In comments made to AccountantsDaily, Peter Russell, D&A leader at KPMG, noted that audits are no longer started “with a blank sheet of paper”, as data analytics allow auditors to monitor transactions year round.
Mr Russell credited an increase in the availability of data, technology, and a rise in processing power as the catalyst for the shift in the auditing process.
The ability to identify outliers and large movements in data as a result of newly developed investigative routines and algorithms are key advantages of the recently evolved process, according to Mr Russell.
“Data-driven audits can mitigate your risks a day by showing back to you how your business is performing against the risk framework that you've set,” he said.
“This changes the relationship between the auditor and the client from a reactive to a proactive one,” Mr Russell added.
According to Mr Russell, auditors are now “armed” with data and analytics evidence, allowing a much deeper knowledge of the ins and outs of the business operations.
“We can drill down into particular transactions to discuss things in a bit more depth than we were able to previously,” he stated.
“We’re not just taking this information from you, we’re analysing your information and engaging in a two-way conversation that we've never had before.”
When questioned as to the future direction of audit, Mr Russell noted that predictive analytics would help auditors and their clients to act pre-emptively in response to discrepancies in data.
"There’s predictive analytics around future performance, as well as identifying areas of potential risk within the portfolio within the organisation that management need to keep their eye on,” Mr Russell concluded.