Customer story: Wärtsilä
Time to Change Internal Audit? Strengthening Internal Audit
with Process Mining
As the world continues to evolve at an ever-increasing pace, organizations across industries are constantly searching for ways to stay ahead of the curve. With the current landscape of increasing risks, regulatory actions, and compliance expenses, the global manufacturer Wärtsilä decided it’s time to strengthen its approach to internal audit.
We get total visibility to our processes and data, there’s no longer a need for extrapolation and assumptions based on sampling.
Aurora Sunna
Advanced Audit Automation Analyst at Wärtsilä
MEET OUR CUSTOMER
Wärtsilä
Wärtsilä is a global leader in innovative technologies and lifecycle solutions for the marine and energy markets. They emphasize innovation in sustainable technology and services to help their customers continuously improve their environmental and economic performance.
The Rise of Data-Driven Internal Audit
For Wärtsilä, a global leader in innovative technologies and lifecycle solutions for the marine and energy markets, internal audits are an essential component of maintaining compliance and ensuring operational excellence.
However, while there are clear benefits of traditional internal auditing methods, these alone couldn’t provide holistic visibility to the data and processes, which are a significant part of the business in a large company like Wärtsilä.
The Internal Audit function at Wärtsilä wanted to find a way to incorporate a direct and data-based approach into their audits. Now, they stand out as forerunners in the profession, as they use process mining to diversify the auditing approach.
In this case study, Wärtsilä shares its journey to data-driven internal audit. This story provides insights, ideas, and best practices for all professionals looking to enhance the effectiveness of their internal audit functions and transform traditional audit practices into data-driven approaches.
Data Enhances Traditional Audits: Why Auditing Methods are Evolving
With the focus more on the processes and data, Wärtsilä Internal Audit recognized the need to find a more data-driven and holistic way to conduct audits. The availability of process mining presented an opportunity to move into advanced analytics, to understand patterns across the entire data population in the global ERP, as a strong complement to the traditional review of a small number of random samples.
We get total visibility to our processes and data, there’s no longer a need for extrapolation and assumptions based on sampling.
Aurora Sunna, Advanced Audit Automation Analyst at Wärtsilä
Tom Unnérus, VP of Internal Audit at Wärtsilä, highlights that there is a point in internal auditors having access and visibility to all data in the business processes - it creates a more level playing field for factual discussions on what issues and root causes we may have, or not.
Learn how:
- Wärtsilä uses data to enhance traditional internal audits and the Internal Audit function
- Processes analytics benefits auditors in their audit work
- Process Mining benefits Internal Audit as a function
Why not only use data-based audits, then?
For Wärtsilä, it has been ideal to incorporate data and process analytics into their standard audit process, in addition to using the new technology in standalone analytics audits.
Wärtsilä’s auditors see process mining technology as an important complement and still find traditional audits crucial. In more traditional audits, whether enhanced by process mining or not, auditors interact first-hand with both management and colleagues who execute the audit subject in real life, thus improving collaboration. In addition, traditional sessions allow auditors to observe operations directly, and get a deeper understanding of any details, opportunities, gaps, weaknesses, or inefficiencies that may have been pointed out by the technology. This is a two-way street - technology may also be used to dig deeper into any leads provided by live audit sessions with colleagues.
While the hypothesis is still there that the cost and time of traditional audits can be reduced as Wärtsilä’s auditors are able to investigate data in advance and go directly to the point when meeting auditees – there is also truth in the (Finnish) saying that the appetite comes with eating. The discussion is one level more detailed than before, and therefore also quickly requires the presence of analytics. It is also therefore important to realize that audit methods evolve in the same way as business operations do, and the analytics also join the audit sessions. Jointly reviewing the influence analyses in audit sessions to iteratively work one’s way toward pinpointing influencing factors supports very effective collaboration toward the resolution of issues.
Some points are now easier to look up in advance. So, when we meet a local purchasing manager, we already know what to ask – we come with more informed questions, we go more directly to the point.
