Question

According to the IAASB, data analytics or big data is the “science and art of discovering and analysing patterns, deviations and inconsistencies, and extracting other useful information in the data underlying or related to the subject matter of an audit through analysis, modelling and visualisation for the purpose of planning and performing the audit” You are required to: Critically analyse and demonstrate how the definition outlined by IAASB can be applied in the audit process to enhance audit quality.

Answer 1

It is said that big data is the “science and art of discovering and analysing patterns, deviations and inconsistencies, and extracting other useful information in the data underlying or related to the subject matter of an audit through analysis, modelling and visualisation for the purpose of planning and performing the audit”.

This can be very helpful in enhancing the quality of the audit performed. When auditing large volumes of data, if their patterns could be analysed easily, then it would be a lot easier to find any shortfalls or discrepancies in the data being provided. This would help the auditor to save time as he wouldnt have to go through it completely rather the mistakes will be found out using data analytics.

If deviations and inconsistencies are easily found out, it makes the job of the auditor much easier, as all he has to do is make sure whether these amounts found are material or immaterial to the financial statements and whether they have to be disclosed in the audit report or whether they are too small to cause any problems to the financial statements as a whole.

Big data and data analytics would also help to visualise data in a better way and make it easier to find out things which could be helpful during the audit. These could be a really useful tool in the planning and performing of an audit for a company who has large amount of data.

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