A conversation with Wade Brylow, director of internal audit at Northrop Grumman

Among the most powerful tools these days to detect and deter fraud is data analytics. While some internal audit departments struggle to use sophisticated analytics tools and continuous monitoring, those that do have a leg up on rooting out fraud and finding it in unlikely places.

We recently caught up with Wade Brylow, director of internal audit at defense contractor Northrop Grumman, to talk about the company's approach to data analytics and to detecting and deterring fraud throughout the company's sophisticated and sprawling operations.

Brylow says data analytics not only helps fight fraud but improves the audit function across the board. He says Northrop Grumman uses some form of analytics in nearly every audit it conducts. Rather than just auditing samples, data analytics can inspect all the data and signal outliers or other red flags of fraud. "It's a real journey to embark on a data analytics program, and it's certainly not very easy," says Brylow. "One of the toughest things about it is trying to recruit the right types of people back into the organization to perform the data analytics, but we found that it pays such tremendous dividends. It's transformed our complete way we do auditing."

He says companies are using data analytics to look for fraud in travel and expense reporting, labor charging, government contracting, vacation requests, payables, payroll, and other areas. "We use it on almost every audit that we do," he says.

Of course some tools to find fraud are far less sophisticated than data analytics. Brylow says you can't underestimate the power of an auditor's gut instinct. "Some of it is just referring back to an auditor's instinct. It's something we might not be aware of until you are in the field and you start seeing some indicators that something is awry," said Brylow.