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Why you should consider a digital testing approach

A methodology for automating controls testing

​Manual testing is slow, inefficient, and prone to error. But a digital testing approach (DTA) can overcome those problems, bringing valuable insights to management that might otherwise be overlooked. Learn how automating controls testing can create significant, enterprise-wide advantages.

The manual testing dilemma

As regulatory requirements and oversight from internal governance functions continue to create a growing need for organizations to perform controls and compliance testing, manual testing processes may pose significant risks for organizations. Regulations can be vast in scope and will differ by industry, potentially increasing the breadth, along with the cost, of what governance functions are required to monitor.

Internal audit, IT, operations risk, and other governance functions typically struggle with limited resources. In addition, they often lack a framework for automating testing. Pressure to reduce costs leaves them with even fewer people to perform a wider array of tasks, further increasing the risk of failures due to manual errors.

To compound matters, most organizations have an assortment of disparate technologies that prevent them from capturing a consolidated view of risks or reporting for noncompliance.

A winning approach: Digital testing

DTA allows organizations to:
  • Reduce risk. DTA extracts, compiles, and tests defined aspects of data from multiple systems across the organization. Automated tests also enable 100 percent testing of the control and identification of anomalies. This full view of noncompliance items provides transparency and helps reduce risk.
  • Uncover insights. DTA provides a consolidated view of testing that can reveal trends and provide valuable management insights. This can elevate the internal testing effort from a cost center to a function that provides value.
  • Increase efficiency. Manual testing is inefficient, prone to manual error, and time-consuming. DTA creates efficiencies by reducing the time spent in gathering data, selecting what to test, and conducting the back and forth to obtain detailed documentation. Automated tests may reduce these risks while improving the quality and speed of testing.
  • Establish continuous monitoring. Digital testing enables continuous monitoring, provides oversight, and lays the groundwork to automate controls execution. DTA captures and stores control data in an electronic format, automatically comparing data and flagging exceptions. This enables better compliance and allows governance functions to quickly address exceptions, reducing resource and time commitment and freeing individuals to focus on more value-added tasks.
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How to establish a digital testing approach

For companies that want to implement DTA, it's important to establish a project scope and align key stakeholders, so they understand the necessary changes that will be made.

Companies should start by identifying controls that fit necessary criteria and that use data in an electronic format. Developing and executing a proof of concept that has the most electronic data available will aid in managing implementation and enabling success.

Over time, as more data is accessed electronically, the scope of automation can be expanded across multiple processes.

Controls for proof of concept

Identifying the best set of controls for a proof of concept and applying the right tools and techniques can be a challenge. Start by asking the following questions:

  • Which cycle concerns me the most?
  • Where is the most electronic data available?
  • Which control could provide the greatest insights to create efficiency?

Once the answers to these questions are clear, proceed with a proof of concept and measure the resulting benefits. As requirements continue to become more onerous, DTA can create a significant advantage for any organization, enabling better and faster testing, and reducing risks and the costs associated with compliance.

Want to learn more? Download our full report, "Digital testing approach: A methodology for automating controls testing."

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