Why is 'organization' not enough to pass an audit?

Over many months of study to prepare an academic article on Big Data, Organizational Knowledge, Artificial Intelligence and Corporate Governance, I realized that many governance and compliance teams have a limited view of what it means to be ready for today’s challenges — from being prepared for an audit to supporting decision-making and generating value — especially at a time of the AI and Big Data “boom” we have experienced in recent years. In other words, we now have much more data, but not necessarily more (reliable) information.

The first reaction is usually to tidy up files, folders and control spreadsheets. That organization is essential, but on its own it does not guarantee compliance. Here I share some reflections from my study and why I believe governance is the determining factor and why technology is fundamental.

From organization to knowledge

One of the central points of my work was understanding the difference between data, information and knowledge. Data are raw records that, in isolation, do not say much. Information emerges when those records are processed and given context. Knowledge, in turn, is the result of interpreting that information based on human experience, individual or collective – preferably collective, since I believe several people think better than one alone, most of the time.

Throughout my career and in many interviews, meetings and readings, it became clear that, in audits, having a control spreadsheet stored in a folder is of no use if no one knows what it represents or how it was generated – and there is no guarantee that the information and “links” in it are correct and point to the right documentation in the right versions. It is much more than that. Data must be turned into information and, finally, into knowledge capable of supporting decisions, all grounded in sound corporate governance, data governance and the correct use of the best technologies for each scenario.

I was also struck by the pace at which the amount of data grows. Recent estimates suggest that the world will produce more than 170 zettabytes of data in 2025, with a large share of that volume generated by Internet of Things (IoT) devices and nearly half of it stored in public clouds. This means that traditional organization — maintaining folders, documents and “master” spreadsheets, or even using a specialist system (an ECM or an EDM (Electronic Document Management) system, for example) — can no longer keep up. Without clear policies, a repository can quickly turn into a data swamp, with duplicates and lost versions, making traceability unfeasible or even containing incorrect information that never went through a proper review and approval workflow.

The role of governance

Data governance is, in simple terms, the set of rules, policies, processes and technologies that ensure the quality, security and proper use of information. It answers questions such as: who accessed a given document? When was the last update made? What is the history of that document or form? Which version is the valid one? Who reviewed it, who approved it and when?

Organizing is like keeping the company’s keys in a drawer; governing is knowing who used each key, when and for what. That is a difference I learned in practice, as a specialist in corporate content management, electronic documentation and governance — always, of course, applying technology to “glue” it all together.

Taking part in projects and talking with customers and partners, often from the quality, compliance and controlling areas, I identified four tangible benefits of governance:

• Reliability – validation and control processes prevent inconsistencies and ensure everyone works within the same context and with the same “official versions” of documents.

• Compliance – auditors value systems that record accesses and changes; they scrutinize the data-handling process more than the data itself.

• AI readiness – artificial intelligence algorithms depend on clean, well-documented databases. Research shows that, although more than half of people already use some form of AI and recognize its benefits, fewer than 50% fully trust these technologies and few companies have formal AI governance structures.

• Efficiency – avoiding data swamps reduces rework and allows the team to focus on analysis rather than on hunting for versions.

Ignoring these points was, for me, the biggest negative surprise reported by managers: an untracked document, an unreviewed policy or a lost history can generate high costs and even fines.

Artificial Intelligence and tacit knowledge

In the article, I also deepened the debate on Artificial Intelligence (AI) as a support for knowledge management. Machine learning tools help classify documents and detect usage patterns, freeing up the team’s time for analytical tasks. However, AI only “learns” if the data is reliable, and compliance, the ethical use of information and the control of biases — to mention just a few — can only be guaranteed where there is governance.

Moreover, it runs into what philosophers and scientists call tacit knowledge. Michael Polanyi, for example, reminded us that “we know more than we can tell”: many skills are intuitive and based on personal experience, and cannot be fully converted into code or rules. This view reinforces the importance of combining technology with people: no tool replaces human sensitivity in interpreting contexts and making ethical decisions.

Conclusion

If there is one message I would like this summary to leave, it is that organization is necessary, but governance is indispensable. In a world of abundant data and powerful algorithms, the biggest mistake is to believe that tidying up folders, text documents and spreadsheets — even in a state-of-the-art system — is enough to guarantee compliance and pass an audit.

My experience, both in research and in professional practice, shows that structuring processes and fostering a responsible data culture make disorganization very difficult and free people up to focus on what really matters: generating value and making informed decisions.