Using process mining to replace traditional walk-through testing in auditing: A qualitative study conducted with the Big Four companies in Finland
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School of Business |
Master's thesis
Authors
Date
2019
Department
Major/Subject
Mcode
Degree programme
Accounting
Language
en
Pages
80 + 3
Series
Abstract
Process mining is a new and innovative set of data analysis tools that auditors can utilize to inspect the business processes of their clients. Process mining offers auditors the opportunity to visualize the flow of processes with process models that are based on data about how the employees of the client have really performed the processes. The modern and advanced information systems of today’s companies automatically produce and store such event data, which is used as input data for process mining tools. According to researchers, process mining offers several potential benefits from the perspective of auditing. One of the most important benefits is that with process mining, auditors can replace the traditional, manual way of conducting walk-through tests. Walk-through test is a common test of controls procedure used in auditing, where the whole life cycle of a single transaction is reviewed by tracing it from the beginning until the end through the accounting system. With process mining, this procedure can be automated, and the whole population of transactions can be covered instead of a small sample. The purpose of this study is to form a better understanding about how process mining can be utilized to replace traditional walk-through testing in auditing. There are three research questions. First, what kind of benefits can auditors gain from using process mining tools to conduct walk-throughs? Second, what kind of challenges and requirements are there related to this? Third, can process mining make traditional walk-throughs obsolete? In addition, it was necessary to clarify the current state and future outlook of the phenomenon in order to form a better general understanding about it. To answer these questions, six different process mining experts were interviewed from three different Big Four audit firms in Finland. The following key findings were made from the interviews. The development of process mining tools is still in its early stages in the Finnish audit firms, but awareness and usage have remarkably increased in the recent years. It is likely that process mining will become a standard procedure in the audits of the biggest clients in the coming years. The experts saw many potential benefits from replacing traditional walk-through testing with process mining, of which the most important was the enhanced understandability and clarity of the client’s processes. However, there are several limitations and requirements related to this, of which the most relevant were challenges related to getting the data from clients. According to the experts, it is unlikely that traditional walk-through testing will become entirely obsolete in the future of auditing, as there will still be circumstances and situations in the future where the usage of process mining might not be sensible.Description
Thesis advisor
Niemi, LasseKeywords
process mining, auditing, walk-through, process modeling, event log