Future of Big Data in Audit
As audit firms look to invest in big data, it will be even more critical to understand the implications of using big data and analytics on the audit profession. There are multiple ways in which data analytics would enhance the effectiveness and efficiency of external audits. From looking at the complete population, to finding trends, to allowing employees to do less routine tasks, there are multiple ways big data benefits audits. Big data would also enhance critical procedures performed for the sales and collection cycle. These benefits are not without some drawbacks that would need to be addressed by the profession. There are many ways in which data analytics can enhance external financial statement audits. First,
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If auditors can look at a complete population, they may not have a great defense if they missed a “smoking gun” since they looked at all the data (Alles and Glen). However, this data may not be valid which raises the importance of the auditor understanding where the data came from and how reliable it is. Not only this, it will be interesting to see how standards consider big data evidence. While it most likely will not be as reliable as confirmations, it would be a challenge to figure out how much the auditors could rely on it. Furthermore, higher education would most likely play a role in helping their graduates understand data and how to use technology to be not only more efficient but also ensure they are able to use sound professional judgement while using big data. The implementation of big data into the audit profession will be welcomed considering the current business environment. While there are some drawbacks, big data has a role in audits. The main questions that will face the new wave of auditors will be in which ways and how big data can be used in the audit program. It’s clear that auditing standards, clients, firms, and higher education will all have to address these issues in the near future as audit adapts to the potential of big
Individual Article Review Lily Cobian LAW/421 March 31, 2014 Ramon E. Ortiz-Velez Individual Article Review Introduction My article review is based on Sarbanes-Oxley and audit failure, a critical examination why the Sarbanes-Oxley Act of 2002 was established and why it is not a guarantee to prevent failure of audits. Sarbanes-Oxley Act talks about scandals of Enron which occurred in 2001 and even more appalling the company’s auditor, Arthur Anderson, found guilty of shredding company documents after finding out Enron Company was going to be audited. The exorbitant amounts of money auditors get paid to hide audit discrepancies was also beyond belief. The article went on to explain many companies hire relatives or friends to do their audits, resulting in fraud, money embezzlement, corruption and even the demise of companies. Resulting in the public losing faith in the accounting profession, the Sarbanes-Oxley Act passed in 2002 by congress was designed to restrict what company owners and auditors can and cannot do. From what I gathered in the article, ever since the implementation of the Sarbanes- Oxley Act there has been somewhat of an improvement but questions are still being asked as to why there are still issues that are not being targeted in hopes of preventing more audit failures. The article also talked about four common causes of audit failure: unintentional auditor mistakes, fraud, fatigue and auditor client relationships. The American Institute of Certified Public Accountants (AICPA) Code of Professional Conduct clearly states an independent auditor because it produces a credible audit, however, when there is conflict of interest, the relation of a former employer, or a relative or even the fear of getting fire...
As quite data, we tend to use to assist and result in the acceptable call within the business ought to be consistent and dependable. On contrary, the knowledge that isn't reliable will result in injury and ineffective use for the resources of the corporate, unhealthy and damage result to the business and influence its higher cognitive process. To avoid unreliable data and wrong higher cognitive process and to confirm the accuracy within the work in step with the foundations and rules, there should be what's referred to as proof or (Audit), which is handled by freelance and qualified individuals. From all of this, we will acknowledge the importance of auditing method for all businesses. Within the corporations, the auditoris required to state clear opinion, if or not the annual accounts offer the truthful sight concerning the state of the corporate and its money position. To precise the opinion, the auditors shouldmeasure the register of the business, examine its assets and transactions. Altogether cases, the auditor ought to perform his job with due skilled care and high skil...
In short, the Big Data challenges for organizations and enterprises in today's digital age. Once mastered big data, they will have greater chances of success in today's competitive environment, the world would benefit more from the extracted information more accurately, more useful lower costs. Still the criticism revolves around Big Data, however, the field is still very new and we'll see in future Big Data will evolve like.
According to the article authored by Mark Rupert, what are the seven best practices in the roles and responsibilities of an internal audit function?
Auditing is in the challenging position with the emerging technologies and real-time approach in doing business. The audit is a complex activity; this profession has been through many significant changes over the time. The changes that were important for auditing to be updated with the changing business environment. All the changes were done as per the requirements of the legislation that shaped the auditing profession. The main purpose of this paper is to examine what different legislations and how the legislation shaped the audit profession over the past century.
