Internal and external auditing is essential in evaluating and improving a company’s compliance, risk management, and governance. As with most other business functions, Auditing is undergoing a transformation through the advancements in digital possibilities. Process Mining technology provides extensive opportunities to support this change by bringing the Auditing practice into the digital age. Auditing aims to have objectivity at its core, ensuring compliance to internal and external regulations. Process Mining guarantees objectivity, relying on event logs and digital footprints across ERP, CRM and a multitude of other IT systems and can visualize non-compliance, based on these data logs. So how does Process Mining Improve Auditing?
Process Mining helps the auditing practice to stay current with developments in the IT architecture and Big Data. Traditionally, auditors have primarily worked with sample data — a small, but representative data set to support evidence for a predetermined analysis. The content of this set was determined based on the importance of statistical representation and the cost of data collection. Process Mining takes the full breadth of data across various data sources and allows mapping out the actual individual cases for any process. The data set is no longer subject to limitations of sample or attention scope, but provides the full picture, graphically and rich with attributes.
Regulatory compliances may be set by governing laws or internally defined policies. Compliance issues can exist in “blind spots,” well beyond the capacity of self-reporting or sample data. You don’t know what you don’t know, so it is essential to uncover these blind spots. Depending on the Industry, processes to be audited with Process Mining may include processes such as purchase-to-pay, order-to-cash, production, and logistics. All areas in which a CFO needs complete transparency to understand how these processes are ideally working and to what extent they comply to preset guidelines. Process Mining software can identify every single violation, e.g. in compliance to the four eyes principle and/or adherence to mandatory steps.
Understanding how a company works is essential to better assess exposure to risk. Self-reporting easily supports this understanding. Without knowledge of compliance standards, employees can use self-reporting to allow for early detection. Reporting a known compliance issue is straightforward, but without knowledge of such compliance issues employees are not able to self-report what they don’t know. Process Mining allows auditors to avoid, or at a minimum compare, self-reporting with data reality. To compare these self-reports with reality, Auditors rely on time-consuming analysis of documents provided by stakeholders and interviews or workshops. Process Mining allows auditors to avoid, or at a minimum compare, self-reporting with data reality.
Once Process Mining is established as part of the internal audit function, auditors are better able to set the right focus for an audit upfront. Because Process Mining allows for replicable analysis of the same process over time, auditors can benchmark process execution and more quickly assess risk and compliance issues.
Another huge advantage Process Mining offers to audits over traditional methods is fresh data, the closest you’ll get to real-time data in terms of an audit. Process Mining can capture detailed data up to the minute of execution that can be extremely relevant in an audit. Process Mining will use fresh data and allows for fast, up-to-date replication when needed.
A final and quite critical part of internal auditing that Process Mining supports is process visualization. This visualization allows an internal audit team to effortlessly achieve transparency into how processes are executed in real life and gain deeper insight into process interconnectedness.
Talk to one of our experts to understand how we can support your Audit department with Process Mining.
Eric Hellemons Call: +31 6 18 84 61 98 E-mail: email@example.com
Enno Kroesen Call: +31 6 38 78 79 57 E-mail: firstname.lastname@example.org
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