Lesson 2: Analytics is helping audit teams – and audit clients – focus on key issues raised by the pandemic.
When the pandemic hit last year, most of our teams on public company audits already had experience using our GL analyzer, and that experience proved invaluable. This meant that we already had a fine-tuned process in place for global remote data capture and extraction, and our teams had already adopted a data-first mindset. In fact, of the large US public company audits we executed with 2020 year ends, 99% leveraged the GL analyzer.
Our teams ability to capture full populations of data and use them in our analyzers was critical to our clients. For example, for one retail client, the audit team had captured broadscale data on assets for all its retail outlets pre-pandemic, though only a few were impaired at the time. When the client faced challenges across their entire fleet of stores due to the pandemic shutdown, the audit team had the relevant data readily available to enable the team to evaluate the company’s impairment analysis effectively. In today’s rapidly changing environment, that is vital.
With EY Helix, our EY global organization has created a powerful suite of data analytics. Grounding our audit procedures in analytics enables EY teams to better identify potential risks. Hidden patterns and trends in our clients’ financial data are revealed that wouldn’t be apparent in a traditional audit, allowing us to direct our follow-up efforts to the right areas, and enabling our clients to consider new ways to improve their business processes and controls.
For example, at a moment when many clients are extremely concerned about optimizing their workforces, our analytics flagged payroll cost anomalies for one client that included some workers who were regularly clocking 20 or more hours of overtime a week. This allowed the client to assess not only the approval process for that overtime, but also spurred discussion about the implications for employee health.
For another client, our team conducted a trend analysis on the basis of historical costs of manufacturing a product, which suggested the future profitability of the product. That insight was valuable for the audit committee at a time when they were re-evaluating all aspects of the business.
The advanced analytics underpinning the digital audit can inform new strategies, as well as pinpoint risks. That’s a compelling proposition as organizations everywhere shift course.