Structuring your organization for success with data analytics
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The document outlines a webinar led by Michael Kano, focusing on the importance of formalizing data analytics within organizations for auditing purposes. It details the role of AuditNet as a key resource for auditors, highlighting the various models for integrating data analytics and addressing key considerations for effective implementation. Additionally, it provides guidelines for obtaining continuing professional education (CPE) credit and emphasizes the necessity of proper data management and accountability in the auditing process.
Structuring your organization for success with data analytics
- 1. 10/10/2019 1 Key Presenter: Michael Kano, ACDA Data Analytics Specialist Arbutus Software Structuring Your Organization for Success with Data Analytics About Jim Kaplan, CIA, CFE President and Founder of AuditNet®, the global resource for auditors (available on iOS, Android and Windows devices) Auditor, Web Site Guru, Internet for Auditors Pioneer IIA Bradford Cadmus Memorial Award Recipient Local Government Auditor’s Lifetime Award Author of “The Auditor’s Guide to Internet Resources” 2nd Edition Page 2 1 2
- 2. 10/10/2019 2 ABOUT AUDITNET® LLC • AuditNet®, the global resource for auditors, serves the global audit community as the primary resource for Web-based auditing content. As the first online audit portal, AuditNet® has been at the forefront of websites dedicated to promoting the use of audit technology. • Available on the Web, iPad, iPhone, Windows and Android devices and features: • Over 3,100 Reusable Templates, Audit Programs, Questionnaires, and Control Matrices • Webinars focusing on fraud, data analytics, IT audit, and internal audit with free CPE for subscribers and site license users. • Audit guides, manuals, and books on audit basics and using audit technology • LinkedIn Networking Groups • Monthly Newsletters with Expert Guest Columnists • Surveys on timely topics for internal auditors Introductions Page 3 HOUSEKEEPING This webinar and its material are the property of AuditNet® and its Webinar partners. Unauthorized usage or recording of this webinar or any of its material is strictly forbidden. • If you logged in with another individual’s confirmation email you will not receive CPE as the confirmation login is linked to a specific individual • This Webinar is not eligible for viewing in a group setting. You must be logged in with your unique join link. • We are recording the webinar and you will be provided access to that recording after the webinar. Downloading or otherwise duplicating the webinar recording is expressly prohibited. • You must attend the entire Webinar to receive CPE (no partial CPE will be awarded). • If you meet the criteria for earning CPE you will receive a link via email to download your certificate. The official email for CPE will be issued via [email protected] and it is important to white list this address. It is from this email that your CPE credit will be sent. There is a processing fee to have your CPE credit regenerated post event. • Submit questions via the chat box on your screen and we will answer them either during or at the conclusion. • You must answer the survey questions after the Webinar or before downloading your certificate. 3 4
- 3. 10/10/2019 3 IMPORTANT INFORMATION REGARDING CPE! • WEBINAR ATTENDEES - If you attend the entire Webinar, and meet the eligibility criteria, you will receive an email with the link to download your CPE certificate. The official email for CPE will be issued via [email protected] and it is important to white list this address. It is from this email that your CPE credit will be sent. There is a processing fee to have your CPE credit regenerated post event. • We cannot manually generate a CPE certificate as these are handled by our 3rd party provider. We highly recommend that you work with your IT department to identify and correct any email delivery issues prior to attending the Webinar. Issues would include blocks or spam filters in your email system or a firewall that will redirect or not allow delivery of this email from Gensend.io • We are not responsible for any connection, audio or other computer related issues. You must have pop-ups enabled on you computer otherwise you will not be able to answer the polling questions which occur approximately every 20 minutes. We suggest that if you have any pressing issues to see to