Why Data Analytics is important for Financial Audit?

By ridhigrg |Email | Mar 23, 2020 | 3525 Views

Data analytics has become indispensable in many industries. It is firmly embedded in the way a lot of companies to do business. Most companies use the power of data analytics to study customer behavior and manage the progress of most business processes. This provides opportunities for firms to offer services in this domain. One such service is the financial audit. Audit firms can really benefit from this opportunity as technology evolves and advances in the coming times. However, listed below are the key reasons why the audit services providers should gravitate towards data analytics.

1. The volume of data - Traditionally firms offering services to review the financial data, traditionally used to just test data entries based on certain as it is not possible to go through all the data manually. This left a huge gap in the analysis that was done, even if performed by CPA certified professionals. The data analytics approach allows such teams to be able to test all the data extracted from their client's ERP systems and provide much more conclusive analysis in a much shorter turn-around time.

2. Sensitive Nature of the data - Recent times has shown how important it is to have proper checks and balances on the financial industries. Even small discrepancies over time can affect the lives of numerous people just like it did during the financial crisis of 2008. Even at the level of public companies, it is important to ensure that the firms do not engage in illegal financial activities in order to mislead the shareholders and stakeholders.

3. Additional Revenue Stream - Most firms are able to generate new revenue streams by promising much more comprehensive audit reviews for their clients. The inclusion of data analytics to support the audit approach allows firms to offer a wide array of services to their clients. It serves both the firms and the clients well. It allows the firms to increase the scope of the audit and the clients can be informed by timely to take corrective actions.

Audit firms sit at a very advantageous position to benefit from all the advancements in the field of data analytics. Not only can they vastly improve their existing processes to provide much more conclusive analysis but also drive innovation to offer a variety of new services to their clients. It is a win-win for everyone involved in this game. It is just a matter of lining up the ducks.

Source: HOB