Audit Analytics Capabilities in the Denver Auditor’s Office

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We surveyed other local government audit organizations and reviewed professional literature about audit analytics with two objectives:

  • To assess the current state of audit analytics methods, tools, and applications to auditing.
  • To identify areas where we can further enhance how we use analytics to improve our audit work.


The Denver Auditor’s Office began its audit analytics program in 2017 by implementing continuous auditing — a practice that involves automating specific steps to audit digital information soon after it is created. 

Continuous auditing generally emerged in the late 1990s and uses auditing software that connects to an organization’s financial systems. In its infancy, continuous auditing was revolutionary in that it increased auditors’ efficiency. It allowed auditors to examine entire sets of data rather than only samples, and it reduced the time between when an event happens and when auditors could review the event.

Audit analytics is the next evolution in auditing and is a reaction to the vast amount of digital information available today. Organizations are digitizing their processes and accepting information from internet-connected devices, such as smartphones submitting requests to Denver’s 311 system. For auditors to be successful in auditing their organizations, they need to be able to examine large amounts of data securely, quickly, and effectively.

Therefore, audit analytics differs from simply using audit software to automate more traditional audit tasks. Audit analytics:

  • Applies advanced statistics and data science tools.
  • Applies expertise to examine large datasets that describe an organization’s transactions and functions.
  • Helps identify inefficiencies, fraud, or data-quality problems.
  • Helps identify the causes and effects of issues.

Why this matters

Audit analytics tools allow us to efficiently and securely connect to a wide range of data sources, look for control issues or risks within large datasets, and automate those analyses to improve our efficiency and the timeliness of identifying any potential issues.


The Denver Auditor’s Office Is a Leader in Data Analytics in Local Government Auditing, with Room to Grow

The Denver Auditor’s Office is generally among the leaders in using audit analytics when compared to our peer organizations in local government auditing, and our analytical techniques are often ahead of the curve of the methods described in recent academic and professional literature.

Specifically, we excel in:

  • Having dedicated audit analytics resources, both in staff expertise and technology.
  • Continuous auditing — including using analytics to find outliers or conditions that could indicate a process or system is not working as it should (i.e., risk assessments and control tests).
  • Using statistics and methods to fine-tune how sensitive our analytics are in identifying risks within a dataset, with the goal of reducing the number of false-positive results.
  • Applying analytics and continuous auditing for general risk assessment and annual planning.
  • Applying analytics to specific audits and using analytics to identify the cause of an issue.
  • Reporting analytical results in myriad ways — such as through original audits and follow-up audits, summary reports to city agencies and the public, and detailed audit work papers.

In particular, our survey of local government audit organizations and our review of relevant professional literature bolstered our understanding of the importance of having an audit analytics program in the Denver Auditor’s Office.

We found that audit organizations that have dedicated resources, like ours, are more likely to use analytics on a regular basis and they are more likely to apply the types of techniques recommended in professional literature.

We also learned of areas where the Denver Auditor’s Office can expand our analytics and learn from our peers in local government auditing and academia.

Auditor's Letter

June 23, 2022

We surveyed other local government audit organizations and reviewed professional literature about audit analytics with two objectives: (1) to assess the current state of audit analytics methods, tools, and applications to auditing, and (2) to identify areas where we can further enhance how we use analytics to improve our audit work.

I am pleased to present the results of this effort.

Our comparative study found the Denver Auditor’s Office is a leader in its use of and reporting on audit analytics. From the over 100 local government audit organizations that responded to our survey, we learned our office is among the few local government audit organizations that apply advanced analytics to identify risks and assess controls of critical city systems and processes.

This is because we have a dedicated analytics team, collaboration among our audit staff, ongoing training, and new tools for working with large datasets and statistics. We also found our analytics work is often more rigorous or extensive than the audit analytics methods described in professional literature.

Meanwhile, we found that we report our analytical results in more ways than most other local government audit organizations. We share our results internally to support our audit work, publicly in reports to the Independent Audit Committee twice a year, and with individual city agencies after each analytics project.

From our peers in local government auditing, we learned of new ways to enhance our audit analytics program, such as applying new techniques to identify data-quality issues. The academic literature also gave us new ideas on how we can use statistics to improve our risk assessment processes.

We thank the Association of Local Government Auditors for its partnership in making our survey possible, and we thank the audit organizations who provided responses. Additionally, I appreciate the past and present members of our Audit Analytics Team, whose efforts have helped advance our audit analytics program these last five years.

Please contact me at 720-913-5000 with any questions.

Denver Auditor

Auditor's Signature
Timothy O'Brien, CPA

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Denver Auditor

Denver Auditor's Office

201 W. Colfax Ave. #705 Denver, CO 80202
Call: 720-913-5000
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