TIAPS ALB_Module 2E. Data Analytics for Internal Auditing

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2E.4 Data Visualization Auditors gather data from many sources and in different ways. Examples include: • Interviewing people or conducting focus groups within or outside of the areas being audited. • Using questionnaires or checklists to collect information, including observations and opinions from people who work in or deal with the business area being audited. • Observing the workings within a business area over a period of time to spot issues or inconsistencies. • Vertical auditing, in which the auditor monitors one process from beginning to end to identify any issues. • Documenting formal practices and procedures within a business area. • Accessing informal documentation that may provide insights into ad hoc processes and procedures. 70 Data must be validated by: • Evaluating whether the data has come from a reliable source and makes sense in context with the auditors’ overall understanding of the business area. • Considering how many sources the data are derived from, as well as how long they took to obtain, to determine if these factors raise risks to data integrity. 71 Data visualization can be defined as the practice of translating information into a visual context, such as a map or graph, to make data easier for the human brain to understand and pull insights from. The main goal of data visualization is to make it easier to identify patterns, trends and outliers in large data sets. The term is often used interchangeably with others, including information graphics, information visualization and statistical graphics. 72 Software makes it easy to create appealing graphics to communicate key information succinctly and powerfully. It can also be a temptation for overelaborate and complex pictures that obscure more than they reveal. Choice of colors, 3-D effects, font size, animation, and other graphical elements combined with decisions regarding what data to include and to what level of detail create challenges for an auditor completing a report or preparing a presentation. 73 Auditors should be familiar with the best way to use pie charts, bar charts, and so on. Some common techniques are described below, based on a Harvard Business School list. 74 70 Data Analytics Part 2: Gathering, Understanding, and Visualizing Data, The IIA, 2022. 71 Data Analytics Part 2: Gathering, Understanding, and Visualizing Data, The IIA, 2022. 72 Data Visualization, TechTarget, Business Analytics, 2022. 73 Examples of data visualization tools can be found at The Best Data Visualization Tools of 2023, Forbes, 2023. 74 See Harvard Business School online, https://online.hbs.edu/blog/post/data-visualization-techniques 77
Technique and Description A pie chart is a segmented circle depicting relative proportions of categories. Used for. An exploded pie chart highlights a segment or segments of particular relevance. A bar graph compare multiple categories of data. Variants include vertical, horizontal, segmented, and others. A histogram looks similar to a bar chart, but it illustrates how a variable changes. A Gantt chart organizes events in relation to each other to show their relative timing, how they are linked, and their current status. A heat map organizes data with different colors (often using a spectrum from cold to hot) to indicate relative size and significance. A box and whisker diagram illustrates frequency and marks the upper and lower quartiles in the form of a box and the median as a line inside the box. The “whiskers” show the range from the highest and lowest values. A waterfall chart shows a stepwise progress of a variable in relation to another factor. An area chart is a line graph under which the areas are shaded. A scatter plot illustrates the relationship between two variables. A pictogram uses a relevant icon or picture to show relative size or changes in a variable. The picture may be repeated or scaled in proportion. A timeline depicts related information arranged in chronological order. A highlight table deploys colors within a data grid to show areas of significance. A bullet graph variation of a simple bar graph to show live data variances with benchmarks, targets, or expected values. A choropleth map is a shaded geographical map. A word cloud is an array of words using font size to show relative frequency. A network diagram comprises nodes and links that illustrate connections between different points. A correlation matrix uses colors to emphasize emphasis and appeal. Usefulness Useful for conveying simple messages about comparative weightings Useful for quick comparison of size. Useful for illustrating changes over time or in relation to another variable. Useful for project management. Among other applications, heat maps are often used to show risk data. Useful for communicating frequency data and its relative spread. Useful for communicating significant moments of change in values. Provides a visual cue of relative proportions. Useful for a quick visual determination if there is a direct, indirect, or negligible relationship between two variables. Useful for a quick and impactful illustration of relative proportions. Useful for illustrating developments over time. Useful for communicating such features about the data as highest/lowest, trends, anomalies, etc. Useful for showing current activity in comparison with desired outcomes and for creating dashboards. Useful for depicting regional variations. Useful for showing the most frequently occurring topics or words from unstructured information. Useful for identifying relationships among individuals, teams, organizations, geographical locations, centers of activity, and more Useful for communicating correlation coefficients easily. 78
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