The future of audit is changing, here’s why…

There’s no two ways about it, the role of the auditor and how audits are performed is changing… rapidly.

Auditing has long been associated with labour-intensive manual processes, but thanks to the evolution of artificial intelligence, automation and data analytics, auditors are now being freed up to unearth deeper and richer insights, provide greater value and improve audit quality.

Machines are doing it for themselves

One of, if not the key engine of change in auditing is the use of workflow or robotic process automation (RPA) in combination with artificial intelligence (AI), or cognitive technology.

These combine within tools to not only collect and process huge quantities of data and information (RPA), but then to analyse, find correlations and make predictions.

Finally, at the very cutting edge of the technology, AI is effectively the machine learning from experience, teaching itself how to perform tasks or analyse data, and therefore improving its own performance and effectiveness.

There’s an app for that

At this point it would be fair to wonder where the ‘human’ is in all this. In theory they’re not burning the midnight oil buried beneath piles of documents, but receiving information sooner than ever before, allowing them to not only complete projects more quickly but to a higher standard.

Data visualisation tools

For example, Deloitte has a tool called Argus, which uses natural language processing (NLP) and machine learning to rapidly read and understand key concepts in audit-specific electronic documentation. It can scan documents for inconsistencies and flag up concerns. It can visualise data and present findings as working papers.

Drones used to collect data

Drones are being put to use by auditors to collect data from the air. Drones can get to hard to reach places and capture huge volumes of data in very short periods of time. They can be deployed to inspect assets, count inventory or monitor environmental impact. The data captured can produce digital twins as 3D representations of mapped areas.

Analytics and visualisation

Visualisation of information can turn the arduously won and often dry work product of audit into snappy visual representations that make it easier to find valuable insights buried within large and complex sets of data.

A functional use is in journal-entry testing, whereby auditors can run a programme over millions of records to produce a visual representation of the journal-entry population across an organisation globally, potentially highlighting avenues for improvement, such as automation.

The Internet of Things

The mobile and the tablet aren’t just for Instagram, Google Maps and YouTube, they’re replacing the good old-fashioned pencil and clipboard for auditors.

Mobile tools/apps deployed within an audit – think inventory count, asset assessment and beyond – allow auditors to gather and share data quickly and securely for live analysis with teammates, wherever they are; compile photographic evidence; and create reports and working papers in real time. Again this provides auditors with more time and space to focus on what they are trained to do – observe, question and critique, not collect data and document.

It’s also expected that the Internet of Things (IoT) will give back even more time to auditors as ‘intelligent electronic devices’ bypass humans to communicate directly with one another. Machines will report their performance in real time to other machines that will monitor and analyse data for inconsistencies or problems.

Blockchain, a key disruptor?

It feels like blockchain has long been touted as a key disruptor in the audit profession, while in reality it’s at the ‘let’s see if it sticks’ phase of its evolution across the business world.

A blockchain is a digital ledger that captures transactions made by various parties in a network. It is peer-to-peer, internet/cloud-based and includes all transactions since its creation. As an example, digital currencies such as bitcoin use blockchain.

Arguments have been made that blockchain will do away with the need for a financial statement audit altogether. Perhaps so, but in the meantime, as with the aforementioned technology, it will serve to free up auditors to do what they’re best at.

A change in skill set

The contemporary and future audit requires a more varied and nuanced skillset of its practitioners.  Firstly, and perhaps contrarily given the aforementioned technological disruption, auditors need to be gifted communicators, team players and stakeholder managers.

It’s all good and well having this technology doing the laborious tasks and offering up fresh insights, but it takes intelligent communication to convey findings and justify recommendations effectively and efficiently.

Auditors also need to be flexible, reactive and adaptable in the face of constant change. As for the technology side of the skill set, embracing apps and systems, and being comfortable with the rapidly evolving nature of technology is vital.

Key technology skills relate to:

• mining structured and unstructured data from varied sources
• identifying data risks
• working with relational and non-relational databases
• applying statistical methods and advanced analytics within tools to turn raw data into useful insights
• knowing how to leverage analytics to perform robust risk assessments
• using visualisation tools to present complex data analysis in a way that is compelling and easy to understand.

In Summary

Auditors with the right skill sets and attitudes to change and technology will provide more value to clients throughout the audit. How these skillsets are achieved rests on the shoulders of the profession.

• Including professional bodies and qualifications providing support and development.
• Organisations upksilling their workforce’s and helping to enrich the talent pool via partnerships and broader engagement across the profession.
• Technology companies educating the workforce on their products and innovations.
• Finally individuals taking it upon themselves to move with the times and see this evolution of the profession as an opportunity for richer careers.

For more on audit and data analytics:

• Has audit gone awry
• Data visualisation techniques to bring your data to life
• Data analytics – how data science and machine learning fit in

Neil Johnson is a freelance business journalist who contributes regularly to trade publications and member organisations, covering employability, recruitment, business trends and industrial analysis.