Digital Controls and Algorithms Assurance
Digital controls are everywhere
Real life scenarios and use cases
Banking client asked Deloitte to validate the commission calculation algorithm and the actual revenues calculated for many years based on millions of financial transactions. The input parameters included frequently changing conditions lists, Dataflow used for the calculations involved several systems. All of these resulted in calculation logic and parameters related governance issues, data deviation problems over time, calculation logic related development flaws and simple change management control deficiencies resulting in financial losses over time.
The client approached Deloitte with a request on auditing their green profile indicator related calculation algorithm to ensure compliance with a published standard before the algorithm can be offered to banking clients. The algorithm used transactions and larger publicly available sustainability related databases to calculated the green profile indicators based on complex modeling. Deloitte provided sustainability and IT experts to review the algorithm and identify issues to be fixed based on the complex requirements of the standard.
Deloitte as a financial auditor performed portfolio level control review and testing of core banking systems to understand basic governance of the input parameters and review calculation logics and test calculation results. In case of any deviations the portfolio related mass effect over time has been estimated to ensure that potential losses or potentially overcharged clients are recognized.
Deloitte reviewed new developments of heuristic pairing logics and decision trees for several clients. These solutions aim to handle manually initiated bank transfers that either contain more facilities in one amount or only partially allow to identify the actual account of the debtor. Multi layer decision trees, complex criteria set, automated data cleaning and transformation, similarity matching algorithms and further elements of the implemented solutions helped to reduce manual work, on the other hand could have easily lead to significant amount of client complaints.
- Banking BackOffice and Accounting Tasks Automated
- Instant Payment Systems (GIRO IG3) Reconciliation and Automated Correction Logic Testing
- IFRS Related Developments Testing – Amortized Cost, EIR, Staging, Past Due Calculations, Portfolio Level ECL Calculation Supporting System
- System Driven Complex Modeling and Workflows – Banking Client Scoring System Review and Model Implementations Testing
- Calculation Methodology Audit – Certification Related IT System Audit in Biomass Energy Utilization