Efficiently Using Data Analytics in the Auditing Process

Expense audits are essential to control spend and ensure the financial health of a business, and the integration of data analytics into traditional processes is revolutionizing the task. Studies indicate that data analytics enhances the quality of audits by providing deeper insights and identifying potential risks more effectively, so organizations can be ready for anything.

Gone are the days of manual data entry and paper-based audit trails. Now, with sophisticated data analytics tools, auditors have access to large amounts of data that can be analyzed quickly and accurately. This has transformed the audit process, allowing auditors to review more expenses and detect anomalies, patterns, and trends that may have gone unnoticed in the past.

While the benefits of incorporating data analytics into audits are undeniable, this advancement comes with its own challenges, like the need for specialized skills, longer hours spent on analysis, and disruptions to traditional audit processes. The increased reliance on data analytics has also meant increasing the workload for employees, exacerbating CPA staffing shortages, and leading to heightened stress levels among travel managers.

Challenges of Data Analytics in Audits

A key concern associated with data analytics and audits is the impact on employee workload given today’s talent shortages. CPA firms are already struggling to hire, and the industry is seeing a plunge in accounting graduates. An alliantTalent survey of 250 top CPA executives found that fewer than 1% of small- and medium-sized CPA firms can find enough qualified U.S. candidates for employment.

Additionally, the Financial Education & Research Foundation (FERF) found that audit fees are on the rise as is the scope of audits. According to FERF, 64% of preparers said they used emerging technology like data analytics to assist with workloads, but this new technology means auditors need to follow new and updated internal controls, which adds to their workload.

At the same time, travel managers, who also play a crucial role in audits, face their own challenges. Travel managers are responsible for coordinating logistics, managing schedules and budgets, and ensuring smooth operations for business travel. The increased workload and complexity associated with data-driven audits (on top of their own staffing shortages) can lead to elevated stress levels among travel managers.

In fact, SAP Concur research found nearly half (47%) of global traveler managers say their role is more stressful now than 12 months ago. Nearly all global travel managers (98%) say their job is hindered by lagging data and analytics, particularly when it comes to demonstrating ROI to senior leadership (39%), complying with regulations and industry standards (37%), setting budgets (37%), and updating travel policies (37%). Travel managers are increasingly hungry for tools to improve visibility into all aspects of travel, including expense reports and travel-related spend.

Tips for a Balanced Approach

Additional demands associated with data analytics can further strain resources amid the accounting talent crisis and increase travel manager stress. To mitigate, consider the following strategies:

1. Embrace Automation: Implement digital tools and automation wherever possible to streamline repetitive tasks and free up employees' time for more strategic activities. This can include deploying platforms to simplify travel booking, itinerary management, and expense reporting and automate data collection, analysis, and reporting processes. Incorporating AI and automation into the audit process can help ensure that 100% of all spending aligns with travel and expense policies, sustainability requirements, tax laws, fraud indicators, and budgets.
2. Invest in Training and Development: Provide comprehensive training programs to equip employees with the necessary skills to leverage data analytics tools effectively. Ongoing education and development are vital for creating a workforce that can grow and adapt as industry innovation continues. Investing in training will not only enhance audit quality but also increase employee confidence and job satisfaction.
3. Improve Communication and Collaboration: Foster clear communication channels between audit teams and travel managers to ensure alignment on objectives, timelines, and expectations. Establish regular check-ins and feedback sessions to address concerns and optimize workflows. A more collaborative team will be better equipped to manage existing audit workflows and utilize data analytics to streamline processes.
4. Prioritize Employee Support: When workloads are high and staffing is low, it’s especially important to recognize the impact of employee well-being on productivity and quality of work. Encourage flexible work arrangements, promote time management strategies, and foster a supportive work culture to enhance productivity. Prioritize employee well-being and provide avenues for relaxation and rejuvenation during intense audit periods.

The integration of data analytics into audits has significantly improved their quality, but there’s still work to be done to address the increased workloads and stress that come with its implementation. Adopting strategic measures—such as investing in automation and training, enhancing communication and collaboration, and prioritizing employee well-being—can help effectively navigate these challenges and achieve a more balanced approach that optimizes both audit quality and employee experience.

For additional resources to help streamline the auditing process, read our ebook, “6 Ways to Increase Audit Efficiency to Improve Spend Management