Deployment of Audit Bots for Risk Management in an Indian Manufacturing Company

Problem Definition :
A manufacturing company based in India, was facing uncertainity in its business due to accounting errors and limited knowledge in forecasting its future business due to absence of any statistical or analytical tools. The client approached itechpath Associate to come up with a solution for better risk management in their business.

Approach :
itechpath Associate’s knowledge of business standards, best practices, key performance metrics were used to assess the problem. A team of experts from finance, operations, and sector specific experts were drawn to research & identify the root cause of the problem.

From the research, it was found out that the root cause of the problem was primarily due to inability of the internal auditors of the company to audit and check accounting errors on a real time basis. It was observed that identification of fraudulent accounting transactions and other accounting errors were done only at the end of every business quarter and not on a regular basis. This way, the client was exposed to huge financial risks that could negatively impact their future business if proper risk management practices were not put in place.

Team members at itechpath Associate had to spend sufficient time to assess the problem in detail. It was found out that multiple accounting errors such as over purchases, duplicate payments, non verified transactions, payment rate mismatches, purchased items actually not required for business were overlooked during the client’s existing internal audit process controls thereby increasing their overall costs. Once identified itechpath Associate worked towards putting in a comprehensive solution.

Solution:
To address this issue, itechpath Associate had recommended the client to utilize its proprietary governance, risk and compliance tool – “AuditBots” which runs on ERP Systems such as SAP and Oracle, for real time monitoring of accounting transactions.
Various risk libraries were created for different type of accounting risks. An algorithm was created for every risk library and these algorithms were run across millions of accounting transactions on a real time basis to analyse data and spot patterns. If there were any exceptions, the system would identify and throw errors.

AuditBots tool was adopted by the client after realizing its numerous advantages. The client was able to closely monitor accounting transactions on a real time basis using AuditBots tool.