Integra(ng  Data  Analy(cs  into  a  Risk-­‐Based  Audit  Plan  

Presented by: Andrew Simpson, MBA, Chief Operating Officer, CaseWare Analytics

Drivers  of  Risk  Management  

Risk  is  high  on  the  agenda  for  boards  today  due  to:  • A  focus  on  cost  reduc(on  • A  desire  for  added  value  • An  evolving  regulatory  environment  •  Technological  changes  and  availability  of  data  

Stakeholder  Percep(ons  

The  overwhelming  opinion  of  1,700  execu(ves  par(cipa(ng  in  the  both  the  9th  and  10th  annual  PwC  State  of  the  Internal  Audit  Profession  Study  is  that  internal  audit  needs  to  reach  for  new  heights  and  contribute  to  the  organiza(on  in  a  more  

meaningful  way.    

Source: PwC 2014 State of the Internal Audit Profession Study

A  Visionary  Approach  to  Risk  The  Building  Blocks  to  Successful  Risk  Management  

Where  Do  You  Want  to  Be?  

Source: IIA, Pulse of the Profession, Defining Our Role in a Changing Landscape Report

A  Visionary  Approach  

Crea(ng  a  visionary  approach  to  risk  is:  •  Not  just  about  technology  •  Applicable  to  all  levels  of  a  business  •  A  maSer  of  culture  and  philosophy  •  Integrated  into  how  things  are  done  everyday  

Building  Blocks  

Visionary  Leadership  

Stakeholder  Sa(sfac(on  

Staff  Development  

Best  Prac(ces  and  Efficiency  

Risk-­‐Based  Audits  

Results  Focused  Analy(cs  

Building  Blocks  

Visionary  Leadership  

Paving  the  Pathway  to  Success  

To  have  a  visionary  team,  you  need  a  visionary  leader.  But  there  will  be  challenges  in  forging  this  new  path:  

Innova(on  and  

Technology  

External  Stakeholders  

Internal  Challenge  

Building  Blocks  

Visionary  Leadership  

Stakeholder  Sa(sfac(on  

Becoming  a  Trusted  Advisor  

Source: PwC 2014 State of the Internal Audit Profession Study

Building  Blocks  

Visionary  Leadership  

Stakeholder  Sa(sfac(on  

Best  Prac(ces  and  Efficiency  

Broadening  the  Audit  Landscape  

A  comparison  of  the  average  audit  plan  composi(on  between  2013  and  2014  shows  that  in  very  liSle  (me,  the  coverage  of  internal  audit  is  broadening  dras(cally.  Internal  audit  is  now  expected  to  allocate  more  (me  to  business  strategy,  risk  management  effec(veness,  and  governance  than  ever  before.    

Source: IIA, Pulse of the Profession, Enhancing Value Through Collaboration

Audit  Plan  Coverage  in  2013  vs.  Audit  Plan  Coverage  in  2014  

Building  Blocks  

Visionary  Leadership  

Stakeholder  Sa(sfac(on  

Staff  Development  

Best  Prac(ces  and  Efficiency  

Building  a  Team  of  Experts  

Gaining  value  from  an  investment  in  people  and  technology  is  a  top  priority  when  building  your  audit  team.  Effec(ve  data  analysts  are  those  who  demonstrate  cri(cal  thinking.  

Source: IIA, Pulse of the Profession, Enhancing Value Through Collaboration

Building  Blocks  

Visionary  Leadership  

Stakeholder  Sa(sfac(on  

Staff  Development  

Best  Prac(ces  and  Efficiency  

Risk-­‐Based  Audits  

Adapted from: EDPACS, 2014, Performing a Strategic Risk-Based Assessment

Building  Blocks  

Visionary  Leadership  

Stakeholder  Sa(sfac(on  

Staff  Development  

Best  Prac(ces  and  Efficiency  

Risk-­‐Based  Audits  

Results  Focused  Analy(cs  

Results  Focused  Analy(cs:  Using  Insights  to  Drive  Results  in  Risk-­‐Based  Audits  

Source: EDPACS, 2014, Performing a Strategic Risk-Based Assessment

Data  Analy(cs  from  End  to  End  

The  first  step  to  effec(vely  incorporate  data  analy(cs  within  your  audit  process  using  a  risk-­‐based  approach  is  to  begin  with  the  audit  plan.  Using  data  analy(cs  during  your  audit  plan  will  help  to:  •  Focus  your  audit.  •  Allocate  resources  effec(vely.  •  Save  (me  (less  (me  onsite).  •  Learn  more  about  the  business.  

Risk  and  Controls  Assessment  Purchasing  Card  Example:  

Data  Analy(cs  from  End  to  End  

In  the  execu(on  phase,  it  is  important  to  analyze  100%  of  the  data  during  your  audit  execu(on  in  order  to:  •  Eliminate  sampling  risk.  •  Report  on  validated  insights.  •  Save  (me.  •  Address  control  deficiencies.  •  Establish  a  root  cause  analysis.  

Next  Steps  

Using  data  analy(cs  from  end  to  end  within  the  audit  universe  requires  a  con(nuous  stream  of  analy(cs  processes.  While  not  en(rely  the  final  step,  using  analy(cs  within  your  audit  report  is  important  in  gaining  alliance  with  corporate  stakeholders.  Your  audit  report  should:  •  Contain  validated  deficiencies.  •  Highlight  root  causes.  •  Provide  recommenda(ons.  •  Be  clear  and  understandable.  

Moving  Forward:  Data  Discovery  

We  currently  use  data  as  a  tool  to  display  findings  in  a  unique  and  easy-­‐to-­‐digest  format,  but  the  future  of  audit  lies  in  the  ability  to  use  visual  data  discoveries  to  enhance  your  audit  poten(al  and  enable  you  to:  •  Visualize  frequencies  and  anomalies.  •  Probe  further  into  visual  discrepancies.  •  Visualize  a  more  in-­‐depth  picture  of  a  controls  framework.    

Summary  

• Be  crea(ve  about  how  you  approach  data  analysis.  •  Invest  in  the  people  and  tools  necessary  for  success.  

• Provide  value  for  management  from  data  analy(cs.  •  Eliminate  sampling  risk.  • Use  data  analy(cs  to  scope  audit  engagements.  

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Andrew  Simpson,  MBA,  Chief  Opera(ng  Officer  

CaseWare  Analy(cs  Email:  Andrew.Simpson@CaseWare.com