Data analytics in selected Maltese internal audit functions

Abstract

PURPOSE – The study aims to evaluate the importance given to the internal audit function by selected listed organisations. It seeks to assess when and how data analytics are applied and their function since the inception of the internal audit functions. Lastly, the study also aims to determine the views of the IAF on the extent of usefulness of such data analytical tools and the future of data analytics in the local internal audit functions. DESIGN – A qualitative approach was deemed to be the ideal approach to be applied given the purpose of the study. After an inclusive understanding of the literature, the interview schedules were made, and fourteen interviews were conducted. The interviewees included listed organisations and three of the Big Four audit firms. FINDINGS – The study showed that the role of the internal auditor in an organisation has taken a more fundamental and strategic role in the organisation. The findings also highlighted that the majority of the local internal audit functions, only make use of descriptive and diagnostic analytics. However, the interviewees did not exclude the fact that in the near future they might try to invest in more sophisticated analytics being predictive analytics. Lastly, findings showed that data analytics offer several benefits to the internal audit function and all of the interviewees agreed that processes and procedures have been facilitated. In fact, the interviewees agreed that the influences and existence of analytics will gradually transform the IAF, bringing it to a position where it would be difficult to work otherwise. CONCLUSIONS – The study concluded that although there are several internal audit functions which already make use of basic data analytics in their processes, there are others which do not due to different reasons – however, these agreed that such tools are “there on the table”, and sooner or later their organisations would need to sit down and discuss how these tools can be used throughout their processes in order for the IAF to become more well-organised. On the other hand, those internal audit functions which already make use of basic data analytics, contended that their organisations are continuously striving to invest in more advanced tools yet there are several factors which need to be taken into consideration.

VALUE – The study aims to raise awareness regarding the impact of data analytics in the internal audit functions and how these can benefit. In order to meet the demands of the environment and the developing needs of the stakeholders, the internal audit functions are required to raise the bar and move on. Therefore, it is important to keep abreast with new technologies in order to remain relevant.