Just like many other bits of a big business, internal audit functions are experimenting with the wide and growing range of new software available to collect, analyze, and make use of data.
Audit teams tend to call this work “data analytics” and, although it provides many opportunities for faster and more insightful audits, getting staff to embrace the work is no simple task. It is difficult to convince busy professionals to get used to the idea of something new, especially if it’s a discipline they aren’t comfortable with.
But as the audit team at one big financial services firm in CEB’s networks demonstrated, once the fear of the unknown is alleviated, auditors will far more happily take on the methods and capabilities required for integrating data analysis into their day-to-day work.
To educate audit staff members and encourage them to use analytic techniques more systematically, managers created a “data analytics diploma” program consisting of mandatory online and classroom-based foundational training coupled with optional specializations for those who are interested. The program was designed specifically to remove common fears and misconceptions about data analytics and to give auditors the confidence to employ analytics in their day-to-day work.
Removing the Fear: A Shift from Abstract to Concrete
Classroom training begins with a purposeful effort to uncover and address concerns related to data analysis. Group discussion on why staff believe that analytics would help or hinder their current approach are encouraged, along with conversations about what they see as any barriers to adoption. This honest dialogue is supplemented by the function’s vision for making use of analytic skills, along with a lucid explanation about why the department is investing in the training.
Next, auditors break down into smaller groups to connect the dots between data analysis and familiar audit work. This helps to demystify the ambiguous concept for staff auditors who may have been intimidated by the term “analytics” beforehand.
Furthermore, the course organizers emphasize problem definition and hypothesis generation as the first and most important steps in its data analytics framework (see chart 1). Because planning and scoping are also important elements of an effective audit engagement, auditors can see how the analysis of data will prove useful.
Chart 1: First steps in a data analytics framework Source: CEB analysis
Reinforcing the Training: Practice with Real-Life Examples
Once participants become comfortable with the overarching framework, they work through case studies to test their hypotheses with rigorous data evaluation. Each case example is tested internally to make sure it is relevant and is designed to be challenging without being overwhelming.
“The case study was extremely useful and helped reinforce the training,” one participant said, adding that “the problems were similar to in-the-field challenges I come across often.” Small group discussion afterwards then allowed auditors to compare techniques and understand any shared issues they had with the whole process.
“Discussing our problems in small groups also allowed me to better understand where many of my team members typically struggle while incorporating analytics into their day-to-day workflow,” said one participant. “It revealed that structuring the problem, and not technical proficiency, was the biggest challenge the audit team struggled with.”
Moving Forward: Full Integration
Ultimately, the training focuses on the ability to solve practical problems using data evaluation techniques. It isn’t about showing auditors how to use technical software systems. Instead, the training helps them solve issues using Excel while applying the analytics framework they learned. It is a concerted effort to illustrate how analysis can practically apply to their every day jobs as a way to sustainably embed these methods in every stage of the audit team’s assurance work.
“The Data Analytics Diploma Program sparked a cultural shift within the Audit team,” one participant explained to CEB. “It challenged the mind-sets of auditors on how we use analytics to tackle risks and provide better assurance, which is not by using more complicated Excel formulas but by thinking more analytically about how to structure problems to get efficient — and effective — answers.”
Observing Results: ‘A Lot More Interest’
“We tried other things but found that technical, software-focused, trainings lacked longevity,” the head of group internal audit said. With the new curriculum, “we have observed a lot more interest in the training program, as well as the ease with which the team is applying analytics to their audit work,” he added.