System-Dynamic Audit Analysis

– systemic analysis of the audit and its network partners for focused output enhancement –

Objective:

ARC employs the tools of systemic analysis and the so-called system-dynamics structuring method in order to clarify the various corporate-policy and socio-economic effects on the auditing task within a company. Furthermore, these tools are utilized to better understanding both existing and future reaction patterns.

The concept of system dynamics (SD) was developed by Jay W. Forrester, a pioneer US-American computer engineer, systems scientist and professor at the Massachusetts Institute of Technology. Dealing with the simulation of interactions between objects in dynamic systems, SD serves to assist company leadership in the management of complex corporate developments and in the decision-making process. Furthermore, SD facilitates a comprehensive representation and analysis of complex causal structures. Only thus is the impact of individual decisions illustrated clearly with respect to its scope of consequences and also justifiable from a long-term perspective.

The “system-dynamic audit analysis” methodology developed by ARC serves the analysis of complex and dynamic corporate systems in the form of a strategic early intelligence. This is achieved particularly from the prevailing risk-convergence perspectives of various administrative departments. ARC employs the four typical constituent elements of dynamic socio-economic systems in order to clarify the interconnections of networks and make them more understandable. These elements include causal feedback relationships, delayed impact, inventory variables and nonlinearities.
Interaction with ARC’s audit-reference model enables management-level staff to ascertain, scrutinize and systematically advance the development of its own subjective models regarding dynamic systems. “System-dynamic audit analysis” methodology can be employed as a qualitative and quantitative explanatory model. In most cases, qualitative modeling is sufficient in order to analyze clear effects of closed cause-and-effect chains within the respective corporate network.

This particular consultancy module often enables course participants to clarify unsolved audit-implementation problems from the past as well as suspected corporate patterns and to find solutions for the future.

Topics:

  • Systemic analytic approaches and their benefit for the internal audit function
  • Risk convergence within the framework of independent management services
  • Processing of empiric cases and their pitfalls from a network perspective
  • Analysis of the respective corporate status quo
  • The structure of cause-and-effect chains based on individual audit examinations, their audit results as well as selected audit procedures – from perspectives of SD
  • Visualization and modeling of the company-specific network situation
  • Simulation of various audit decisions and their consequences
  • Integration of “system-dynamic audit analysis” methodology within the everyday audit environment

Training Team

Audit Championship

Audit-Championship is a university spin-off. We focus on networking between science and practice. Audit-Championship provides thought leadership and innovative methods to support its customers across all industries in digital transformation. We support audit departments globally as well as national Internal Audit associations with yearly 1.800+ training days and transformation services along an internal audit knowledge value chain.

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