Business intelligence in the age of hyper transparency

How we are helping businesses get ahead of the wave of unanalysed information by using data exploration and visualisation to illuminate insights.

The amount of data being generated and collected each and every moment is staggering. In fact, some estimate that by next year there will be more digital bits of data than stars in the known universe.

This vast quantity of data can drive business intelligence and help businesses manage costs and reduce fraud. But the challenge is figuring out how to use that data – many major companies currently analyse just 12% of the data they have.1

In 2019, our survey of global CEOs found 87% believe data is essential for understanding their business’s risk exposure, but only 22% feel their current data is up to the task.2

Increased scrutiny, declining control

Technology is exponentially accelerating the potential of data, but its misuse and rapidly mounting numbers of data breaches mean increased monitoring, while the trust gap between customers and institutions widens.

“What we are seeing across Asia Pacific is this increasing scrutiny from within and also from outside organisations. We can call it a decline in trust,” says Paul McMahen, Partner and National Leader for Data Assurance, PwC Australia.

At the same time, transparency is becoming difficult. Systems are fragmented, robotic process automation is on the rise, and back-of-house activities relating to financial transactions are often outsourced. It’s all driving data siloing, which 51% of CEOs say is the main reason their data is inadequate.2

“As management, you’re being asked to provide greater confidence about what's happening under increased scrutiny, but you have less and less control and visibility over detailed transactions,” McMahen says.

In this age of hyper transparency and declining trust, traditional methods in internal audit, for example, are being challenged. “They’re typically point-in-time, maybe once a year or two years per financial process. They use a random sample of maybe 10 to 15 transactions that potentially aren't the risky ones,” he says.

Extrapolating risk from a small set of random transactions means traditional methods struggle to find the real cause of an issue. “We’re finding boards now just have this expectation,” McMahen says. “They’re asking us ‘what are you doing with big data?’”

PwC has strived to leverage technology and data to bring in and analyse 100% of transactions, providing more coverage, confidence and quality. In a break from tradition, Financial Processes Analyser (FPA) started as a regionally funded Asia Pacific initiative, to foster territory collaboration in meeting the challenges of big data across the region.

Australia, New Zealand, Hong Kong and Singapore were identified as development hubs with the right capabilities to contribute talents in developing a data-driven solution for the Asia Pacific market. This collaborative approach not only resulted in a solution that all territories can leverage to bring to market, it enabled data analytics teams to gain knowledge and approaches from the experience of more mature markets.

FPA has high applicability to audit, risk and compliance functions, but also as a powerful management tool for the likes of CFOs, heads of procurement, or heads of HR who are looking to get more value out of the analysis of financial transactions.

“It's a powerful business intelligence solution, which allows for the continuous monitoring of financial processes and the ability to explore and visually cut and dice your data in unique ways,” McMahen says. “FPA is the answer to be able to get all that disparate data into one place and give management the ability to monitor and explore it in a really fast, simple way.’’

Surprisingly, there aren’t really any products out there that look like FPA. Data visualisation tools are readily accessible, but PwC’s goal was to create something to help future proof its existing services as clients increasingly expect PwC to come with data solutions, not just smart people and methodologies. “There are similar solutions, but they’re often mutually exclusive to the financial process that’s being examined,” McMahen says. “They’re great for analysis of individual financial processes, but there’s nothing that brings everything together like FPA.”

For one leading Australian financial services company, FPA allowed them to map employee expense claims – both corporate card and cash reimbursement – against HR data. They were able to quickly drill down into and cross-analyse all expense data, and can now monitor, continuously for exceptions such as when expenses are claimed twice on both corporate card and cash reimbursement, or when an employee incurred expenses whilst on leave.

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“What we are seeing across Asia Pacific is this increasing scrutiny from within and also from outside organisations. We can call it a decline in trust.”

