Big data. Analytics. Robotic Process Automation. Blockchain. CFOs have been hearing these buzz words in recent years, but there doesn’t seem to have been actual deployments and outcomes. Is it all hype?
Maybe not. “The companies I’ve spoken to are implementing data analytics, but it’s more an experimentation,” says Alan Young, Global Methodology Leader at EY. However, EY itself is investing heavily in analytics and looking seriously at robotics.
Young and Felice Persico, EY’s Global Assurance Leader, spoke to CFO Innovation’s May May Ho about how EY and its clients are deploying new technologies, the challenges and benefits, and other issues. Excerpts:
What is data analytics and how is it changing the work of auditors and consultants, and the management of your client companies?
Alan Young: From an audit perspective, we’re looking at taking management and financial information [from the client company] and analyzing it to identify if there has been any material misstatements within there, or whether there has been any issues within the transactions that management had performed.
“In a more traditional external audit, it was very much sample-based, and inquiries and observations. We can now capture all the data that the company has processed in the 12 months and we can perform analysis on that”
From the [client] management perspective, analyzing the data will be very helpful to inform decision-making responsibilities and help with forecasting. What we [on the advisory side] have been doing with some companies is help them manage the vast amount of information that sits within different systems and bring that together in a way that they have never been able to do before.
That’s really valuable for a company that’s got a number of legacy systems dealing with both financial and non-financial information.
Felice Persico: Analytics has been there for a long time. What’s new is big data. Once you know you can capture [millions of financial and non-financial data points], you open a new world. With big data you can do many things. You can analyze and then also automate.
Alan Young: For example, in financial services, there is a lot of effort goes in behind the scenes – manual intervention by people moving data from one information system to another, doing third-party reconciliations and checks. The advent of technology and big data analytics is allowing a lot of that to be automated.
You also have robotics software that is automatically moving information from one place to another and that could really streamline the process. This can cut costs in terms of reduction in headcount. That’s really only the start. The ability to implement those types of robotic activity will bring a significant change to business.
For companies that put off the big expense of replacing legacy systems with new systems, what robotics allows them to do is not necessarily replace those systems, but put a layer on top that does that automation. That opens up the opportunity for management to access information in a way they couldn’t before without significant cost to them.
Let’s talk about assurance, both external and internal auditing. Is big data analytics enhancing the quality of your audits?
Alan Young: In a more traditional external audit, it was very much sample-based, and inquiries and observations. We can now capture all the data that the company has processed in the 12 months and we can perform analysis on that. We’re getting better insights and better assurance from the analysis of their performance because we are looking at the actual population.
Analytics also helps improve the relevancy of that audit by enabling us to bring more insights to management about their financial data that perhaps they have not thought about or understood.
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