The need for speed in new-fashioned auditors
A new wave of technology is transforming the audit profession, and the biggest risk for auditors is not keeping pace.
- It is critical that auditors keep pace with technological changes to the audit industry.
- Robotic process automation, AI, machine learning and drones will change how auditors work.
- Advanced technology allows auditors to audit faster, with a reduced risk of error.
Towards the end of the 20th century, the auditing profession began to take on a whole new look. Computers, the internet and email resulted in a near total elimination of paper, completely changing how we work. Now, a new wave of technology is coming.
Audit and Technology, CA ANZ’s recent report produced in collaboration with ACCA, outlines the various technologies likely to affect the audit profession now and in the near future, and what this means for auditors as people.
There is debate about the impact that technology will have on the scope and relevance of audit. If auditors don’t engage with these developments, the outlook could be bleak. At best, the profession as we know it will become less relevant; at worst, we might not be in business at all.
It’s critical that auditors keep pace with this change. Understanding different technologies is no longer a specialist skill – it is a core skill.
“Understanding different technologies is no longer a specialist skill – it is a core skill.”
Data analytics is already used in audit practice, but distributed ledger technology (including blockchain), robotic process automation, artificial intelligence (AI), machine learning (ML) and even drones (used to inspect physical assets) will change how auditors work.
In the future, auditors will need a mix of skillsets. The profession will still require people who have assurance skills, but who are also extremely IT literate. Analytical capability is coming to the fore, but also the ability to code and work with a range of technologies.
To meet this demand, some audit firms are already recruiting in a broader way than they have done in the past, and this trend looks set to continue.
How is new technology good for audit?
Technology is a tool that can achieve efficiencies with administrative tasks, so auditors can focus on more strategic areas of their roles and make the best use of their skills, training and judgement.
Advanced technology lets auditors do audits faster, with a reduced risk of error, and also add value. For example, rather than looking at a sample of transactions, auditors can use AI and data mining software on entire populations of data to identify patterns and anomalies. So as well as monitoring ‘business as usual’ activities, auditors could focus on identifying risks.
The use of these new technologies promises a transformation in the audit profession, changing audit from a reactive and backward-looking exercise to a proactive, constant source of forward-looking insights.
Machine learning, in particular, can generate predictions by comparing statistical analyses of large historical datasets with current data.
However, this hugely expanded volume and flow of data brings with it increased ethical responsibilities as to how this data is handled and stored, for what purposes it’s used and by whom.
Such developments could also affect what we audit. Will there one day be a need to provide assurance over the algorithms, code and smart contracts that underpin this technology?
New tech and old auditing standards
Staying on top of emerging technologies is a challenging task for policymakers and regulators, too.
Current auditing standards give a cursory nod to computer-assisted audit techniques – CAATs for short. But how do you incorporate their use into auditing standards without those standards becoming obsolete as technology advances further? There’s also the issue of audit inspection bodies making their own interpretations as to how such technologies fit within existing auditing standards.
Technology isn’t going away – it is not the future, it is now. The biggest risk for auditors lies in doing nothing in response. As a profession that is steeped in tradition and surrounded by regulation, it’s going to take a concerted effort to embrace and respond to the opportunities and challenges this technological revolution will bring.
Audit & Technology reportDownload the CA ANZ and ACCA Audit & Technology report here
A roadmap to the future of audit
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