Paul McMahen, Partner and National Leader for Data Assurance, PwC Australia

Visualisation – seeing the whole story

We all love a good story, and nothing tells a story like a picture. That’s why data visualisation is at the heart of FPA; it’s the ability to instantly see changing trends and identify outliers across millions of transactions. “The detail is still there,” McMahen says. “The power of visualisation is being able to look at the highest level but, within a click or two in FPA, be able to get back down to that detailed transaction level of information for outliers that catch your eye,” he says.

Compared to using small data samples, big data and visualisation is incredibly powerful. “With FPA, you can turn up to the meeting and say ‘here it all is, this is everything in these visuals. These are the ones that we're talking about today, because, as we all can see, they look a bit strange compared to the rest,’” says McMahen.

By actively tracing all transactions, FPA is helping PwC move away from simply identifying outliers to now bringing in positive assurance. Identifying the small fraction of questionable transactions with reliable accuracy provides assurance that the remaining majority are unremarkable.

“We can now say ‘here’s everything relative to each other. You can see all the normal looking transactions that also have been profiled, adding confidence to why the more unusual transactions have been the ones investigated in more detail,’” McMahen says.

In a global business environment on hyper-speed, more positive assurance from analysing complete populations is invaluable. Imagine a vendor in the market involved in a political or financial scandal. Quickly knowing your exposure is essential. “You can use FPA to within seconds, examine the entire data set in the payables area for every purchase order, every payment, every invoice, every interaction with a vendor, and answer with so much more confidence whether and when you’ve dealt with them.”

FPA in action

Case study - Reconciliation analysis

For one Hong Kong-based fashion group, analysing and ensuring integrity and completeness in their order to cash cycle was proving difficult. The group provides footwear, clothing research design, manufacturing and brand development, and has branches across Mainland China.

Many of these branches commonly used personal bank accounts for cash collection. PwC knew this was a high-risk area for identifying revenue against cash collection, but manual reconciliation across private accounts, bank journals, and recognised branch revenue is time-consuming and rarely accurate.

Instead, PwC integrated monthly private account data into fiscal year, segmented by region and account ID, and used data visualisation to test the data’s completeness and accuracy.

Visualisation allowed rapid order-to-cash analysis and checking of private account debt and credit amounts. Although the partnership is still ongoing, PwC was able to provide one-to-one checks of branch private account data with bank details. 

It’s that ability to identify patterns and trends from highest level, and then quickly drill down to a particular vendor or employee, for example, to solve the problem that sets FPA apart.

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Case study - Internal audit and controls

A regional Malaysian security guard firm was employing a relatively manual internal audit process. This meant the group was unable to perform deep-dive reviews or identify unusual transaction patterns.

To reveal trends and gaps in back-office processes, cash management, purchasing and payroll, PwC deployed an integrated audit of data and controls, including sample testing and data analytics.

Comfortingly, the internal audit team discovered there were very few exceptions and that most controls were effective. However, the audit did reveal instances of guards working excessive hours – more than 18 hours every day for a month. Prior to the audit, management was unaware of this irregularity.

Management has now implemented stringent preventative and control measures to improve conditions.

As a result of FPA, guard welfare has improved, maximum hours are no longer exceeded, and a potential breach-of-contract issue has been averted.

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Case study - Purchasing processes visualisation

After implementing a SAP solution and expanding its business operations, a solar panel manufacturer in Vietnam required a detailed overview of its main purchasing processes. The goal was to identify and address anomalies, and remove any obstacles to future success.

PwC’s audit and data teams identified six important issues which it communicated on dashboards to the Financial Controller.

The data visualisation function allowed management to clearly and fully appreciate the impact of these issues, and resolve them accordingly.

With the powerful functionality of FPA now demonstrated, the manufacturer is keen to deploy additional FPA modules for its next audit.

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Contact us

Paul McMahen

National Leader, Data Assurance, Melbourne, PwC Australia

Tel: +61 419 495 984

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