that you do so immediately after a polling question. The views expressed by the presenters do not necessarily represent the views, positions, or opinions of AuditNet® LLC. These materials, and the oral presentation accompanying them, are for educational purposes only and do not constitute accounting or legal advice or create an accountant-client relationship. While AuditNet® makes every effort to ensure information is accurate and complete, AuditNet® makes no representations, guarantees, or warranties as to the accuracy or completeness of the information provided via this presentation. AuditNet® specifically disclaims all liability for any claims or damages that may result from the information contained in this presentation, including any websites maintained by third parties and linked to the AuditNet® website. Any mention of commercial products is for information only; it does not imply recommendation or endorsement by AuditNet® LLC 5 6
- 4. 10/10/2019 4 AGENDA • Introductions • Why does DA need formalizing? • Four Models Overview • Key Considerations • What works best? Michael Kano Michael is a recent addition to the Arbutus Software team. He has 25 years of experience in data analytics and internal audit with organizations in the USA, Canada, and the Middle East. From 2015 to 2019, he was a senior member of the data analytics practice at Focal Point Data Risk, a US-based professional services firm. Prior to Focal Point, Michael led eBay, Inc.’s data analytics program in the InternalAudit department. He was tasked with integrating data analytics into the audit workflow on strategic and tactical levels. This included developing quality and documentation standards, training users, and providing analytics support on numerous audits in the IT, PayPal, and eBay marketplaces business areas. He also provided support to non-IA teams such as the Business Ethics Office and Enterprise Risk Management teams. During his years at eBay, Michael supported audits throughout the organization in the IT, compliance, operations, vendor management, revenue assurance,T&E, and human resources areas. Michael's software experience includes ArbutusAnalyzer, ACL Desktop/Direct Link,Alteryx, Microsoft Access, SQL, andTableau. He led ACL Services Ltd.’s global training team for 8 years. He is a graduate of the UCLA Anderson School of Management. 7 8
- 5. 10/10/2019 5 Why does DA need formalizing? • It’s not a fad and it’s not going away • Data is a key part of the audit environment • Findings based on data evidence • Multiple, massive data sets • Variety of formats • High-speed, high-volume transactions • Pressure to perform 0000010 0000100 1110010 0110000 1100011 POLLING QUESTION 1 9 10
- 6. 10/10/2019 6 FOUR MODELS 1 Internal- Dispersed/Distributed Individual auditors manage their own tools and procedures 2 Internal- Centralized/Dedicated DA as a distinct competency with formalized procedures, policies, and processes 3 Organization- Internally Sourced DA conducted by other department(s) on behalf of IA 4 Outsourced/Co-Sourced DA conducted by an external organization What are some of the key items we must take into account? • StrategicValue Perception • DATools • Accountability • Resources • Data Management • Cost • Documentation • Data IntegrityVerification • Metrics Key Considerations 11 12
- 7. 10/10/2019 7 1 2 3 4 Internal- Dispersed/Distributed Internal- Centralized/Dedicated Organization- Internally Sourced Outsourced/Co-Sourced Low due to lack of visibility or distinction; cost is commingled Medium to high due to distinctiveness Low to medium Medium to high due to line-item status StrategicValue Perception Do key players in our organization understand and value the contributions of data analytics? • Chief Audit Executive • Audit Committee-right of data access in audit charter • Business & tech leadership 1 2 3 4 Internal- Dispersed/Distributed Internal- Centralized/Dedicated Organization- Internally Sourced Outsourced/Co-Sourced Multiple tools One or two key tools Multiple tools One or two key tools Data AnalyticsTools Are our tools the best fit for our needs? • Powerful analytical capabilities • Read multi-source data formats and types • User training & support availability • Read-only • Execution log for audit trail • Scheduling/continuous capability 13 14
