In the course of the digital transformation in companies, auditors increasingly have complete digital access to data relevant to financial statements. Data analysis is thus becoming increasingly important within the audit of financial statements, but also for internal audits during the year. With the increasing amount of data being produced in companies, a higher degree of automation for process audits is becoming necessary. In addition, auditors are faced with the challenge of evaluating and mastering the right tools for data analysis so that they can perform their work as efficiently and reliably as possible.

In this article, we will use a concrete audit action to show how this can be done with the data analysis tool Alteryx Designer can be automated, faster and easier.

1. Benefits of data-based audits

Before the age of modern data-based audits, entire batches of documents or individual electronic files had to be worked through manually. Today, there is hardly a company in which the business processes are not mapped in an ERP. The data from this is available in structured form and thus forms the ideal basis for digital data analysis.

Excel is not the right tool for the data analysis of audit activities with large data volumes, error-prone formulas and those that are repeated exactly every year or with a similar logic. For that, you need a tool that specializes in data analysis, like Alteryx Designer.

Alteryx can effortlessly and quickly process very large amounts of data (several million records). This is relevant for business areas where large volumes of transactions are processed automatically. We will see this in our following example of point-of-sale transactions.

With the right toole, the coverage of the population can be efficiently increased. This improves audit reliability. In Alteryx, workflows can also be used to automate extensive manual audit processes and easily change them over and over again. Alteryx's toolbox includes nearly 200 data analysis tools that can be applied with simple drag and drop. Alteryx significantly increases data literacy while making it easier to work with data.

2. Application areas

Data-based analysis can support the following activities within the annual audit or audits within an internal control system (ICS), for example:

• Gain a better understanding of business areas
• Visualization of complex issues
• Defining a meaningful audit strategy
• Understanding the risks and developing the audit program
• Identification of individual outliers
• Automated audit of controls

Example audit of cash transactions 

Using Alteryx, we want to investigate the following audit question:

Were there any point-of-sale transactions in the POS on days when the outlets were closed?

To do this, we have developed the following workflow using Alteryx:

For the workflow, we performed the following steps:

Advantages in this example with Alteryx:

• Large amounts of data (over 30 million records) can be processed effortlessly.
• Speed: Due to an optimized calculation engine, calculations are performed in fractions - compared to Excel, valuable time can be saved.  
• Standardization and automation: This workflow can be easily reused the next time it is used, e.g. in the following year.
• Traceability: By means of clear documentation of the workflows, other employees can also directly use the preliminary work.
• Flexibility: Nevertheless, the workflow can be extended or adapted as required. But even within an ICS, the audit can be performed several times during the year as a progress check.

These advantages lead to a significantly higher efficiency in handling and analyzing data compared to alternative solutions such as Excel.

3. More application examples

This makes it easy to carry out a wide variety of test actions. We would like to list a few more here:

• Select randomized sample from population 
• Automation of annual KPI's from certain business areas: e.g. ratio of sales and revenue reduction (fraud by personnel or when lowering prices etc.)
• Checking compliance guidelines: e.g. whether all orders over defined amount have been approved by a second person with certain functional level
• Reconciliation of data from invoices and whether there was a matching goods receipt posted for each one
• The company has implemented controls over master data changes.  By analyzing the change tables in the system, it is possible to check whether master data changes, such as mutations in sales prices, were made without a second visa.

4. Conclusion 

Auditors and internal auditors have to deal with an increasing amount of digital data in their daily work. Large audit institutions are already using Alteryx - for those who are not yet, it is high time to meet this change with the support of a data analysis tool. Alteryx can basically support any inspection activity by applying the analysis tools. In addition, testing processes can be easily automated. The traceability of the workflows also allows others in the team to benefit. The correct selection and application of a data analysis tool significantly increases audit quality and thus security, as well as efficiency in handling data.

Would you like to learn more about how Alteryx can support you in your auditing activities? We would be happy to show you how Alteryx can support you using one of your specific examples.

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