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The PwC Internal AuditInternal Audit. Expect More.
June 2016
www.pwc.com
Risky Business: Leveraging DataAnalytics, Insight and Visualization throughoutthe Audit Lifecycle to Mitigate Risk
Financial Management Institute of Canada
PwC
Agenda
Fun Facts, AnalyticsDrivers andLifecycle 1
Strategy andBenefits
2
Technology, Peopleand Capabilities
3
Case Studies andDemo
4
Risk and Monitoring
5
Questions
6
2
PwC
Polling Question
3
Fun Facts, Analytics Drivers and Lifecycle
Q1: “In today’s session, what are you most interestedin hearing about?”
1) Fun Facts, Analytics Drivers and Lifecycle2) Strategy and Benefits3) Technology, People and Capabilities4) Case Studies and Demo5) Risk and Monitoring
To vote go to:
PollEV.com/pwcfmi
OR
Text PWCFMIto 37607
The PwC Internal AuditInternal Audit. Expect More.
www.pwc.com
Fun Facts, Analytics Driversand Lifecycle
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Did you know?
5
Fun Facts, Analytics Drivers and Lifecycle
• “Data volumes are exploding, more data has been created in thepast two years than in the entire previous history of the humanrace.” www.sintef.com
• “Presently less than 0.5% of all data is ever analysed and used,think of the potential that can be harvested.” www.technologyreview.com
• “John Henry and Tom Werner purchased the Boston Red Sox in 2002 and hired baseballanalytics expert Bill James in 2003. Since this date the Red Sox have won World Series titlesin 2004, 2007 and 2013.” boston.redsox.mlb.com
• “Finance professionals are looking for ways to gain a deeper understanding of more parts ofthe business. Three-quarters of respondents (76%) report that finance now is central to theuse of advanced analytics (either for their own use, or for use by other functions).”Thriving in the Digital Economy: The Innovative Finance Function by CFO Research in collaboration with SAP
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What are Financial professionals thinking?
6
How might technologyaffect thecomposition andstructure of Financeresponsibilitiesand/or teams?
How much of ourfinance function willbe automated in thefuture? What impactwill big data have onthe public sector?
I want to better modeland predict insightsfor the business todeliver “intelligence inthe moment”.
We want to bringinsight to the data wealready have.
I want to develop ananalytics functionto facilitate theFinance function.What does this looklike and how do Iachieve thissuccessfully?
Fun Facts, Analytics Drivers and Lifecycle
PwC
Effective use of data analytics is a journey Finance is on
Reactive
De
liv
er
ye
ffic
ien
cy
Bu
sin
es
se
na
ble
r
PredictiveEffectiveness in monitoring of key Finance processes/risks
Va
lue
too
rg
an
isa
tio
n
Manual function
Developing
Defined
Advanced
Leading
• Processes performedusing observation,walkthrough or hard copydocuments
• Piloting and Ad Hoc
• Finance function ownanalytical tools such asIDEA, Excel and ACLavailable
• Sustainable and periodicanalytics
• Analytical scripts areautomated andstandardised for specificreviews
• Specialist staff supportextract and analysisof data
• A physical and logical datarepository (internally orexternally developed/procure) linked to keysystems and residingonsite and accessible byFinance
• Overlay with dashboardsand alerts to enableFinance to monitorexceptions and hot spotareas on a continuousbasis
• Key input in defining andupdating the Finance plan
• Proactive, Predictiveanalytics and patternmatching
• Automated Financecontrols are monitored ona real time basis once andpotential exceptions areflagged to risk and/orcontrols owners on a realtime basis
• Finance controlweaknesses are identifiedand remediated in a ‘real-time’ manner prior to riskmaterialising
Automated: Analytical tests which replace activitiestypically performed (“displacement”).
Assisted: Analytical tests that provide information uponwhich Finance judgements can be made
7
Fun Facts, Analytics Drivers and Lifecycle
PwC
Polling Question
8
Fun Facts, Analytics Drivers and Lifecycle
Q2: “Where do you see the Finance analyticsfunction, on average, being at in your organization?”
1) Manual function (Walk through and observations)
2) Developing (Piloting and ad hoc)
3) Defined (Sustainable and periodic analytics)
4) Advanced (Monitoring and physical and logical data repository)
5) Leading (Predictive analytics)
To vote go to:
PollEV.com/pwcfmi
OR
Text PWCFMIto 37607
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Strategy and Benefits
PwC 10
The Analytics Approach
LeveragelearningsCollect data
Create ahypothesis
Extract insightsDefine theproblem
Strategy and Benefits
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Polling Question
11
Q3: “Have you performed an analytics pilot withinyour Finance department?”
