Issue link: https://maltatoday.uberflip.com/i/1313317
maltatoday | SUNDAY • 29 NOVEMBER 2020 8 AUDITING Maria Rosaria Coduti and Julie Sors Directorate-General Communications Networks, Content and Technology (DG CNECT), European Commission Data as a key resource for auditors Artificial intelligence, the Internet of Things, sensors, connectivity, indus- try 4.0. These words have entered our everyday vocabulary and exemplify the world we live in. Data is the foundation of all of these. It is the enabler of the digital transformation that is pervad- ing every aspect of our lives, from the management of traffic flows in cities and improved use of natural resources in farms, to more efficient factories and better diagnoses and clinical decisions in hospitals. Data enhances the ability of stakeholders to innovate, create job opportunities, boost growth and com- petitiveness, deliver services to citizens and make their actions sustainable for the well-being of individuals and our planet. Data is being generated and collected all around us at every moment; for ex- ample, geographical information, statis- tics, weather data, research data, trans- port data, energy consumption data or health data. The increasing capacity to make sense of 'big data,' thanks to the advance of data analytics and manage- ment tools, is leading to technological innovation and the development of new services and products. For example, high-resolution satellite data from Copernicus Sentinel satellites allows for the real-time monitoring of natural water resources to prevent drought or pollution. Such data brings considerable benefits to public authori- ties, researchers and private companies in terms of providing innovative servic- es. Auditors need to embrace the digital revolution The digital transformation is not leav- ing the world of auditing untouched. On the contrary, auditors are already beginning to embrace the digital revolu- tion in order to execute their functions in the most efficient and effective way. The availability of non-traditional data- sets, together with enhanced data ana- lytics technologies, represents a great opportunity for auditors in fulfilling their duties. For example, auditors can now more easily combine datasets to analyse a particular phenomenon, e.g. performance of farmers across different countries at the same time. In doing so, they can better identify weaknesses, in- efficiencies and trends in order to make recommendations to auditees. Audit processes should continue to harness the latest technological de- velopments in data analytics, machine learning and artificial intelligence, to al- low auditors to perform their financial, compliance and performance audits in a faster and more innovative way, draw- ing conclusions that would have been impossible to reach via traditional sta- tistical sampling. By automating data collection and processing, these tools could spare auditors from time-con- suming manual data collection and analyses, thus allowing them to focus more directly on the analysis of insights to identify potential risks and fraud cases more easily. Finally, digital au- diting — using digital means available to arrive at an audit opinion — is set to improve the transparency and account- ability of public authorities towards the citizens they serve. To gain maximum benefit from the digitisation of auditing in the near future, it is crucial that auditors are equipped with the digital skills and ca- pabilities needed to use the new tech- nologies available. Auditors as producers of data Auditors — from both supreme au- dit institutions (SAIs) and the private sector — are not only users and ben- eficiaries of the vast quantities of data produced every day, but also produce data themselves. Such data, along with other public sector data, can be ex- tremely relevant not only for boost- ing the economy and developing more sustainable and efficient products and services, but also for developing more evidence-based decision-making and helping policymakers understand which priority areas to focus on. The insights from auditing procedures are a valuable resource for public authorities to per- form ex ante or ex post evaluations of different types of interventions, e.g. leg- islative interventions or financial sup- port, to mention but a couple. The need for SAIs to make more data available is therefore clear. The ECA, for example, has published eight datasets on the EU Open Data Portal , which gives access to open data published by EU institutions and bodies. All the data stored in the Portal's catalogue is free to use for com- mercial or non-commercial purposes . The ECA has released the annual re- ports on the implementation of the EU budget from 2010 to 2017. The opin- ions that the ECA gives on the extent to which the annual accounts are reliable, and on whether income and spending transactions comply with the applica- ble rules and regulations, are important to demonstrate to EU citizens that the European Commission and EU Mem- ber States spend the EU budget — to which citizens contribute through taxes — properly and responsibly. In turn, the Commission obtains useful information to evaluate its action and better plan for the following years. This illustrates that if more data from auditing activities were made available, stakeholders could benefit from such guidance. By making more of its data available on the Portal, the ECA could help contribute to this objective. EU data strategy The European Union is at the forefront in terms of promoting the availability of data from both public and private sec- tors — for access and re-use — in order to benefit the economy and society, and foster the uptake of artificial intelli- gence and other data technologies. The ultimate aim of the EU's strategy is to create a common European data space — a seamless digital area with the scale to enable the development of new prod- ucts and services based on data — as a building block of the digital single mar- ket. Under the data economy strategy, the European Commission has developed several strands in order to make at least some data flow more easily in the econ- omy. Its April 2018 Communication 'Towards a common European data space' sought to address the re-usability of data from different sources in a ho- listic way. Its main legislative element is the revision of the Directive on the re-use of public sector information (PSI Directive). This new Open Data Direc- tive significantly improves the availabil- ity, usability and socioeconomic impact of public sector information in the EU. In particular, by enabling an EU-wide release of high-value datasets, such as geospatial, meteorological, statistical and mobility data, the new rules will be instrumental in the development of artificial intelligence solutions by SMEs and start-ups. These high-value data- sets will be made available for free, in a machine-readable format and via appli- cation-programming interfaces. As part of the data package, the 'Rec- ommendation on access to and preser- vation of scientific information' was al- so updated to improve the availability of data generated in the context of public- ly funded research. Finally, a guidance document on sharing private sector da- ta, which also contains a number of key data-sharing principles, is expected to help break down data silos and create fair markets enabling smaller actors to innovate. The increased availability of open da- ta will benefit auditors. It will provide them with more data that they can use in their audit processes. Access to private sector data benefits auditing In the era of the data revolution, it is not only the public sector but also the private sector that produces and col- lects huge quantities of data. Such data represents a key resource for public au- thorities to address public interests. For this reason, the Commission is current- ly focusing on facilitating, in certain circumstances, access to private sector data in both business-to-business (B2B) and business-to-government (B2G) contexts. In this context, an expert group was set up in October 2018 to formulate a set of recommendations on future pol- icy or legal measures to take forward the EU's policy on B2G data sharing for public interest purposes. Access to private sector data is relevant for both public and private auditors because, for example, it can facilitate a better under- standing of European economic behav- iour. The expert group will finalise its report by the end of 2019. What is next? Data and digitisation are key priorities for the new Commission. In the politi- cal guidelines for the 2019–2024 Com- mission, President von der Leyen stated that 'data and AI are the ingredients for innovation that can help us to find solutions to societal challenges' and that 'the public sector has an important role in stimulating digital transforma- tion'. Auditors, as producers and users of data, can contribute to this goal while benefiting from the data revolution. Data: an enabler of more efficient and effective auditing With its objective of making Europe fit for the digital age, the European Commission wants to put the EU and its Member States at the forefront of digitalisation