Read Example2 and explain your take away. Add additional information. Your document should include minimum 200 words plus credible references.
Analytical tools for auditors
Data analysis is an integral business practice, but it is vague to the auditor on how to leverage data using the numerous data analytical tools. Data analytical tools are essential to the auditors because they help auditors analyze financial statements and give various insightful information regarding the organizations’ financial health. Auditors use Excel, IDEA, and other analytical tools for analyzing the financial statements, which aids in making a different decision regarding the business. Data analytical tools help improve the quality of the audit, and thus, they are used by the auditors to maintain the accuracy and quality of the audit process. This post will delve into the type of analytical tools used by the auditors, give the analytical tools’ limitations and advantages, and finally give recommendations on the appropriate analytical tools among them.
The data analytical tools have numerous advantages to the auditors, and at the same time, a significant number of shortcomings. Data analytical tools such as excel and IDEA can analyze substantial data, easy to format, and input data. It can create a visual representation of data, thus enhancing the visualization of results (Earley, 2015). Moreover, the analytical tools can be protected from external parties since the user can create a password directly, limiting unauthorized users from accessing the data input in the excel sheets. Also, the analytical tools have formulas that are input in the system and thus helps in the automation of results, which becomes easy, unlike when the analysis is done manually. Although analytical tools such as excel and IDEA have various benefits, they are limited because they require proper training. The analytical tools are also subject to a virus that attacks macro files, which are mini-programs resulting in program slowing down (Earley, 2015). The program may eventually break down because of the viruses, and as a result, the data may be lost. Data analytical tools are essential to the auditors because they help them analyze data to create visual representations that ease the interpretation of financial information to the users of the financial statements. On the contrary, the data analytical tools are subjects to viruses, require know-how, which might result in breakdown and thus affect the auditing process negatively.
I would inquire with the clients and the information technology experts regarding the objectivity of the audit process to choose the best analytical tools that I will use in the audit process. The know-how of the objective would help me understand the business monitoring metrics hence helping me to choose a data analytical tool compatible with the auditing process. In my case, I would select Command Audit Language software, which can lock down data that limits users of financial statements from inadvertently changing data. I would also convince the management to adopt the Audit Command Language software because of its ability to red flag fraudulent activities and lock down the data, thus preventing manipulation. In would also get them through training to equip them with the know-how of using the software. Audit Command Language software would meet my objectives of prevention of fraud since it can lock down data
In essence, the data analytical tools are essential to the auditors because they help the auditory input, analyze and interpret financial statements for various decision making. Based on the high prevalence of fraudulent activities, the main objective in choosing an audit tool would be to prevent fraud, which would be made possible by Audit Command Language software. I would encourage the management to adopt the tool since it locks down data and prevents data from being manipulated.
Earley, C. E. (2015). Data analytics in auditing: Opportunities and challenges. Business Horizons, 58(5), 493-500. https://doi.org/10.1016/j.bushor.2015.05.002
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