Anyone in today’s corporate world knows that big data is supposed to be the big boon to business – a way to slice and dice information into so many digestible and manageable components to help feed business decisions that boost the bottom line.
Yet, a recent report by the Institute of Internal Auditors (IIA) indicates that only 29 percent of chief audit executives (CAEs) are extremely or very confident in decisions based on data their organizations gather.
On the other side of the same coin, 23 percent said they are slightly or not at all confident about decisions based on data, while 48 percent said they are moderately confident.
What’s more, almost half (47 percent) of survey respondents said internal audit has little or no involvement in evaluating the data. Slightly more than a third (36 percent) said internal audit was moderately involved, while 17 percent reported internal audit is extremely involved in evaluating the quality of the data.
Despite that mix of involvement, 37 percent of respondents said data mining and analytical skills are very or extremely essential to internal audit’s ability to perform its responsibilities.
Consider, then, what the report indicates are problem areas in data collection and analysis:
Is use of the data legal and ethical?
Has the data’s accuracy and completeness been verified? Is it appropriate?
How was the data evaluated to ensure a lack of bias or flaw? “The difference between correlation and causation is not always well understood,” the report states.
Are conclusions based on what the data indicates or what the desired outcome is?
“Consider such concerns along with the increasing availability of data and sophistication of the tools available to analyze data, and one could conclude that the risk for many (if not most) organizations related to their collection and use of data is greater than it was even a few years ago,” the report states.
But here’s the upshot: This evaluation risk is a value-add opportunity. Internal audit can use this to toot its horn.
“With the expertise in data analytics that exists in many internal audit departments, CAEs have the opportunity to move the profession into this increasingly risky area by providing assurance over organizational use and evaluation of data,” the report states.
The report is based on survey responses from 486 North American CAEs, directors, and senior managers.
Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.