For years, auditors have been able to get by leveraging traditional methods like interviews and workshops to conduct successful company audits. However, as more and more business processes become digitized, today’s auditors are finding they need to move beyond strictly traditional analytics – to advanced analytics offerings such as Process Mining.
The reality? Big data is changing the way organizations operate, and internal audit departments can’t afford to be left behind. As business processes continue to become more digitized, auditors feel the pressure to leverage in-depth analytics to gain insights into the inner working of those processes, rather than simply base audits on a small sample of data.
Conducting an audit based on more accurate information can help streamline approvals, timelines, exceptions and violations in order 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?
Process Mining: An Auditor’s Best Friend
Process Mining leverages the digital event logs in a company’s existing IT systems to create a visual reconstruction of the business processes in an organization. This allows the internal audit department to easily visualize and analyze processes like purchase-to-pay, order-to-cash, production and logistics, to achieve 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 the 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.
Where Can Process Mining Support Internal Audit?
Process Mining can support the internal auditing process all the way from the preparation stage to the reporting stage, as it helps benchmark process execution to set the right focus for the audit upfront. With the goal of improving processes and avoiding business risk, Process Mining helps:
● Reduce Compliance Costs:
Uncover hidden inefficiencies and bottlenecks to reduce compliance costs, as well as the cost for auditing itself.
● Increase Speed:
Gain access to real-time surveillance of business transactions and fast results due to proactive insights and fast root-cause analysis.
● Boost Efficiency:
Make use of pre-defined analyses for an easy and professional reporting mechanism.
● Achieve Higher Quality:
Provide high precision and full transparency of all running processes to ensure every non-compliant process is caught.
Real World Success
Need more proof? Let’s look at how one internationally leading technology enterprise with over 20,000 employees worldwide used Process Mining in the internal audit process to improve the organization’s order-to-cash process. With Process Mining, the organization was able to see that 55% of credit checks were non-compliant – as the same person was both approving the credit check and crediting the invoice, which was against compliance guidelines. With this new insight, the organization moved to ensure the segregation of duties, which requires more than one person to complete or fulfill an activity or task, and in turn move towards achieving a rate of 0% on non-compliant credit checks.
Another example of how Process Mining benefited an organization’s internal audit surrounds a leading service provider in the telecommunications industry with over 100,000 employees. Process Mining alerted the telecommunications provider that more than 1,000 purchasing orders without approval were found in the system. This can create a major problem in the purchase-to-pay process, if no purchase order was set up, or if there is an incorrect or unapproved purchase order, which can lead to error-prone buying activities. Since approval of purchase orders is important to adhere to compliance standards, the telecommunications provider implemented Process Mining technology to ensure that all purchase orders without approval are avoided and adjusted immediately.
Creating a Vision for Audit
With Process Mining as a foundation, auditors can become the digital leaders in the organization. Through simplifying processes, automating mundane tasks and transforming operations, auditors can be seen as the preemptive minds – proactively monitoring the issues that could drive significant business risk. Auditors shouldn’t be afraid to use the machine learning capabilities to transform the audit game as we know it – preemptively auditing 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 capabilities to keep up in today’s digital world?Back to the blog