Many companies require managers to prepare a Technology Business Case for any new software purchases. A persuasive business case for purchasing some desktop audit software usually includes these elements:

 

Good Governance: Many public companies use analytics to test 100% of their general ledger entries and other critical transactions for duplicate, fraudulent and inaccurate entries. Audit specific desktop software from IDEA, Arbutus or ACL along with a little training for a couple of auditors often costs less than $10,000. It is hard for corporate leaders to justify why they are looking at small samples in Excel when many companies are now automating their controls testing using inexpensive desktop software.

 

Consistency: Audit managers and compliance officers need to rely on standardized processes. Any two auditors using the same analytic script on the same data should get the same results.

 

Cash Recovery: Audit software can review many more transactions at once than most versions of Excel can. This helps to find duplicate and suspect payments, expense fraud, unused vendor discounts and other wasted money. Although it is difficult to predict exactly how much money you might recover, a good rule of thumb is that for every $1 million your organization spends it is probably wasting about $10,000. Many auditors recoup the cost of the desktop audit software and the related training and consulting during their first big suspect vendor payment review. You may be able to put a price on the deterrence factor too. When everyone knows that the auditors will automatically review every expense claim and purchase order they will follow the rules much more closely.

 

IT Savings: Analytic tools reduce IT costs because they can automatically make a scheduled connection to a database to extract data. Saving just two hours a week of a database administrator’s time (at $50 or more per hour) may be enough to pay for the software and training in a year.

 

Buy versus Build: In most cases it makes sense to invest in fostering the skills in-house to maintain and extend the analytic scripts instead of calling a consultant for every minor change. But beware: Using analytics effectively means making a multi-year investment in training people and building process and changing the way you audit. Many analytic initiatives wither and die because there is no ongoing annual budget for training any new users to replace those that will eventually leave the audit group.

 

If you cannot realistically invest in the people, processes and technology to do it right then you may be better off spending your budget elsewhere rather than having your analytics projects fizzle out as key people leave or lose interest. If you only need the occasional vendor master or suspect payment review, you can hire consultants who may charge $100 an hour or more or they may take a fee based on how much money they recover. Many companies justify buying analytic software and training because it will cost less than hiring consultants for a single large suspect payment analysis. 

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About the Author

For over fifteen years Sean Elrington, MBA, CISSP, ACDA has been helping organizations to choose and implement effective controls using the right technology and audit strategies.

 

He is particularly good at justifying the need for automated audit analytics to corporate stakeholders and executives and developing the technology business case, audit scripts and the analytic processes.

 

Sean has conducted SAS 70, ISO17799 and other audits for a Big 4 firm and he recently spent several years as the Senior Presales Consultant for a leading audit software provider.

 

He is available for consulting and public speaking engagements.

For more information please contact:

Internal Audit Analytics

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