New Trends in Digital Audits

Innovative application of CAATs
In addition to the digitalization of auditing processes, the focus of current discussions on innovations is on automated evaluations of mass data using artificial intelligence. In particular, larger accounting firms advertise the use of appropriate techniques and state in accompanying studies that in the near future more than half of the available audit capacity can be transferred to associated software processes. The scenarios presented are usually accompanied by keywords, that often remain undetermined. Experience has shown that this complicates access to a complex subject, so that we briefly deal with conceptual delimitations and the positioning of testing software in the first parts of this article. In a second part, we will focus on practical and application-related questions about the use of CAATs.

Data Mining for Forensic Investigators

One of the main tasks of forensic investigators, data-quality managers, and auditors is the revealing of errors and potential cases of fraud in data. Effective software tools exist that can help to carry out this task. Investigators can confidently and comfortably conduct thorough analysis of data and reveal inconsistencies and “strange” cases to be investigated on any desired data type and/or size.

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IMPROVING FINANCIAL AUDITING Forensic accountants in law enforcement who investigate or work directly for the financial industry use data mining tools to uncover patterns that indicate errors or fraud in the vast amount of financial data. As in other data mining applications, the quality of analysis is a key differentiator of these technologies. Software developers are continuously devising auditing tools to provide increasingly sophisticated error and fraud detection to forensic accountants. For example, WizSoft® Inc., of Syosset, New York, a wholly-owned subsidiary of WizSoft Ltd., of Tel Aviv, Israel, has designed its patent-pending Revealing Outstand If-Then Rules feature to enhance the analytical capabilities of its WizRule data auditing tool. WizSoft develops, licenses, and supports software products based on mathematical algorithms for the business sector. Their portfolio includes: data mining tools, data auditing, concept-based search engine, knowledge management, and Enterprise Resource Planning.

Data Mining for Forensic Investigators

One of the main tasks of auditors, forensic investigators and data-quality managers is revealing fraudulent cases and errors in data. WizRule can help in carrying out this task. WizRule is a data-auditing tool based on data mining technology. It performs an analysis of the data revealing inconsistencies and “strange” cases to be investigated.

The standard method for revealing fraudulent cases and errors uses reports that filter and sort the data. For example, one such report may list all the transactions in which the discount percentage is above a certain threshold. There are several tools that can be used in order to issue these kinds of reports.

WizRule does not compete with these tools. Rather it complements them.