Using Data Analytics in Audits

Data Analytics is the process of inspecting, cleansing, transforming and modeling raw data with the purpose of discovering useful information, drawing conclusions and supporting decision making.

Traditional audit methods served auditors for decades but as technology advances and stakeholders’ expectations evolve, so does the need for auditors to innovate and transform their approaches in order to keep pace with demand. Advances in technology and software solutions like Computer Aided Audit Tools (CAATS) and Audit Data Analytics (ADA) make it possible for auditors to fundamentally change the way a financial statement audit is done.

What is new about Audit Data Analytics (ADA)?

Classical analytical procedures consist of absolute comparisons of balances with prior year balances or with budgets and forecasts, ratio comparisons and trend analyses. They may also consist of comparisons based on financial or operational data designed to predict the balance in a financial statement classification and form part of the audit judgment process by challenging financial information or the lack of such information.

Audit data analytics is much broader and deeper than traditional analytical procedures. It involves using powerful software tools and statistically complex procedures. These can include: cluster analysis; predictive models; data layering; visualizations; and “what if” scenarios that allow the exploration of new ways to analyse large sets of audit relevant data sourced from internal and external sources in order to produce audit evidence during risk assessment, analytical procedures, substantive procedures and control testing.

What benefits do ADA bring to auditors?

The advances in technologies and software solutions in ADA will enable auditors to improve audit quality in a number of ways, including:

  • deepening the auditor’s understanding of the entity;
  • facilitating the focus of audit testing on the areas of highest risk through stratification of large populations;
  • aiding the exercise of professional skepticism;
  • improving consistency and central oversight in group audits;
  • enabling the auditor to perform tests on large or complex datasets where a manual approach would not be feasible;
  • improving audit efficiency;
  • identifying instances of fraud; and
  • enhancing communications with audit committees.

How ADA can enhance audit quality?

ADA techniques and methods enable audit teams to start analysing client data early in the audit process and begin identifying areas that need further investigation. This enables problems to be identified as early as possible, and audit teams can tailor the audit approach to deliver a more relevant audit by adapting their audit plans accordingly.

ADA can be used to evaluate and assess large volumes of information quickly and can result in better understanding the entity and its systems. This provides opportunity for auditors to make better informed risk assessments so that further audit procedures responsive to those risks are more focused and effective. Since more time is spent focusing on the areas where greater risk is detected, a better and more sophisticated risk analysis, fraud identification and monitoring is possible, enabling increased auditors’ focus.

ADA techniques can also enable auditors to perform more frequent testing at shorter intervals, rather than concentrating audit work around year-end. Engaging in continuous testing and monitoring of data again leads to better risk identification, more accurate control assessments, and more timely and relevant audit reporting.

What is important to ensure that ADA can be used successfully?

It is important to first confirm the feasibility of ADA in an audit. The following would need to be considered:

  • Availability of data
  • Transportability of data
  • The client’s data media and format
  • Costs of using ADA

Once the feasibility of ADA is confirmed the next steps would need to be taken:

  • Decide which areas will be subjected to ADA (amend audit plan accordingly)
  • Define the objectives of each procedure (what outcome is required?)
  • Involve the IT specialists (where necessary)
  • Identify the data fields that would be needed to produce the required reports
  • Discuss the objectives and benefits with the client and identify a primary client contact person that will assist the audit engagement team
  • Request the data files in an acceptable format
  • Perform a test run (where ADA is being used for the first time) to ensure that data is correct
  • Develop and run the test on the data (as developed to address audit objectives)
  • Inspect reports with test results and follow up on any exceptions
  • Evaluate the results and conclude
  • Communicate findings to the client in an understandable manner (charts and graphs with simple notes can be used)

Nexia International becomes ninth largest global accounting network

Nexia International (Nexia), a network of independent accounting and consulting firms, is delighted to announce that according to the latest International Accounting Bulletin (IAB) World Survey, the network has risen one place since last year to become the 9th largest global accounting network, as measured by fee income.

The  financial results for 2017, show total fee income of more than US$3.62bn – an increase of 13% on 2016.

This increase in global revenue is a result of growth right across the network. The Asia Pacific region achieved spectacular growth of 62%, including a doubling of fee income in China for the second consecutive year.

The North & Central America region showed an increase of 8%, and in Europe, the Middle East and Africa fee income grew by 7%.