Tom Unnérus
VP of Internal Audit at Wärtsilä
Why Analytics Matters in Internal Audits
Instead of relying on partial, siloed, or fragmented data, auditors can apply an end-to-end process-oriented approach to understand the organization’s operations holistically. By examining all the data in the business processes, auditors can identify risks that cut across all transactions, geographies, products, customer groups, business areas, or functional areas and assess the exact failure rates and their contributing factors of controls in mitigating those risks.
Auditors may rely on process mining to look for tokens or patterns indicating defects or mistakes, speed or efficiency losses, or of the 8 types of waste in the processes, as well as signs of risk exposure such as fraud, corruption, non-compliance, misconduct, etc. Without technology, these signs may be hidden among the overwhelming majority of normal and good operations in any IT system.
Beyond identifying opportunity areas, auditors can use analytics to make clear and tangible recommendations, for example for where in the process to improve.
A process and data-focused approach to internal audit helps organizations to achieve greater transparency and accountability overall, as all process data is included, and inconsistencies together with their influencing factors are highlighted.
How strong analytics supports independence and objectivity
Why would Internal Audit need to do process analytics themselves? The response has to do with looking with the eye of the auditor. When analyzing processes, non-audit functions, and business units usually focus on improving process efficiency and lead times by removing bottlenecks.
In contrast, auditors in their unique role to “think like a thief” may find process steps progressing too quickly even more interesting. Therefore, there is particular value in performing analytics and process mining independently within and by the Internal Audit themselves. In the extension, direct and capable access to the raw data supports the independence and objectivity of the Internal Audit function.
How Process Mining and Big Data Analytics in Wärtsilä Internal Audit Improves Accuracy, Efficiency, and Collaboration
Accuracy
The data-based approach provides a more in-depth understanding of the operations and risk profile of Wärtsilä’s complex organization.
Efficiency
It also enables auditors to focus on significant risk areas, which can be identified proactively (meaning before the audit sessions), for example using the influence analysis. The same may allow the auditor to invest less of the valuable session time in a certain topic if the advance influence analysis does not raise alarms.
Collaboration
Placing analytics of process data at the center of the discussions may enable a more collaborative approach to facts, removing opinions or assumptions.
Influence Analysis Helps Ask Informed Questions and Solve Problems
By evaluating business processes and identifying contributing factors, auditors are able to pinpoint the specific details that affect a problem or inefficiency. This information is then used jointly with the auditee to ask more informed questions and address potential issues.
“Influence analysis is one of the most practical features.”
Aurora Sunna, Advanced Audit Automation Analyst at Wärtsilä
Tom Unnérus, VP of Internal Audit at Wärtsilä, explains that the influence analysis is not a way to expose the guilty party; instead, it enables constructive and collaborative problem-solving in the actual process itself, together with the auditees. “In addition to issues in the process, Influence analysis is a constructive way for finding solutions to problems in the policies and directives, systems and tools, or the roles and responsibilities, too. We can point out where something has happened and when, and give color commentary about why”, Tom explains.
Increased Visibility into Transactions Means Easy Access to Audit Evidence
With QPR ProcessAnalyzer, Wärtsilä is now able to look at all transactions, rather than just a small fraction, which has greatly increased the company's visibility into actual discrepancies. Collaborating with auditees has become much easier as evidence is easily available:
“Now we can provide audit evidence to our auditees with ease, which helps our auditees to recognize the issues”, comments Aurora Sunna, Advanced Audit Automation Analyst at Wärtsilä
Internal audit before process mining vs. after process mining
Relying on traditional audit methods
Analysing hard copy, Excel, or SAP report samples
Relying on interviewing and manually diving into samples in SAP data
Limited visibility to process compliance, extrapolating conclusions based on control gaps in samples
Auditing all possible topics with sampling and interviews
Utilizing data analysis as a complement
Analyzing all relevant SAP data.
