The Use of Data Analytics in Auditing Industry: A Research of the Effects of Data Analytics in the Audit Process

Abstract

The main subject of this study is auditing with emphasis on data analytics. Data analytics is an uprising subject in the world of audit, as the society is getting more digitalized, and the data is generated from various channels. As many researches have shown that the digitalization of the data has made the sudden increase in the use of the data analytics in the last 4-5 years. Which is why our thesis statement of the study is “Which effects does data analytics have on auditing compared with the traditional approach.” The purpose of the study is to examine how data analytics and the traditional approach relates to the requirements in the international standards on auditing, as well as the pros and cons. Furthermore, these effects of data analytics and the traditional approach will be compared. To examine and properly answer the study’s thesis statement, a qualitative research method is used to interview auditors working for two of the Big Four. The respondents are auditors from PwC and Deloitte, who both works with data analytics in their respective firms. Based on the respondent’s professional background and competencies, they will positively benefit the study and the statements that are made in the paper. In conclusion some of the pros when using data analytics are, that when using sample testing, it is less time consuming and more effective. One of the cons is that it is still under development with a big untapped potential. This means that old, as well as new, auditors needs to be educated in the use and understanding of these data analytical tools, which can be both expensive and time consuming. The most essential challenge with utilizing data analytics is the fact that it does not fit the international standards on auditing as well as the traditional approach. However, the analysis reveals that it is not impossible for an auditor to accommodate the challenges of the international standards on auditing, by performing further audit procedures. Some of the measures taken by the auditor are, among other things, to carry out other external confirmation of the client’s data, plan the use of the data analytics and to implement the results to the audit.