Where Open Source Meets Audit Analytics - ISACA North America CACS 2017
- 1. Copyright © 2017 Information Systems Audit and Control Association, Inc. All rights reserved. Andrew Clark, IT Auditor / Internal Audit Data Scientist Astec Industries, Inc., M.S. Data Science Candidate
- 2. Copyright © 2017 Information Systems Audit and Control Association, Inc. All rights reserved. Overview 1. What is open source software? 2. Why is it important? 3. What are the benefits of using open source software for analytics over CAATs? 4. How do I begin using open source software for analytics? 5. Case study 6. The application of advanced analytic techniques
- 3. Copyright © 2017 Information Systems Audit and Control Association, Inc. All rights reserved. Meet Open Source
- 4. Copyright © 2017 Information Systems Audit and Control Association, Inc. All rights reserved. Open Source Software “Open source software is software whose source code is available for modification or enhancement by anyone.” What Is Open Source?" Opensource.com. Accessed June 12, 2016. https://opensource.com/resources/what-open-source.
- 5. Copyright © 2017 Information Systems Audit and Control Association, Inc. All rights reserved. Open Source examples 1. Linux (mainly) 2. Android (mainly) 3. Firefox 4. R programming language 5. Git 6. Docker
- 6. Copyright © 2017 Information Systems Audit and Control Association, Inc. All rights reserved. Why is it important? • Vibrant community • Frequent updates • Potential for strong security • Cutting edge technology • Customizable • Cost
- 7. Copyright © 2017 Information Systems Audit and Control Association, Inc. All rights reserved. How does Open Source relate to Audit Analytics? • State of the art technology • Computer science's best and brightest love to contribute • Customizable • Scalability • Beautiful visualizations • Analytics and Data Science leaders use almost exclusively open source frameworks for their analytics, i.e. Google, Facebook, Uber, Airbnb, etc.
- 8. Copyright © 2017 Information Systems Audit and Control Association, Inc. All rights reserved. "Bubble Charts." Plotly. Accessed August 14, 2016. https://plot.ly/python/bubble-charts/.
- 9. Copyright © 2017 Information Systems Audit and Control Association, Inc. All rights reserved. Benefits over traditional CAATs • ACL, IDEA, Arbutus, the existing market leaders • Not very user friendly • Requires extensive training to use effectively • Not very flexible • Does not provide the output auditors are expecting
- 10. Copyright © 2017 Information Systems Audit and Control Association, Inc. All rights reserved. So what do we do about it?
- 11. Copyright © 2017 Information Systems Audit and Control Association, Inc. All rights reserved. Enter Python (and R)
- 12. Copyright © 2017 Information Systems Audit and Control Association, Inc. All rights reserved. What is Python? "About Python." Python.org. Accessed August 14, 2016. https://www.python.org/about/. • Open source, general purpose programming language • High level of support • Used by some of the best and brightest in Data Science • Extensive scientific, mathematic, data wrangling and visualization libraries • Most popular first language in computer • science departments across America (http://tinyurl.com/knw5mdv)
- 13. Copyright © 2017 Information Systems Audit and Control Association, Inc. All rights reserved. What is R? • "R is a language and environment for statistical computing and graphics."- "What Is R?" The R Project for Statistical Computing. Accessed August 14, 2016. https://www.r-project.org/about.html. • Used widely by statisticians for statistical analysis • As a result of its widespread use, thousands of easy to implement libraries that provide *all* widely used statistical techniques • Is not a 'real' programming language
- 14. Copyright © 2017 Information Systems Audit and Control Association, Inc. All rights reserved. How would we go about using Python (or R)? • The hard way: by learning it • The even harder way: hire an auditor with programming, analytics and auditing experience • The *easiest* and most effective way: create a cross functional team by borrowing a programmer from IT and a business analyst from the business.
- 15. Copyright © 2017 Information Systems Audit and Control Association, Inc. All rights reserved. Example Python (and R) analytic test • https://github.com/aclarkData/AuditAnalytics • 999 amount, weekends and keywords journal entry tests • Steps: • Input libraries • Import data • Wrangle as needed • Export to folder • Email • Schedule - Task Scheduler in Windows, Cron, or equivalent in Unix based system, i.e. Mac and Linux
- 16. Copyright © 2017 Information Systems Audit and Control Association, Inc. All rights reserved.
- 17. Copyright © 2017 Information Systems Audit and Control Association, Inc. All rights reserved.
- 18. Copyright © 2017 Information Systems Audit and Control Association, Inc. All rights reserved.
- 19. Copyright © 2017 Information Systems Audit and Control Association, Inc. All rights reserved.
- 20. Copyright © 2017 Information Systems Audit and Control Association, Inc. All rights reserved. Machine Learning • In essence, a machine understanding patterns in data without having to be explicitly programmed. • Very, very powerful technology that is transforming banking, search engines, advertising, and soon, every industry. • Examples: Credit card fraud detection, target demographic advertising, anomalous sensory data, etc.
- 21. Copyright © 2017 Information Systems Audit and Control Association, Inc. All rights reserved. Machine Learning Cont. • Numerous possibilities for utilizing machine learning and related technology, e.x. Natural Language Processing, etc., for Financial Auditing • For example, unsupervised clustering algorithm in use at Astec Industries. • Latest developments are only available in open source software or expensive statistical or computational programs such as SAS, which currently runs at a minimum of $9,200 upfront per single user license plus annual fees - “SAS® Analytics Pro." SAS®. Accessed August 26, 2016. https://www.sas.com/store/software/analytics- pro/prodPERSANL.html.
- 22. Copyright © 2017 Information Systems Audit and Control Association, Inc. All rights reserved. Possibilities • Time Series Machine Learning for predicting account balances • Natural Language Processing techniques for contract review and summarization - current bottleneck is (OCR) Optical Character Recognition technology. • Sentiment Analysis for Journal Entry and Transaction descriptions. • Jupyter notebooks for reproducible analytics and audit documentation
- 23. Copyright © 2017 Information Systems Audit and Control Association, Inc. All rights reserved.
- 24. Copyright © 2017 Information Systems Audit and Control Association, Inc. All rights reserved. Conclusion • Definition of Open Source Software • Unlimited possibilities for a customizable analytics experience • Scalable • Real world example • Machine Learning and the future of audit analytics
- 25. Copyright © 2017 Information Systems Audit and Control Association, Inc. All rights reserved. Thank you! • Email: [email protected] • GitHub: aclarkData • Blog: https: aclarkdata.github.io • LinkedIn: www.linkedin.com/in/andrew-clark-b326b767