Financial and Managerial accounting are used for making sound financial decisions about an organization. They provide information of past quantitative financial activities and are useful in making future economic decisions. (Albrecht, Stice, Stice, & Skousen, 2002) The same financial data is used to derive reports for each accounting process yet they differ in some ways. Financial accounting primarily provides external reports for external users such as stock holders, creditors, regulating authority and others. (Garrison, Noreen, & Brewer, 2010) On the other hand Managerial accounting is concern with providing information that deals with the internal viability of the organization and is tailored to meet the needs of an individual organization. (Albrecht, Stice, Stice, & Skousen, 2002)
Reducing the risk of misstatements in your financial statements caused by fraud or error is the key to gaining the trust of your donors. Azadzoi Auditing Company is pleased to propose auditing services to your non-profit organization to help you become a trustworthy organization for your donors.
Companies have transformed technology from a supporting tool into a strategic weapon.”(Davenport, 2006) In business research, technology has become an essential means that many organizations use in their daily operations. According to the article, Analytics is a major technological tool used. It is described as “the extensive use of data, statistical and quantitative analysis, explanatory and predictive models, and fact-based management to drive decisions and actions."(Davenport, 2006) Data is compiled to enhance business practices. When samples are taken, they are used to examine research and understand how to solve problems or why situations are as they are. Furthermore, in this article, Thomas Davenport discusses analytics from a business standpoint. He refers to organizations that have been successful in their usage of data and statistical analysis. In addition, he also discusses how data and statistics can be vital in the efforts to improve the operations of businesses.
In today’s society, technology has become more advanced than the human’s mind. Companies want to make sure that their information systems stay up-to-date with the rapidly growing technology. It is very important to senior-level executives and board of directions of companies that their systems can produce the right and best information for their company to result in a greater outcome and new organizational capabilities. Big data and data analytics are one of those important factors that contribute to a successful company and their updated software and information systems.
Internal auditors are necessary in the organization to ensure that policies and business processes are effectively implemented. They are vital in achieving organizational goals and used by management to safeguard the company’s resources, to evaluate the accura...
The major characters of the tradition audit are all information what is needed by auditors are on the paper and the manual calculators and without high communication technology. Auditors usually were limited by the place in the paper time. When a several people are working on the same auditing project for a client with offices in cities across the country, even worldwide, it takes a lots all time those auditors get the information which they need from the client, even there is risk paper information disappear for many reasons. on the another hand, mail paper information increase the auditing cost. The mistake caused by the manual calculators inevitably, no matter how fixed auditors concentrate on recalculate is, after all auditors are human. The global business become major in the modern business world, some example, several auditors who are in different locations are working a same auditing project, or auditors are in different city even country with the client, when there is issue among these auditors or between auditors and client, they only can communicate with each other by phone or be together and have meeting. Phone call can not make sure information been watched in the same time when the voice is talking about the issue, but having a meeting takes time and money make all people together, it increases auditing cost.
Big data is a concept that has been misunderstood therefore I will be writing this paper with the intentions of thoroughly discussing this technological concept and all its dimensions with regard to what constitutes big data and how the term came about. The rapid innovations in Information Technology have brought about the realisation of big data. The concept of big data is complex and has different connotations but I intend to clarify its functions. Big data refers to the concept of a collection of large and complex amounts of data that are found extremely difficult to notate or even process by most on-hand devices and database technologies.
Salehi (2009) states that external auditors have a role to monitor the performance of the company on behalf of the shareholders to ensure the truth and fairness of financial statements by giving an independent audit opinion. Thus, reducing the risk of management manipulation, concealment and boosts the credibility of the financial information provided for
Auditing has been the backbone of the complicated business world and has always changed with the times. As the business world grew strong, auditors’ roles grew more important. The auditors’ job became more difficult as the accounting principles changed. It also became easier with the use of internal controls, which introduced the need for testing, not a complete audit. Scandals and stock market crashes made auditors aware of deficiencies in auditing, and the auditing community was always quick to fix those deficiencies. Computers played an important role of changing the way audits were performed and also brought along some difficulties.
Adopting big data can also help the banking industry by saving them from lots of embarrassment resulting from increase in the number of customer which in turn requires banks to improve on their performance. As stated earlier banks are entrusted with lots of information and this information must be safe will be required to be accessed ready and in a timely fashion. The use a normal small database will not be enough to perform this operation and if banks don’t embrace the use of big data they might start to experience failure in there system.