For years, auditors have used traditional methods like interviews and workshops to conduct successful company audits. As more and more business processes become digitized, however, auditors are finding they need to move beyond strictly traditional analytics to advanced offerings such as process mining.
Why? Big data is changing the way organizations operate, and internal audit departments can’t afford to be left behind. The exponential growth in data means an exponential need for analysis, putting pressure on auditors to gain insights into the inner working of those processes, rather than basing audits on a small data sample.
Process mining leverages the digital event logs in your company’s existing IT systems to create a visual reconstruction of the business processes in your organization. This allows your internal audit department to easily visualize and analyze purchase-to-pay, order-to-cash, production and logistics processes, and gain complete transparency into how these processes are working in real life.
With the data visualization component of process mining, the latest machine learning and artificial intelligence algorithms easily guide an auditor through the analysis, pointing out compliance issues and inefficiencies along the way, as well as providing a full automated root-cause analysis with prescriptive, proactive recommendations. Simply put: think of process mining as your auditor’s personal MRI of the organization, providing unbiased visibility and diagnostic capability, in real time.
Conducting an audit based on more accurate information can help streamline approvals, timelines, exceptions and violations to improve business processes and avoid business risks. So, the question becomes: How can your organization capitalize on the wealth of data now available—from your own business activities as well as external sources—to help internal audit generate valuable new insights and increase efficiency?
From preparation to reporting stages, process mining helps benchmark process execution and set the right focus upfront for your audit. With the goal of improving processes and avoiding business risk, process mining helps optimize a number of factors.
Reduce Compliance Costs: Uncover hidden inefficiencies and bottlenecks to reduce compliance costs, as well as the cost for auditing itself.<!— htmlmin:ignore —>
Increase Speed: Gain access to real-time surveillance of business transactions and fast results due to proactive insights and fast root-cause analysis.<!— htmlmin:ignore —>
Boost Efficiency: Make use of pre-defined analyses for an easy and professional reporting mechanism.<!— htmlmin:ignore —>
Achieve Higher Quality: Provide high precision and full transparency of all running processes to ensure every non-compliant process is caught.<!— htmlmin:ignore —>
Need more proof? One internationally leading technology enterprise with more than 20,000 employees worldwide used process mining to improve their order-to-cash process. They uncovered that 55% of credit checks were non-compliant—the same person was approving the credit check and crediting the invoice—which was against guidelines. Armed with this insight, the organization enforced a segregation of duties, requiring more than one person to complete an activity, and in turn move toward a 0% rate on non-compliant credit checks.
As another example, a leading telecommunications service provider with more than 100,000 employees used process mining to discover over 1,000 purchasing orders in their system without approval. Since approval of purchase orders is important to meet compliance standards, the company was able to make adjustments to avoid future risk.
Auditors shouldn’t be afraid to use machine learning to transform the audit game as we know it. With process mining as a foundation, auditors can become digital leaders in their organizations. Through simplifying processes, automating mundane tasks and transforming operations, auditors could be further seen as the preemptive minds of an organization—proactively monitoring issues and avoiding business risk before it even occurs.
There’s no denying it—big data has transformed the way organizations operate, and it’s imperative that internal audit departments aren’t left in the dust. So, it’s time to ask yourself, does your internal audit team have the capability to keep up in today’s digital world?