1) Yes2) No
Strategy and Benefits
To vote go to:
PollEV.com/pwcfmi
OR
Text PWCFMIto 37607
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Strategy and Benefits
Strategy - Considerations for Getting Started
Refine your analytics strategyand roadmap
Formalize your analyticsmethodology
Conduct analytics-enabledreviews
Understand your current state1 Develop a structured methodology1
Refine and document yourstrategy2
Develop roadmap3
Develop program levelanalytics governance2
Identify potential candidate(s)for analytics-enabled processes3
Select one area to serve asanalytics-enabled pilot1
Determine the scopeof analytics and indicators2
Develop and deliveragreed upon analytics results3
Formalize your strategy and roadmapwill provide the level of rigor aroundyour analytics initiative
Implement a program-level approach toidentify, plan and manage analytics-enabled for Finance
Conduct one analytics-enabled pilot toserve as the proof of concept for theanalytics methodology
12
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Strategy and Benefits
Benefits - Demonstrate the value of the analytics investment
Other Quantifiable:
• New policies enacted• Finance user base
adoption and expansion• Finance procedures
refined
Qualitative:
• Risk focused testing• Visual focus on trends and outliers• Higher quality management
conversations• Technology enablement by general
finance team members
Quantifiable:
• Finance hours saved• Expenses minimized• Revenue found• Development time
saved compared totraditional BI
Ex
am
ple
Su
cc
es
sM
etr
ics
14
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Technology, People andCapabilities
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Polling Question
15
Q4: “What is your primary tool of choice foranalysing data?”
1) MS Excel2) MS Power BI3) Tableau and/or Qlik4) Financial System Canned Reporting5) ACL and/or IDEA6) R and/or Python7) SAS8) Cognos9) Other10)Not Sure
Technology, People and Capabilities
To vote go to:
PollEV.com/pwcfmi
OR
Text PWCFMIto 37607
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Technology
16
05
Technology, People and Capabilities
• What are we seeing in Technology?
KN
IME
SAS
AlteryxGephi
Tableau
RapidMiner
MA
TL
AB
MS Power BI
Cognos
Sp
otf
ire
AC
L
D3
IDE
A
Java
Hadoop
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It takes a team!
What Capabilities must be in place?
Storytellers/Visualizationsand BusinessAnalysts
InfoArchitects,Datagovernance
DataScientists
Data Prep andModelers
Dataextraction
Ability tocommunicate &evangelize.
Creative,investigative,analytical mindswith Industry orBusiness domainknowledge
Information anddataarchitecture,data quality, andmaster datamanagementskills
Statisticalprogrammingskills, adept atadvancedtechniques andlanguages (R,SAS, etc.)
Programmingskills &developmentmethodology.Applicationdevelopment andimplementationexperience.
Programmingskills with datadiscovery andmashing/blendinglarge amounts ofdata skills.
DBMS skills,data extraction,transformation,load. Detailoriented toensurecompletenessand accuracy.
Analytic AppImplementers
18
Technology, People and Capabilities
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Case Studies and Demo
PwC 19
In ActionCase Study –Duplicate Invoices and Recoveries with Analytics
Challenges Analytics Applied
Automation andKnowledge Sharing
Results and Efficiencies
Case Studies and Demo
PwC
Polling Question
20
Q5: “What demo would you prefer to view from theoptions below?”
1) Incident Management2) Indirect Sales Tax Credits3) Manual Journal Entries4) Expenses and Compliance Heat Map5) Duplicate Invoice Recoveries
Case Studies and Demo
To vote go to:
PollEV.com/pwcfmi
OR
Text PWCFMIto 37607
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Demo
21
05
Case Studies and Demo
The PwC Internal AuditInternal Audit. Expect More.
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Risk and Monitoring
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Predictive analytics and opportunities in Finance
23
05
Risk and Monitoring
• Detection of financial risks: Financial departments can leverage predictive analytics toestablish baseline criteria that makes it easier to identify outliers before they can hurt overallcompany performance.
• Company performance risk management: Predictive analytics can also help financeprofessionals get a forecasted “sneak preview” into the financial mid-period to avoidsurprising news.
• Receivables aging: Finance professional can optimize receivables aging processes andcollect overdue amounts faster by setting alerts when customers deviate from past paymentpatterns.
• Cash forecasting: Leveraging data insights, financial professionals can look at trends toidentify slow and fast payers, detect system issues and address and improve receivablemanagement.
Referenced from FEI Daily, “How Can Finance Professionals TakeAdvantage of Predictive Analytics?”, Henner Schliebs, April 7, 2016
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Questions?
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PwC publications
25
Breaking away: Financeeffectiveness benchmarkpublication 2015http://www.pwc.com/ca/en/consulting/publications
Government and the 19th AnnualGlobal CEO Surveyhttp://www.pwc.com/gx/en/industries/government-public-services/public-sector-research-centre/publications/government-19th-annual-ceo-survey.html
PwC’s Global Data & AnalyticsSurvey 2014: Big Decisionswww.pwc.com/bigdecisions
Introduction
PwC
Contact Us
26
Introduction
Anthony DiasPartner, Risk Assurance [email protected]
613-755-5945
Courtney R. BrownDirector, Data Assurance and [email protected]
416-687-8904
Thank You
This content is for general information purposes only, and should not be used as a substitute for consultation with professionaladvisers.
© 2016 PricewaterhouseCoopers LLP, an Ontario limited liability partnership. All rights reserved.
PwC refers to the Canadian firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity.Please see www.pwc.com/structure for further details.