Bagaka uses data analytics to support management in their efforts to build cohesive control environments and to support audit teams improve coverage in their efforts to add value to business and financial processes.
We perform data integrity and verification reviews for monitoring and evaluation of controls and for detection of deficiencies in the control environments. Data has wide applications, we share a few:
Database Integrity
Integrity of existing database is critical to operations. Deficiencies could result in real financial losses, example, payments made to incorrect suppliers, ghost employees being paid, difficulties in tracking members resulting in unclaimed benefits, etc.
Data hoarding is costly and could result in security breaches or cyber-attacks. Furthermore, data carries a regulatory risk due to the enactment of the POPI Act. It is important that organisations only carry costs of data that is relevant and accurate for the business. Data sweep is necessary to clear servers of any unnecessary and legacy data or accounts.
Examples of types of databases: Membership, suppliers, creditors, contracts, products, accounts, users, subscribers, inventory management, etc.
Example of industries: Financial services (Pension funds and other retirement funds, insurance, banking, etc), manufacturing, construction, public sector
Employee Management
Organisations that carry high staff compliment ran a risk of financial losses due to non-compliance with policies, laws and regulations and ghost or non-existent employees.
Employee management is critical in managing a successful business operation. Organisations incur significant costs in the management and wellbeing of their employees, who ensure the sustainability of business operations. It is important that employee data is accurate, complete, consistent and can be verified.
Examples of employee data risk factors:
- Non-compliance with remuneration policies
- Incorrect application of the remuneration grading scale
- Non-compliance with leave policies and the accumulation of statutory leave
- Non-compliance with overtime policy and Labour Relations Act
The risks could result in excessive compensation causing the organisation real-time financial losses or non-compliance with laws and regulations that could result in fines and penalties.
Supply Chain and Contract Management
Procurement remains a source of tension in business operations. It is a high fraud risk area and insufficient management could cause serious disruption to business operations. It is critical that controls should be put in-place to prevent and detect instance of fraud or weakness in the system.
Data analysis can be used for assessing weakness in controls, monitoring and detecting deficiencies in the systems.
Data Risk areas:
- Incomplete data (Gaps) in the supplier database
- Payments made to suppliers that are not approved
- Payments made to suppliers with no existing contracts
- Excessive payments made to suppliers (payments made more than the contract amount)
- Payments made outside the organisations’ policies (could results in cashflow mismatch)
- Non-compliance with procurement policies
The risks could result on payments to the wrong customer or not sufficient data for regulatory or impact reporting (BB-BEE reporting). Weakness in contract management and supply chain have far reaching impact on the business, with possible cashflow mismatch with no set payment terms or contracts not in place, disruptions to business, etc.
Application for Audit
Data analytics have wide applications in external, internal, and forensic audits. It can be used for:
- Risk assessment to identify high risks areas or transactions that can be tested further;
- Sampling of transactions
- Payments analysis to identify unusual and high-risk payments and tracking of payments to determine relationships.
- Testing completeness of transactions and duplicate transactions
- Quantification of results and financial impact of deficiencies
To understand how data analytics can be applied to your specific organisation, you can contact Bagaka for a review.
