Embedding Analytics into Internal Audit

It is the year 2020, and if you did not expect this point to pop up sooner or later, we're afraid you haven't been up-to-date on how the corporate ecosystem has transferred. Even the most labour-intensive businesses have incorporated analytics in their business operations to simplify the business activities and become efficient in completing tasks in uniformity. The use of corporate tools in frequent business activities in the UAE has entitled employees and managers to communicate, record, analyze, and strategize for future operations.

Analytics includes the process of collecting data, using computational methods to study the patterns in the data and using this knowledge to make decisions. Many conglomerates have introduced analytics into fields such as –

  • Target Market Study
  • Productivity Analysis in Human Resources
  • Internal and External Audit
  • Corporate Governance
  • Strategic Management
  • Blockchain Technology in the UAE
  • Investment, Trading and Portfolio Management

Use of Analytics in Internal Audit

Internal Audit takes place when the organizational heads set up an audit committee from members within the management hierarchy to analyze and review the company’s operations, earnings and policies in an unbiased manner. This usually helps the top managerial personnel to maintain quality control, sustain the corporate code of ethics and implement necessary policy amendments. Data Analytics has shown an upward scope in the field of audit services in the UAE. The benefits often include a detailed investigation of business operations digging deep into the financial records of the company, analyzing each and every transaction and monitoring cash flow activities to determine whether the company is making genuine transactions or maintaining false records.

Internal Audit lies at the heart of corporate governance. Therefore, to harness internal Audit is to be more self-aware about the business. Large volumes of data are channelled into a common source that requires – bifurcation, arrangement, analysis and interpretation to be useful in internal audit framework. Where data analytics plays a major role in this long process is –

  • By giving identity to the data by isolating data points in linear formats helping auditors to recognize patterns.
  • Creating data sets that can be analyzed separately or in a union.
  • Evaluating and understanding the internal control system.
  • Analyzing the account balances and transactions.
  • Identifying aspects of quality control in different departments that can help either restructure the business or at the very least, guide the company in a more progressive direction.
  • Detecting errors in the data. This can, in turn, help identify data authenticity.
  • In the case where data is found to be unreliable or unauthentic, it could, in many cases, lead to scams or frauds.
  • For the best interest of the stakeholders, it is always safe to verify data before interpreting and decision making.
  • In many cases, auditors also revise the compliance policies and corporate governance policies that are directly or indirectly impacting the current financial position of the company.

The company's future lies on how self-aware the critical managerial personnel are about the flaws in their corporate governance system. And at the very core of crisis issues, a business faces are the lack of quality control in an organizational entity. Thus, implementing data analytics in internal Audit will make the process efficient and accurate, reducing the risks of flaws.

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