)
- Data quality is an issue as well – only 22 percent rate it to be excellent or good
The Protiviti report offers insights on these challenges and many other key findings of the survey. For example, internal audit groups with dedicated analytics functions and organizations that have attained a 'managed' or 'optimized' state of analytics maturity are far more likely to conduct continuous auditing. Protiviti's survey found that overcoming the constraints to build more sophisticated analytics processes requires:
- A longer-term strategy and an implementation roadmap
- Carefully chosen and well-crafted pilot programs
- Clear direction (including investment in skills, tools and expertise) from CAEs and organizational leaders
"It can be overwhelming for organizations just getting started with using data analytics. There may be budget and resource constraints, employees need to learn new technologies and new processes need to be developed. We've found that companies just need to pick a starting point and get the help they need so that, over time, they can truly optimize their internal audit functions," added Christensen.
In addition to the 2017 study's special focus on data analytics, the Protiviti report includes sections on general technical knowledge; audit process knowledge; and personal skills and capabilities. In these sections, data analytics, continuous auditing and emerging technologies stand out as areas that CAEs and internal audit professionals need to improve their knowledge and expertise.
Webinar on April 12
Key findings from the survey will be discussed in a complimentary webinar on April 12 at 10:00 a.m. PDT. Protiviti's Christensen, joined by Protiviti Managing Directors Gordon Braun and Barbi Goldstein, will discuss the findings and add their insights during the 90-minute webinar. Please register here.
About the Survey and Resources
Protiviti's 2017 Internal Audit Capabilities and Needs Survey was fielded in December 2016 across the globe and surveyed 906 respondents. Respondents work in the public, private, government and non-profit sectors and are representative of virtually all industry sectors. Nearly two-thirds of respondents are from organizations with more than $1 billion in revenue.
The survey report, along with an infographic highlighting key results, a podcast and a short video, are all available for complimentary download at www.protiviti.com/IAsurvey.
From March 20th to 22nd, Protiviti is exhibiting at The Institute of Internal Auditors' General Audit Management Conference in Orlando, FL and has complimentary copies of the survey report available for interested attendees. For more information about the conference, please visit: www.protiviti.com/events.
Protiviti (www.protiviti.com) is a global consulting firm that delivers deep expertise, objective insights, a tailored approach and unparalleled collaboration to help leaders confidently face the future. Through its network of more than 70 offices in over 20 countries, Protiviti and its independently owned Member Firms provide clients with consulting solutions in finance, technology, operations, data analytics, governance, risk and internal audit.
Protiviti has served more than 60 percent of Fortune 1000® and 35 percent of Fortune Global 500® companies. The firm also works with smaller, growing companies, including those looking to go public, as well as with government agencies. Protiviti is a wholly owned subsidiary of Robert Half (NYSE: RHI). Founded in 1948, Robert Half is a member of the S&P 500 index.
Protiviti is not licensed or registered as a public accounting firm and does not issue opinions on financial statements or offer attestation services.
Editor's note: Infographic (in jpeg and pdf) and photos available upon request.
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