What is the next move for audit firm with big data?

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Are you on the move or will the big data challenges push you as an auditor?

By Maina Wanjau

They say that big data is the new oil in the economy. Big data has been defined by experts as any data that meets the 3 V’s characteristics; Volume- Large data from many sources that would pose a challenge to a company in storing or processing it, Velocity- data created over a very short period and that
companies need to respond to in real time, and lastly, Variety – referring to different forms or types of data.

In summary, big data refers to a large volume of data, which can be structured, semi-structured or unstructured, and that is generated within a very short period of time. Over 90% of big data was
created in the past 2 years, implying that technological advancement in the world is transforming the way things used to be done in the past. We are now in the digital age where innovation is the basic
way of doing things. Companies are now embracing emerging technologies like Robotics Process Automation (RPA), Artificial Intelligence (AI), Blockchain, and Cloud servers to enhance data security. Large volumes of data are being created in the blink of an eye. According to the sixth edition of DOMO’s research
report, over 2.5 quintillion bytes of data are created every single day. It is estimated that 1.75MB of data will be created every second by every person on earth by 2020. The big question is, what’s next now that
you have created large volumes of data for your organization and stored it securely in the cloud?

Big data can only be compared to oil that is still in reservoirs and is not of any help to those who have created the wealth. The oil in the data will remain a theory if the parties involved do not plan to mine
the data. Companies will remain labourintensive, trying to capture all relevant data and store it in expensive infrastructure in the name of databases, but the data will remain irrelevant if it cannot be analysed
and used to generate insights for the use of the management in decision making. Many companies are struggling to be profitable and remain profitable. Others are struggling to maintain proper liquidity
ratios for better operations. With proper data analysis, companies are in a better position to make executive decisions driven by insights from information generated from the analysis, as opposed to the
traditional way of making decisions based on individual experiences and skills.

However, big data poses challenges to companies that own the data. These include analysing the data to generate insights, maintaining data security, maintaining quality data and managing data growth.
Big data does not only pose challenges to the owners of the data, but also poses challenges to the consultants that companies hire to offer professional services and advise management at different
levels. Some of the key challenges to the consultants include but are not limited to; obtaining or extracting quality data from clients’ databases, capacity to invest in the right tools to extract, transform and process
the data, obtaining and maintaining human resources with the right talent to process the data, capacity to securely transfer and store the data, timely processing and sharing insights with clients. For audit
firms with the Big Data Challenges, this then presents the question “what next?”

For a consultancy firm offering audit services, the key questions to respond to the challenges would be: “Do we have the necessary capacity to offer the digital audit services that big data demands?”, “How do
we drive efficiency in our service offering with the opportunities that big data offers us?”, “How do we improve audit quality and meet the ever-increasing expectations of stakeholders?” and “Do we have the
capacity to store the data securely without compromising client’s data privacy?”.

With the key questions in mind, audit firms would need to carry out an assessment of capacity in terms of human resources with the right technical skills, tools that the firms have invested in to carry out data extraction, transformation, loading and processing, technical expertise to handle statistical analysis and derive insights for clients.

Audit firms need to maintain a stable portfolio of human resources with the technical know-how to handle big data hat clients share year on year. There should be value addition to clients by (audit) firms from the data analysed. To maintain a portfolio of the right resources, with the highest percentage of the current work force being millennial would require firms to be more intentional in hiring the right people in the relevant fields, especially science, technology, engineering and mathematics (STEM). These resources would complement the work force with qualifications in the accountancy discipline.
To drive the agenda of digital audit using big data, the resources must have the right attitude and self-drive in delivering the transformative audit services in this digital 34 JANUARY- FEBRUARY 2020 THE ACCOUNTANT age. Empowering the millennials with the right skills and giving them the freedom to explore their talents and interests within the work ethics is the greatest asset to possess and firms should strive to retain these at all logical cost. Possessing the right blend of resources would offer firms competitive advantage in the market.

For a consultancy firm offering audit services, the key questions to respond to the challenges would be: “Do we have the necessary capacity to offer the digital audit services that big data demands?

To drive efficiency, firms must invest in the right tools that can be used by the consultants in analysing
data at a faster rate, as opposed to the traditional way of analysing data. As they say, big data is for machines and small data is for people. Big data can easily be processed using tools that are
human friendly with proper training. With advanced technologies like AI and RPA, consultancy firms have
developed tools that can process data relating to a whole year in less than 8 hours. Firms need to assess their digital assets and how they have employed technology and innovation in service delivery and how routine processes can be automated. Audit teams now need to stop spending most of their time
extracting and processing data and start analysing the data more to drive trust and value with their clients. They should let the data do the work for them rather than working for the data to drive efficiency.

With the right approach to the changes in the audit profession and the right investment in human
capital, technology and innovation (both tangible and intangible assets), the mining of big data would be
the differentiator in the market. The question is

“what is your differentiator in the market and what the next move is”

Out of the promises that you have made to your clients in the audit plans, how far are you from achieving the full benefits of a digital audit? Can the client see any additional value in your reports? Is your audit digital in reality or is it digital theoretically?

With the current digital transformation taking place, audit firms need to evolve and innovate with time. They need to be intentional in ensuring there is continuous and timely learning for their staff. With
the right investment, audit firms should expect efficiency and improved quality of services, with a change from a traditional audit to a digital audit approach. There would be a feeling of value for money received by companies as they would experience efficiency in service delivery, as well as relevant feedback and insights that would be used in improving processes and making data-driven decisions. There would also be enhanced confidence in financial reporting with a better understanding of trends and patterns. Where anomalies have been identified during trend analysis, investigations could be done to obtain a better
understanding of any gaps in client’s financial reporting processes.

Thus, the oil in big data will remain a theory in your conversations until you get value in the form of efficiency in service delivery, better conversations with clients and improved quality of audit files. For transformation to take place in the audit profession in this innovative age, auditors need to be more enthusiastic in the subject of data science and acquire skills in data visualization and data analytics.

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