Best practices – How to Incorporate Fraud Risk and Forensic Data Analytics into an Internal Audit and Vendor Audit Programs
The future for IA and forensic accounting practitioners will be revolutionized by ‘big data’ and how that data can be used to identify potential fraud risk and other risks (i.e. bribery and corruption) that need to be addressed by internal controls and may need to be investigated. For example, Accounts Payable data analytics can identify high risk vendors and/or contracts that should be included in an Internal Audit and/or Vendor Audit program. A comparison of vendors to employees can identify potential conflicts of interest that should be further explored by Internal Audit. Time and expense analytics can be used to assist IA to identify which employees may be circumventing or violating the internal expense policies. Furthermore, fraud risk is a key issue for IA and should be considered in any IA program, forensic data analytics is a great tool to assist in the identification of fraud risk and in the detection of inappropriate behaviours both internally (i.e. employees) and externally (i.e. vendors).