Data Analysis and Data Integrity – part #1

A common refrain that I hear is, “We can rely on the data because it does not have integrity.” This raises a couple of questions in my mind and should in yours as well.  First, what is management using to produce its reports and make decisions?  Second, how accurate does your data have to be to allow you to perform analytics and arrive at valid recommendations/conclusions.  The obvious answer to…

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Duplicates Invoices – Root Cause Analysis

Cost recovery firms make millions of dollars identifying and recovering duplicate payments.  They often have well developed analytics that can identify duplicate payments while reducing the number of false positives.  You will pay 25-50% but you are getting money back, so it feels like a win-win.  However, there are two things to keep in mind: 1) they go after the low hanging fruit and the largest possible duplicates; and 2)…

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Better Audit Reports

Here are my top eight best practices for creating better internal audit reports that hit the mark: Audit Objective: ensure that the audit objective addresses the risks to the goals and objectives of the organization.  It should drive the risk identification and assessment; and be a foundation for the audit workplan and the conduct of the audit.  And ultimately, is it the statement upon which the audit concludes. Audit Workplan:…

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Audit Finding Attribute: Recommendation

This is the seventh in a series of articles on data analytics and internal audit. This article looks at the audit finding statement: recommendation. The focus will be on the use of data analytics to assist you in determining the recommendation. In simple terms, the recommendation is the action that management should take – putting in a control, changing a business process, etc.  If the other components of the finding…

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Audit Finding Attribute: Impact

This is the sixth in a series of articles on data analytics and internal audit. This article looks at the audit finding statement: Impact. The focus will be on the use of data analytics to assist you in determining the impact of what was observed (the condition) and to support the recommendation. In simple terms, the impact answers the ‘why should I care.’  What is the impact of controls failing…

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Audit Finding Attribute: Cause

This is the fifth in a series of articles on data analytics and internal audit. This article looks at the audit finding statement: Cause. The focus will be on the use of data analytics to assist you in determining the cause of what was observed (the condition) and to support the development of the recommendation. In simple terms, the cause answers the ‘why.’  Why are controls failing to prevent and/or…

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Audit Finding Attribute: Condition

This is the fourth in a series of articles on data analytics and internal audit. This article looks at the audit finding statement: Condition. The focus will be on the use of data analytics and how the condition supports the development of the recommendation. In simple terms, the condition is “what is.” Typically, the analytics are testing for the existence of something, and the results are the condition. For example,…

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Audit Finding Attribute: Criteria

This is the third in a series of articles on data analytics and internal audit.  This article looks at the audit finding statement: Criteria.  The focus will be on the use of data analytics and how the criteria play an important role in the development of analytics to support and inform the audit. IIA Standard 2210.A3 states that “adequate criteria are needed to evaluate controls.”  Simply put, the audit criteria…

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Data Analytics and Internal Audit

This is the next post in a series that discusses the importance of having a proper audit objective, defining the business goals and objectives, and the risks to the achievement of those objectives.  This article will discuss the identification and assessment of risk.  The next series of articles will look at the audit finding statement: Criteria, Condition, Cause, Impact and Recommendation.  The focus will be on the use of data…

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Analytics – Pet Peeves

As a promoter of data analysis for fraud, internal controls, and audit for more than 30 years, I am often asked, “Which software tools or application should I use?”  While I have packages that I have used for 30+ years, and am a co-founder of an data analytics service provider (WWW.CTRLmatters.Com) , I hesitate to answer the question.  The capabilities and robustness of data analytics are changing very quickly, and…

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