One of the most pressing challenges for audit is how to tackle “Big Data” – which holds huge potential value to businesses, but is of such variety, velocity and volume that it is challenging, or even impossible, to process via traditional means.
Previously audits would draw primarily on structured datasets from financial systems and listings, whereas today, there is both opportunity and demand to analyze the aggregate of unstructured assets, such as legacy formats, text, emails, and audio/visual resources, which based on a recent survey could account for over 80% of available data1.
As in so many areas, emerging and evolving technologies are facilitating rapid breakthroughs. Natural Language Processing (NLP) uses artificial intelligence to process text and spoken words, whilst Optical Character Recognition (OCR) can capture text from paperwork and images, converting them to digital formats. The wealth of new data made accessible by these innovations enable auditors to work with greater efficiency and accuracy than ever before.
As Shane O’Connor, Partner in Charge of Audit Technology & Innovation, KPMG Australia says: “Big Data is going to impact industries and businesses pretty much across the board. The majority of businesses have data that they are collecting in an unstructured format. And with the techniques and approaches that we have today, we're going to be able to look at that data in a very different way, at much bigger volumes, to get better insights and understanding, and discover risk areas that haven't been identified in the past.”
I met with Shane, and Nicola Stone, Director of Audit Analytics & Data Management, KPMG Australia, to explore the topic further. I have shared their insights below, and hope you will find them useful.
How can Big Data change the audit and the way auditors work?
Across the businesses that KPMG firms audit, the quantity and diversity of data is increasing exponentially. Beyond analyzing verified databases and listings (structured data), we’re now leveraging input from a broadening spectrum of both new and legacy sources including unstructured data.
By building transformative software that combines NLP and OCR technologies, we can automate formerly time-consuming manual processes. This allows us to advance from sample-based audits to evaluate full populations of data, including content and comparators that would historically have been inaccessible. With more time released, and access to a richer dataset, our specialists can focus on the more complex areas of the audit, and provide deeper, more accurate insights.
How can Big Data impact businesses and specific industries?
Big data offers a rich source of information and a wide range of operational applications, from procurement evaluations to everyday efficiencies.
Within the financial sector, OCR can now read business data from bank statements, reports and contracts. It can extract information from valuations, deeds, lease agreements and legal documents. Across organizations, paper documents can be converted to digital ones, reducing physical storage costs, and making ongoing access easier.
Processed data can also be more easily correlated and cross referenced, potentially highlighting issues or opportunities, and aiding in decision-making processes.
What are the potential risks of Big Data?
Big Data offers both potential and pitfalls, as there is no guarantee in the accuracy of unstructured content. And while new technologies are advancing rapidly, it remains an evolving science, requiring considerable investment of time and resources to develop, operate and assess.
OCR can struggle to handle the high volumes and inconsistent formatting of data input. The quality of output is also variable, requiring some level of manual interventions and human oversight to recognize and analyze the key information delivered.
How is KPMG adapting to Big Data?
KPMG firms are making substantial investments into enhancing data acquisition, governance and processing techniques for all types of data, to drive the audit of the future.
The specific needs and complexity of our audits are unique, requiring new processes and tools to augment our capabilities, and optimize the role we fulfil to the organizations we serve. This includes partnering with leading technology companies to develop cloud-based data capabilities, and training our auditors in the latest digital innovations. KPMG Clara enables us to continuously innovate and integrate these new capabilities to effectively manage both structured and unstructured data and turn it into insights and actions.
Big Data, bigger potential
The transformational power of Big Data is increasing, and many organizations are investing more of their resources into harnessing the benefits – creating data lakes to pool their sources and enable more meaningful decision making. These developments will likely continue to evolve the audit in the coming years and decades. For KPMG firms and the businesses we audit, these are exciting times.
Throughout the All eyes on campaign, you’ll hear more from various global leaders on topics including AI, continuous auditing and technology assurance. If you’d like to learn more about how KPMG can help your organization realize the benefits of these technologies, please email me or the below subject matter experts directly.
1. Soares, Jorge. “How to take the challenges and leverage the opportunities of unstructured data.” ABC Consultancy, 17 Feb 2021, OCR | Challenges and Opportunities of Unstructured Data (abpconsultancy.com).