- 8. 10/10/2019 8 1 2 3 4 Internal- Dispersed/Distributed Internal- Centralized/Dedicated Organization- Internally Sourced Outsourced/Co-Sourced Yes, but only as auditors Yes, clear and distinct accountabilities Not necessarily Yes, by contract Accountability Are the DA users accountable? • Direct line between individual analysts and their output • Can be a metric in evaluation 1 2 3 4 Internal- Dispersed/Distributed Internal- Centralized/Dedicated Organization- Internally Sourced Outsourced/Co-Sourced Yes, but only as auditors. Little/no formal or structured assessment of skills Yes, clear and distinct skills and deliverables Not necessarily; may not have a close enough relationship to evaluate Yes, by contract Resources Do we have the skills we need? • Formal training and coaching • Specifically included in job description and evaluations • Depth and breadth of experience 15 16
- 9. 10/10/2019 9 Identifying Potential Resources • Previous experience (Arbutus,ACL, IDEA, SQL,VBA, SAS…) • Math majors • Actuaries POLLING QUESTION 2 17 18
- 10. 10/10/2019 10 1 2 3 4 Internal- Dispersed/Distributed Internal- Centralized/Dedicated Organization- Internally Sourced Outsourced/Co-Sourced Possible, but with weak oversight Easier to implement and maintain Rely on providing departments May be weak without proper safeguards Data Management Are we managing data with the appropriate infrastructure and policies? • Dedicated server(s) and network infrastructure • Policies and practices for maintaining confidentiality and security • Independent access to data 1 2 3 4 Internal- Dispersed/Distributed Internal- Centralized/Dedicated Organization- Internally Sourced Outsourced/Co-Sourced Diluted/commingled Identifiable Hard to identify unless department allocates cost Contract cost Cost • Key elements: software, infrastructure, training, FTEs • ROI question: # of audits, scope, precision, efficiency… Can we (or should we) identify the cost of DA? 19 20
- 11. 10/10/2019 11 1 2 3 4 Internal- Dispersed/Distributed Internal- Centralized/Dedicated Organization- Internally Sourced Outsourced/Co-Sourced Can be challenging to implement across teams Feasible Usually not available Request by contract Documentation • Data dictionaries • Audit planning document • Data request form • Client request form • Process/script description • Engagement checklist • Script execution log (including DIV) • Deliverables/turnover document • Script library • Post-Execution What documentation should we have? 1 2 3 4 Internal- Dispersed/Distributed Internal- Centralized/Dedicated Organization- Internally Sourced Outsourced/Co-Sourced Can be challenging to implement and maintain across teams Feasible Usually not available Request by contract Data IntegrityVerification Why?And what tests should we run? • Due diligence to identify any possible data errors prior to audit testing • General tests • Data-specific tests 0000#10 0@00100 111*010 0110000 1100011 21 22
- 12. 10/10/2019 12 Data: From Raw to Processed The Process Sources of Corruption 23 24
- 13. 10/10/2019 13 GeneralTests : Numeric Data Corruption FieldTotal HighestValue Second-highestValue Ratio of 2nd to HighestValue Lowest value Average Range AbsoluteValue Median Number of Zeros Number of Positives Number of Negatives Standard deviation GeneralTests Date Data Corruption Oldest Date Newest Date Span (valid dates only) Weekends Blank Dates Invalid Non-Blank Dates Character Data Uniqueness* Non-blank* Valid entries Short length Non-printable characters *Where expected 25 26
- 14. 10/10/2019 14 Data-SpecificTests Logical relation between two fields • Invoice date vs PO date • Recalculations PatternValidity • Phone numbers • Zip codes • Custom codes Record Integrity • Uniqueness • Data shifts Data Shifts 27 28
- 15. 10/10/2019 15 Metrics • Number of audits • Quality • Coverage • Precision • Consistency • Development of custom applications • Continuous/automated capability AVOID THE ROI TRAP! How do you evaluate your DA capability? POLLING QUESTION 3 29 30
- 16. 10/10/2019 16 What works best? • Evolutionary process • Hybrids of models • Strong leadership • Ability to attract and retain talent • Fit with corporate culture FOUR MODELS 1 Internal- Dispersed/Distributed Individual auditors manage their own tools and procedures 2 Internal- Centralized/Dedicated DA as a distinct competency with formalized procedures, policies, and processes 3 Organization- Internally Sourced DA conducted by other department(s) on behalf of IA 4 Outsourced/Co-Sourced DA conducted by an external organization Questions? THANK YOU! Michael Kano Data Analytics Specialist [email protected] (604) 456-6338 Arbutus Analytics 31 32