Data-Driven Audits: Audit Analytic Platforms and General Ledger Analytic Tools

SUMMARY The future of auditing is a data-driven audit, which extracts and analyzes digital data stored in client accounting systems. To help conduct data-driven audits, audit firms are developing audit analytic platforms (AAPs). This paper focuses on one key application tool of AAPs that analyzes the entire population of general ledger transactions. These general ledger analytics tools (GLATs) use assessment routines to assign a risk score to each transaction, helping guide the auditor’s planning, risk assessment, and selection of high-risk transactions for substantive procedures. GLATs help support audit quality and provide valuable new insights about client operations. We discuss the analytics routines used by GLATs, the forces driving their use, and some potential limitations of this technology. Data Availability: Data are available from the authors. JEL Classifications: M4.