In 2014, Jimmy Ng, the head of Group Audit at DBS Bank, implemented the bank's continuous auditing project in Singapore. A year ago, Ng had received an urgent call from Kelvin Lam, Country Head of Taiwan Audit. Lam had requested a higher headcount budget to meet the new audit requirements established by the Financial Supervisory Commission in Taiwan.
Ng, however, was reluctant to allocate additional headcount, which he believed would only provide a short-term solution. Instead, he preferred to explore new strategies that would make the auditing process less labour-intensive. He explained,
We needed to strike a balance in our resourcing. Putting more man-hours in conducting manual audit test steps is an inefficient utilisation of manpower. I'd rather put more of our auditors in higher value-adding audit projects so that we can deliver added assurance to our stakeholders and the regulators.
The changing business environment had forced Ng to relook audit practices throughout the bank. The tightening of audit requirements in Taiwan, with the risk of suspension for non-compliance, provided him the ideal opportunity to launch a one-year pilot continuous auditing programme.
Its success resulted in a bank-wide rollout of the continuous auditing approach, starting with its headquarters in Singapore.
Ng had formed a team to identify bottlenecks and anchor points in the audit process, and began to develop the concept of continuous auditing—the continuous and recurring use of Computer Assisted Audit Techniques (CAATs) to fundamentally enhance the way auditors did their work, and improve productivity and efficiency in the allocation of resources.
In addition, an Audit Data Warehouse would be built to house the audit process; and data extraction could then be performed periodically with the CAATs encoded to assist in data analysis. Ng elaborated,
The industrialisation of Computer Assisted Audit Techniques and our Continuous Auditing approach in automating these manual audit test steps are the solutions we were looking for. Continuous Auditing not only allows Group Audit to fully understand critical control points, rules, and exceptions, but also perform control and risk assessments in real time or near-real time.
It also enables us to analyse key business systems for anomalies at the transaction level, as well as data-driven indicators of control deficiencies and emerging risks.
Group Audit improved its handling of routine audits, especially in its ability to detect anomalies in mandatory audits, regulatory compliance, operational control, data quality, and application functionality. The continuous auditing process enhanced the use of CAATs by making the data extraction process automatic, compiling outcomes directly from an end-to-end source into a full audit report.
The process helped auditors reduce their manual workload by repeatedly targeting problem areas based on high transactional volume, or specifically encoded policies and procedures. Continuous auditing moved the bank closer to its long-term goal of continuous assurance.
Auditors could be more proactive in seeking out problem areas by spending less time on mandatory audits and more time on risk-based audit projects. As DBS was able to perform real-time control and risk assessments, it enabled the auditors to fully understand critical control points, rules, and exceptions.
The team also enhanced corporate governance through their increased ability to spot control deficiencies and emerging risks even before they could become real threats.
The new approach had significantly improved the efficiency of their auditing process, and enhanced the productivity of the team. But while the savings looked promising, new challenges and obstacles awaited.
Thus while satisfied with the progress of the project, Ng had work to do before continuous auditing became commonplace regionally throughout DBS.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Singapore Business Review. The author was not remunerated for this article.
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