A key step in establishing internal audit’s analytics program approach is knowing its objectives.
Does your department know what it wants to
achieve with analvtics? This instalment of
“TheAnalytics Journey” series looks to
stimulate internal auditors curiosity about their
departments analvtics program approach. Auditors need to establish why the department wants a program. now the program supports its mission. and now Icrits into the organization.
After all, if auditors do not know what they came to do, and how can they do it.
. “It requires new internal backgrounds to evaluate new erging risk areas,” says Yulia aging corporation of America in chools are producing more audit graduates.
What Do You Want?
The answer to this question will set the stage for everything else internal audit does with the analytics program. It will influence resource allocation, Key milestones and time lines, expected results, and even what auditors are doing and when. Although the answer may be surprising, it will address exactly how the program fits into the organization.
These examples demonstrate a range of potential analytics program objectives. Note how some of these objectives are closely related while being very different from most of the others:
- The program will augment the capacity of the internal audit staff.
- Analytics will drive consistency across projects in the organization.
The program will help internal audit identify and recommend process improvements to its clients.
The program will be perceived as a resource for developing the organization’s analytic efforts.
The program will help internal audit review key financial transactions for signs of fraud, misuse, or abuse.
The program will focus on detective controls to support anti-fraud efforts.
The program will inform internal audit’s risk assessment process and help the department prioritize future projects.
Analytics will monitor performance across the organization.
The program will help internal audit identify changes in performance b a set of specific
processes.
The program will predict changes in performance by specific processes before they affect production.
Reviewing any two of these objective statements
reveals how small variations in the program’s intent would have large impacts on its design and goals. That intent frames who should be involved in the program, what results should be expected, when they should be expected, and how will be they derived. This also reveals why analytic programs from different organizations can be successful while having different designs and obtaining different results. The program’s objective results are unique based on what the department wants from it, and these will evolve over
time.
Can You Have Everything?
What happens when internal audit wants its analytics program to meet all of these objectives? In that case, auditors should keep in mind that internal audit’s objectives can evolve and the department can run parallel efforts with different emphases.
However, as with any job function, the “true North” has to be clear and well aligned between those doing the work and those asking for the work to happen.
What if internal audit wants it all anyway? Then
interna audit must choose to start somewhere keeping in mind the Cheshire Cat’s advice to Alice when she asked for directions: If you don’t know where you are going, then all roads are just as good – or just as bad.
That said, if internal audit takes a couple steps on each road and then changes its mind, it will spend money and time to essentially remain where it started.
Hopefully, the department will learn from each road taken to help it assess its eventual direction, as long as
“exploring” is the program’s intent.
To avoid taking the wrong road, internal audit should consider what success would look like before it commits resources to the program. That clarity will give the department a better idea of how to design and pursue the program, including who to make responsible, how much time and budget to allocate to the program, who else should be involved, and where the effort will be housed.
How Do You Know When the Program Is Working?
A good indication that the program is working is when the department is able to assess whether a proposed new analytic would be a good fit for the program. By understanding how the program fits within the organization and what the department is trying to achieve, internal audit can evaluate whether an idea is worth pursuing, should be referred to someone else, orwould be best saved for later.
The program approach is the most important step on the analytics journey. Once internal audit understands what it wants from its analytics program, it has a real chance of tracing its progress and achieving its objectives.
