“Big data” and analytics promise to transform auditing, but there are still a number of barriers to successfully integrating them into the audit, according to the latest issue of E&Y’s Reporting magazine.
The ultimate goal, E&Y says, is to have intelligent audit applications that function within companies’ data centers and stream the results of proprietary analytics to audit teams. With the technology to accomplish that vision “still in its infancy,” the interim solution is to integrate big data and analytics into the auditing process.
EY identifies data capture as one barrier to successful integration. “Companies invest significantly in protecting their data, which makes the process of obtaining client approval for provisional data to auditors time consuming,” the article says. “In some cases, companies have refused to provide data, citing security concerns.”
Other concerns are that auditors encounter hundreds of different accounting systems and multiple systems within the same company, all containing different sets and types of data, and that embracing big data will increase the complexity of data extraction and the volumes of data to be processed.
The issue of big data was also recently addressed by the Association of Chartered Certified Accountants, which noted in its member magazine that the audit profession “has historically struggled to stay ahead of the data curve.”
“The quantity of data produced by and available to companies, the replacement of paper trails with IT records, cloud storage, integrated reporting, and growing stakeholder expectations for immediate information — any one of these alone would affect the auditing process, but big data is bringing them all, and more, at the same time,” ACCA said.
Some large accounting firms are making huge investments in data analytics. KPMG, for example, is halfway through a $1 billion, five-year global investment plan in data and analytics solutions.
But the ACCA noted that there is still no definitive guidance on what data should be made available to auditors and “current auditing standards have their roots firmly in the traditional audit process, where samples of transactions are examined rather than an entire body of data.”