Kevin Arnold, CEO of Nexia International, said: “This impressive growth across the network is great news and we are delighted to have risen to 9th position in the global rankings.

This rise in fee income is clear evidence that we continue to successfully implement our long-term growth strategy of recruiting high quality firms in key and emerging world markets.”

For more information, please contact:
Kevin Arnold
Nexia International
T +44 (0)20 7436 1114

PR enquiries:
Sarah Miller
Thirdperson Words
T +44 (0)7941 550310

2018 South African Professional Services Awards

Professionals from various organisations gathered at a gala dinner in Montecasino Ball Room on the evening of 1 February 2018 to honour the best amongst them. The South African Professional Services Awards were being hosted for the third time after a rigorous process of determining winners through strict criteria.

Nexia SAB&T were nominees for four awards, which included the hotly contested Accounting Professional of the Year for which both our Chairperson, Ndumi Medupe (meet our new chairperson here) and our CEO, Bashier Adam were nominated:

  • Accounting Firm of the Year (Nominee: Nexia SAB&T)
  • Accounting Professional of the Year (Nominees: Ndumi Medupe and Bashier Adam)
  • Woman Professional of the Year (Nominee: Ndumi Medupe)
  • South Africa’s Best Professional (Nominee: Ndumi Medupe)

“These awards are important as they give visibility to disciplines that are desperately needed in this country. They also reward entities for performing well in important areas such as transformation, customer service, contribution to the community and commitment to ethical best practice,” said Gert Bezuidenhout, Regional General Manager – Sanlam Gauteng Region at Sanlam who sponsored the event.

And The Winners Are

Ndumi Medupe narrowly beat Bashier Adam to the 2018 title of Accounting Professional of the Year.

Nexia SAB&T was recognised as runner-up in the category of Accounting Firm of the Year.

The Woman Professional of the Year went to Shirley Machaba of PWC, while Sally Hutton of Webber Wentzel was crowned SA’s Best Professional.

We wish to extend our congratulations to all the other winners and nominees on the night across the myriad of professional service providers in South Africa. Your spirit of innovation and making a difference inspires us.

The Way Forward

We couldn’t be happier than to be recognised for our efforts in transforming the accounting, audit and business consulting sectors through Gender Empowerment. These awards follow on from our being recognised at the Standard Bank Top Women Awards in August of 2017. (See article here)

Nexia SAB&T is looking forward to 2018 being a year of continuing to demonstrate our commitment to our ideals of gender empowerment, innovation and responsiveness to the needs of our clients, staff and society we serve in.

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Liquidations and Insolvencies

Liquidations and Insolvencies Explained

When a business or a person is unable to pay their debts when they become due, they are considered to be insolvent. The business model is quite simple; when the money going out is more than money coming in, debts are accrued and the liabilities exceed the assets.


A debtor may apply for their personal estate to be sequestrated by way of voluntary sequestration or it can be sequestrated by a creditor by way of compulsory sequestration. The two most important components of applying for sequestration is that a liquidated claim should exist and an act of insolvency should be proved to have been committed.

The applicant must prove that the sequestration will be to the advantage of the general body of creditors who will ultimately receive a dividend from the proceeds of the estate. This would all form part of the Notice of Motion brought before a judge of the High Court who holds jurisdiction.

Once the final sequestration order has been granted by the High Court, the case is referred to the Master of the High Court who holds jurisdiction. The Master will then appoint an Insolvency Practitioner listed on their National Panel either by way of nomination or make a discretionary appointment. Sufficient security needs to be provided to the Master of the High Court to defray all sequestration costs until such time that a Practitioner is appointed.  All estates vest under the care of the Master of the High Court.

Insolvency Practitioners

The appointed practitioner will attend to all the administration to wind up the estate as quickly and efficiently as possible. A great deal of communication exists between the Practitioner and the creditors throughout the administration of the estate. The practitioner will collect claims, sell the assets and maintain the finances of the estate throughout the process. The Practitioner is then obligated to frame and lodge a Liquidation Account with the Master of the High Court setting out the financial situation of the estate. Should all creditors as well as the Master be satisfied with the contents of the Account, the Master will confirm the account and dividends, if any, will be paid out. In the event of a contribution being levied, the Practitioner will enforce the necessary steps to collect same. They will then proceed to finalise the winding up of the estate.

