Future of audit with Big Data & Analytics
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'Big data' is an extremely large data sets of company that may be analysed computationally to reveal patterns, trends, and associations that will dramatic impact on enhancing productivity, profits and risk management.
Cheers to a great innovation, which has now opened the doors for auditors to better identify financial reporting, fraud and operational risks. Big data and analytics have now been enabling auditors in making their audit more comprehensive and relevant.
Barriers: Merging Audit to Big Data AnalyticsThere are a number of barriers to the successful integration of big data and analytics into the audit, though they are not insuperable.
Gathering Data! Its not that easy as it seems. Auditors encounter 'n' number of accounting systems and some times multiple systems in same group of companies, makes it a challenging task for auditor to extract such a voluminous data.
Analytics! Existing level of of knowledge that auditor's have been applying till now may not be contemplate to analyze big data.
In Indian Context, SA 240- "Auditor's responsibility relating to fraud" deals with substantive analytical procedures. However this standard have not covered Big data based analytics to provide "substantive evidence"
Further, SA 500 to 599 covered under "Audit evidences" holds third party evidence at the top and management inquiries at bottom in hierarchy of evidences. But none of the standard have indicated what type of evidence are generated from Big data analytics.
SA-315- "Identifying and assessing the Risks of Material Misstatement Through Understanding the Entity and Its Environment" requires an auditor to detect material misstatement. When companies record revenues amounting to billions of dollars and users of the financial statements expect them to be free of material misstatements, what level of precision do the auditors require of their data analytics?
Ultimately, the audit of the future could look quite different from the audit of today. But to achieve this transformation, the profession will need to work closely with key stakeholders, from the businesses they are auditing to the regulators and standard–setters.
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