Leveraging Data Analytics to Enhance Internal Audit Effectiveness Shane Kenney PwC, LLP

Agenda The power of audit analytics What we’re seeing in the market When and where should we use audit analytics? Data analytics for key business areas Data visualization overview and concepts Question and answer session * Discover innovative ways to integrate data analytics into your audit programs. * Explore tests that you can develop to search for potential fraud, waste and abuse. * Expand your audit knowledge by understanding the potential impact of data analytics. * Learn how you can support your company's governance functions through data analytics.

The power of audit analytics Overview Market When & Where Key Business Areas Data Visualization

What is audit analytics? The process of utilizing data to gain deep insight into business processes to facilitate the audit process of an organization. Repeatability Action Relevance Assurance Ask how each of these will impact auditing in your organization? Assurance: Greater assurance over a broader areas of your organization. Repeatability: Ability to leverage these tests over several audit cycles to monitor improvement. Initial invest; cost recovery Relevance: Get at the heart of current issues in a timely manner Action: Gives management the details to support change within their organizations. Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

Analytics value & maturity What Happened? How Much/Often? Why is it happening? Will this trend continue? Most likely to happen? What’s the ideal state? Standard Reporting Ad-Hoc Reporting Statistical/Targeted Analysis Forecasting Predictive Modelling Optimization Degree of Analysis Degree of Intelligence Mastering “What”, “How” and “Why” has become a necessity for Audit Adapted from “Win With Advanced Business Analytics: Creating Business Value From Your Data” by Jean Paul Isson and Jesse S. Harriott Floor Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

Technology is changing how we audit… Opportunities Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

Value proposition The implementation of data analytics within a well-defined internal audit plan will yield significant value across many functional areas Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

What we’re seeing in the market Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

PwC 2013 state of the profession survey Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

Where are Internal Audit organizations today? Assess where your organization is in this continuum? Goals should be to gradually advance to the next level Emphasis should be on progression AND maintenance Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

When and where should we use Audit Analytics? Overview Market When & Where Key Business Areas Data Visualization

Overview of Audit Analytics Within the traditional audit analytics lifecycle Specific controls testing analytics are prevalent in many organizations; Planning and monitoring are areas where many organizations stop for a variety of reasons; organizational, data availability, dollar amount Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

Auditing life cycle – Risk assessment Analytics within the risk assessment process can be used to assist in designing and developing quantitative risk metrics localized to a business unit or process, or to cross-reference risk across the audit universe Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

Auditing life cycle – Audit testing Analytics used throughout the audit testing cycle including planning, assessment and delivery Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

Auditing life cycle – Monitoring Analytics within monitoring is used to operationalize regular reporting of Key Risk Indicators (KRI’s) however other KPI’s and dashboards focused on controls and performance are being considered based on audit focus Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

Leverage analytics earlier in the audit process Traditionally, audit analytics teams have assisted during the fieldwork process Analytics teams can work more effectively with Audit teams in the preliminary stages by Creating Self Service Analytic packages for use by auditors within scoping Obtaining data sets before fieldwork to help create focus areas Can be done with minimal Analytics team involvement using self-service capabilities Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

Information management – Leading practices Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

What are success factors of leading IA functions? Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

Analytics skills and tools– Leading practices Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

Data oriented culture – Leading practice Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

Leading industry technology solutions Major vendors within the audit analytics space To have an effective audit analytics program for a complex organization, there is no “one size fits all” for technology. An analytics toolbox is necessary to bring the highest value Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

Data analytics for key business areas – some examples Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

Data analytics for key business areas – T&E Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

Data analytics for key business areas – Procure to Pay Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

Data analytics for key business areas – Order to Cash Other areas: Inventory – obsolescence, warehouse levels Pricing – price changes Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

Anti-Fraud Controls Can Make a Difference Median Loss Based on Presence of Anti-Fraud Controls The ACFE’s 2012 Report to the Nation Partnering with management to allow them to monitor and review their organizations can greatly assist decreasing loss. Source: www.acfe.com/RTTN/ Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

Data Visualization Overview and Concepts Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

- Andy Kirk, “Data Visualization – a successful design process” Visual Analytics Visual Analytics is the representation and presentation of data that exploits our visual perception abilities in order to amplify cognition - Andy Kirk, “Data Visualization – a successful design process” Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

Value of Data Visualization More impactful messages to management in reports; within audit plans Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

Value of Data Visualization Ability to “notice” causal relationships between data discrepancies. Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

Data Visualization is Everywhere Adding geographic dimension can assist in determining operational effectiveness. Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

Data Visualization Tools Large amount of players in the market place based on individual organizations needs. Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

Data Visualization Examples Associative analysis Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

Data Visualization Examples Dashboarding and other high-level analysis Audit Analytics Overview Market When & Where Key Business Areas Data Visualization

Question & Answer Session Contact information: Shane Kenney, Risk Assurance PwC, LLP 500 Woodward Avenue Detroit, MI 55402 #313.394.3259 (office) #703.395.2648 (cell) shane.r.kenney@us.pwc.com © 2013 PricewaterhouseCoopers LLP. All rights reserved. PwC refers to the United States member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.