Application for Rehabilitation

The ordinary time when an application for rehabilitation by court can be made is four years after sequestration. The period in a particular case would depend on:

  • When the first account was confirmed
  • Whether the Insolvent Estate was previously sequestrated
  • Whether the Insolvent has been convicted of certain offences
  • Whether the Master recommends rehabilitation

In certain cases the insolvent may apply much earlier if:

  • After giving six weeks’ notice no claims were proved against the estate within six months from the sequestration date, the insolvent has not committed certain offences, and the estate has not been sequestrated previously
  • After the confirmation of the account providing for the payment in full of all claims of creditors with interest thereon.

Liquidation of Companies, Close Corporations and Incorporations

This is the process which precedes the dissolution of an entity. The affairs of the company are administered by tracing and taking control of assets for the payment of creditors according to their ranking of preference and the distribution of the residue amongst the shareholders according to their rights.

Types of Liquidation

Voluntary winding up may be of a solvent company or an insolvent company. Both types of voluntary winding up require the signed resolutions by members / directors which needs to comply with the following; It must be clear from the resolution that:

  • It was a special resolution,
  • Adopted by the members or directors,
  • Which provides for a creditors’ winding up of an insolvent company, or
  • Which provides for the voluntary winding up on a solvent company.

The Company, a creditor, a shareholder or a certain official may apply for the compulsory winding up of a company. The circumstances under which the company may be wound up includes:

  • Inability to pay debts, or
  • It appears to the courts that it is just and equitable that the company should be wound up.

Winding -Up

A provisional winding-up order is usually issued in the form of a rule nisi. Interested parties are invited to appear on the return date and advance reasons for the final order not to be issued. If no such reasons can be given, the court will proceed to issue the Final Liquidation Order.

Security for costs must be lodged until the appointment of a provisional liquidator. The application needs to be accompanied with a certificate from the Master of the High Court confirming that security has been lodged. A copy of the application must be served on the following:

  • The Master of the High Court
  • Registered unions
  • Employees
  • South African Revenue Service

The company will no longer be under the control of its members or directors but rather first in the Master of the High Court and then in the appointed liquidators.

Important consequences of Liquidation include:

  • Transfer of shares after liquidation are void
  • Change of status of Company or the members without approval of liquidator is void
  • Disposition of property, including claims after commencement of liquidation is void
  • All legal processes are suspended

Realisation of Assets

The appointed liquidator will proceed to realise all assets vesting in the Company and liquidate same in order to generate sufficient funds for the payment of the administration costs as well as payment of dividends to proven creditors. All creditors need to prove their claims at the official Creditors’ Meetings convened by the Master of the High Court and the appointed Liquidator.

All funds arising from the liquidation of a company need to be paid to an estate bank account which will be managed by the appointed Liquidator under the care of the Master of the High Court.

Nexia SAB&T’s Insolvency Services

Nexia SAB&T offers administration of deceased estates, both testate and intestate as well as the administration of Insolvent Estates and Liquidated Companies and Close Corporations.

Nexia SAB&T received various appointments within the Liquidation and Insolvency Industry over the years including complex and high profile estates.  Our Liquidation and Insolvency department currently has eleven liquidators on the Master of the High Court’s National Panel of which five are Senior Practicing Liquidators.

Nexia SAB&T received its very first appointment in early 2003 and has developed a fully equipped Insolvency division since then.

We have a qualified and experienced Insolvency and Deceased Estate Practitioners and Insolvency Administrators, acting as assistants and consultants to all our liquidators.

Nexia SAB&T has offices in all nine South African Provinces and take appointments nationally.

Contact Us
Contact: +27 21 596 5400


The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in future, and, to the extent permitted by law. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Nexia SAB&T does not accept liability for any loss arising from any action taken, or omission, on the basis of the content in this article or any documentation and external links provided.

Nexia SAB&T is a member firm of the “Nexia International” network. Nexia International Limited does not deliver services in its own name or otherwise. Nexia International Limited and the member firms of the Nexia International network (including those members which trade under a name which includes the word NEXIA) are not part of a worldwide partnership. Member firms of the Nexia International network are independently owned and operated.

Nexia International Limited does not accept liability for any loss arising from any action taken, or omission, on the basis of the content in this publication or article or any documentation and external links provided.

The trade marks NEXIA INTERNATIONAL, NEXIA and the NEXIA logo are owned by Nexia International Limited and used under licence.

References to Nexia or Nexia International are to Nexia International Limited or to the “Nexia International” network of firms, as the context may dictate.

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