Making more informed, data-driven audit inquiries, and collaborative deep dives in interviews and sessions
Full visibility to all transactions, more accurate facts to estimate the full impact of control gaps or inefficiency Prioritizing topics with the most interesting pre-analytics findings for deep dives in sessions
Wärtsilä is not only an innovator in developing sustainable technology — but also a forerunner in technology usage in internal audit.
What would you tell someone who's considering process mining?
Aurora Sunna, Advanced Audit Automation Analyst at Wärtsilä, answers:
“I would tell them that in internal audit, process mining broadens the auditing perspective and offers many benefits”:
💡 We get total visibility of our processes and data – there’s no longer a need for guesses and assumptions based on (lucky) sampling.
💡 Influence Analysis helps us to see where to put more focus. We still do some sampling, but it’s less random. It helps us to identify the well-working parts of the organization, where best practices can be duplicated elsewhere in the organization.
💡 We can address the findings from the Influence Analysis to the right parties in our complex organization.
💡 We can easily provide data extracts and audit evidence to our auditees.
💡 Process mining is an efficient way to improve: It provides an easier way for auditees to address findings and improve their own operations.
💡 Talking to people and analyzing data complement each other greatly. Since Internal Audit now makes more detailed findings, discussions help us to understand and learn more about exceptions and variations in different processes. Iterations are valuable and needed.
Why Wärtsilä Internal Audit likes to stay with QPR ProcessAnalyzer
- Flexible licensing: QPR offers license-based and flexible pricing. This allows Wärtsilä Internal Audit to analyse multiple processes at a reasonable cost.
- Good product: QPR is a constantly evolving process mining tool with many advanced features.
- Clear communication: From the beginning, the communication between Wärtsilä and QPR has been clear and positive, ensuring that both parties understand each other's needs and goals.
- ETL functionality: The inclusion of ETL (extract, transform, load) functionality in QPR is a useful feature that makes data extraction and analysis easier. Having this supports Internal Audit’s independence and objectivity.
- Data connectors: QPR has a variety of data connectors to different systems, making it easy for Wärtsilä Internal Audit to extract data from various sources.
- Influence analysis: This is one of Wärtsilä Internal Audit’s favorite QPR ProcessAnalyzer features, as it enables the Internal Audit team to identify and address the influencing and contributing factors of what has been investigated.
- Flexibility in creating visualizations: The visualization and flowchart features are versatile and new views are relatively fast to create.
- Data filtering down to the most detailed row level: The ability to dynamically filter data is important when investigating a certain scope, e.g., a part of the organization. Sometimes more information is needed from the source system when drilling needs to be done all the way down to the row level. In practice, it means, that a large number of data is processed relatively quickly.
- Long-term relationship: Wärtsilä has had a positive and long-standing relationship with QPR. This has allowed them to work together on a more equal level and achieve their goals effectively.
- Enhanced auditing capabilities: With QPR ProcessAnalyzer, Wärtsilä Internal Audit has been able to analyze multiple processes, such as order-to-cash and purchase-to-pay, in detail. They can easily filter and analyze data to identify compliance challenges and issues and extend the analysis to other areas.
Summary: Benefits of Internal Audit & Process Mining
Overall, Wärtsilä's use of process mining for internal audits has been important. Using innovative technology, they have been able to enable improved compliance while building trust with stakeholders and supporting Internal Audit independence and objectivity.
🔍 Enhanced visibility: Process mining provides a comprehensive view of Wärtsilä’s processes, allowing internal auditors to see the whole picture.
📈 Improved efficiency: By allowing prioritisation, internal auditors can focus the auditee’s limited time on the most interesting areas.
🕵️♂️ Better risk management: Process mining enables internal auditors to identify potential ethics compliance risks such as fraud and corruption and make recommendations on mitigations.
💻 Data-based auditing: By using a data-driven approach to auditing, auditors can evaluate process performance based on actual data, rather than assumptions or perceptions.
👩💼 Enhanced collaboration: Process mining fosters collaboration with and between different departments and stakeholders, leading to a more cohesive and effective internal audit process.
👍 Improved audit quality: By providing greater visibility and more accurate insights, process mining ultimately leads to a higher quality internal audit process.
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