Data analytics and fraud

Tina Egebjerg Fog & Hatice Göbel Aygar

Student thesis: Master thesis

Abstract

This thesis provides an analysis of how auditors use data analytics within the audit process, as well as how data analytics is used by auditors to detect fraud.
The thesis includes interviews with respondents from different audit companies, to get an all-round view of the audit industry, and the auditors view on data analytics and fraud.
The report finds that there are large differences among the audit companies in the industry. The differences relate to differences in the understanding of what the concept of data analytics are, and how far the companies are in implementing data analytic tools. The report shows that the big four audit companies are significantly further ahead, when it comes to the use of technology in auditing. Data analysis in small and medium-sized audit firms is mainly limited to analysis performed in Excel.
Furthermore, the report shows that the audit companies perform many of the same analysis during the audit, but the complexity, and the level of detail in the analysis is significantly more limited, for those companies using Excel as a tool, compared to big four companies, who use both globally and locally developed analytical programs.
Fraud has major consequences for companies, society, investors, suppliers and employees. 47% of companies have been exposed to financial crime, and external auditors only discover about 4% of all reported fraud cases. This poses the question, on whether auditors do their job well enough, or whether they could do more, when it comes to detecting fraud.
General analysis are performed, with the purpose of finding significant errors. Significant errors can be both unintentional and intentional errors, including fraud, but the companies do not perform specific searches for misuse of assets or accounting manipulation unless, there is a suspicion of it or for committing unforeseen actions.
The thesis concludes that even though there is a large implementation of technology and data analytics in the financial audit, the auditors focus towards fraudulent behavior is limited. This seems to be due to the interpretation of the international audit standards.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2020
Number of pages118
SupervisorsKim Klarskov Jeppesen