Use of Data Analytics in Performing Audits

Transcription

1 Jack Matejka Eaton Senior Vice President - Internal Audit MAPI Internal Audit Council I September 12, 2017

2 Powering businesses worldwide for more than 100 years Founded in 1911 by J.O. Eaton Chairman & CEO Craig Arnold Headquarters: Dublin, Ireland Key locations in Cleveland, OH; Shanghai, China; Morges, Switzerland; Sao Paolo, Brazil Innovation Centers in regions around the world Customers in more than 175 countries 2016 sales of $19.7 billion 50% of sales outside of the U.S. Approximately 95,000 employees 2

3 Eaton delivers safe, reliable, efficient power in several markets. Eaton Designs hydraulic system equipment for the world s largest aircraft and making it far lighter and more fuel efficient to operate. (Air, Fuel) Delivers high-performance to make driving fun, and delivering the better fuel economy to make it smart as well. (Audi superchargers) Creates electrical power chain systems and ensuring that the clean, vital power is always on reliably, safely and economically (data centers) Develops automated transmissions for trucking fleets and making hundreds of millions of miles of safer and fuel-efficient driving possible 3

4 Eaton s products are highly engineered across these markets Aerospace Hydraulic Truck Automotive Electrical 4

5 and many large international customers. Every day, some of the best-known companies in the world choose Eaton when there s a lot at stake. Our customer list includes: JOHN DEERE 5

6 Why? To improve our audit capabilities How? Analytics allows us to transform traditional auditing techniques from: Sampling Method - To - Full File Method Result? Breadth and depth of financial audits are increased Bottom Line: Analytics allows us to audit smarter, not harder 6

7 Internal Audit Global Department 7

8 At Eaton, data analytics allows us to audit in two dimensions: 1. Support on-site plant and sales office audits 2. Horizontal audits 8

9 9

10 Horizontal Audits What s that? Instead of auditing all processes for one site/ledger, a horizontal audit targets one process across all sites/ledgers. For example: 1. Instead of sampling 25 expense reports at each site, we download and electronically audit every expense report periodically. 2. Instead of/in addition to reviewing manual journal entries at each site, we electronically audit all (e.g., credits to revenue) each quarter across all ledgers. 10

11 Example: 11

12 Currently have 140 data analytic audit routines targeting the following areas: Financial Audit Support Manual Journal Entries Payroll Analysis Restricted Parties Master Data Management Accounts Payable Key General Ledger Accounts Travel & Entertainment (T&E) Expenses Inappropriate Entertainment Expenses Purchasing Card Expenses E-Star Employee Awards Employee Health Care Claims 12

13 Data Analytics and Auditing Roadmap Internal Audit Support SAP Purchase to Pay - 10 new tests to support and automate audit test steps SAP Critical Access - 7 new tests mapping roles to critical access points SAP PO Report- 1 new self-service model pulling all necessary POs Industrial Sector Internal Controls (ISIC) SOX analytics automation Oracle Credit Memo analysis and sample Consolidate metrics from Pune team into DAA LI tool AP Aging Analysis Continuous Audit T&E -5 new tests focused on compliance and cost containment Leading Indicators(LI) - 5 global indicators across select Eaton processes Internal Audit Support Oracle Purchase to Pay 7-10 new tests to support and automate audit test steps Detection Routines for Access Issues 2-3 tests focused on employee terminations and transfers Industrial Sector Internal Controls(ISIC) Trade AR Aging Key Account analysis MFGPRO Security Central Critical access and SOD Electrical Sector Internal Controls (ESIC) Focus on high risk areas Continuous Audit Leading Indicators(LI) 3-5 global indicators across select Eaton processes Internal Audit Support Accounts Receivable - Oracle & SAP 7-10 new tests to support and automate audit test steps Other Topics Focus on highest risk Industrial Sector Internal Controls(ISIC) Focus on high risk areas Electrical Sector Internal Controls (ESIC) Focus on high risk areas Continuous Audit Leading Indicators(LI) 3-5 global indicators across select Eaton processes Internal Audit Support Inventory - Oracle & SAP 7-10 new tests to support and automate audit test steps Other Topics Focus on highest risk areas Industrial Sector Internal Controls(ISIC) Focus on high risk areas Electrical Sector Internal Controls (ESIC) Focus on high risk areas Continuous Audit Leading Indicators(LI) 3-5 global indicators across select Eaton processes 13

14 14