From this perspective it is simply another way to make the auditing process more efficient by automating portions of the task in order to free up time for performing analysis and exercising professional judgment.
But in its use of technology an audit can involve different tensions. If a new tool does not provide proper compensation to the auditor, then that auditor’s effectiveness could be impaired as a result.
AI and automation
Audits were formerly time-intensive because they required processing large amounts of paper and the sorting of documents. This has evolved because a cloud-based portal requests, reviews and analyses information in one location, rather than requiring collection and collation of data. Robotic Process Automation (RPA) could, eventually, drive down costs even further because it automates certain repetitive tasks and can potentially eliminate paper.
AI tools could help auditors sift through reams of data more efficiently, spotting patterns that a human team could easily miss, and thus reducing both the risk of human error and enabling a higher-quality audit. AI could help auditors to pre-identify red flags that might indicate fraud or other illegal activity by delving into unstructured financial data such as text in financial statements, for example.
The research also shows that employing AI to conduct an audit offers significant advantages in terms of efficiency, risk assessment, and audit quality. While employing AI in an audit has substantial advantages, we should not forget the ethical issues surrounding the use of this technology, and remain sceptical when dealing with an audit from an AI preparer. The other concerns are associated with AI’s usage in an audit, such as lack of transparency and accountability, powered by algorithmic bias and requiring ‘continuous iteration’ – offering these audit helpers will minimise many types of risks only with a determined effort to make AI systems fair, unbiased and transparent. Furthermore, some completely new concerns, such as ‘reliance on artificial intelligence’, could have no simple solutions.
Blockchain
With its unique ability to provide reliable, secure, open and traceable record-keeping and verification, Blockchain finally provides the secure protocol to automate tasks, which in turn reduces a lot of clerical work and increase efficiency in accounting and auditing. Furthermore, with real-time trustworthy data provided by Blockchain technology, auditors can conduct more audits per person and provide continuous auditing capability. It also improves current accounting and auditing by lowering fraud as well as fraud-detection costs and increasing transparency and trust in the reported financial information and financial contracts. As a brief summary, blockchain technology can assist with the automation of tasks, which in turn, reduces a lot of clerical work and increase efficiency in accounting and auditing. Moreover, it is a unique technology providing reliable, secure, open and traceable records and information that can finally provide accurate and secure record-keeping, thus increasing the trust in financial statements and contracts.
First, investment and learning about blockchain technology will allow an organisation to not lose to other companies that have greater knowledge about how it can be used to store transactional records; second, to develop the skills for assurance activities and to enhance existing assurance practices; and, third, to identify its potential business-model implications and to improve performance – because theory such as agency theory, stakeholder theory and technology acceptance models can all be brought to bear when evaluating its effects.
DataSnipper
DataSnipper is a software company that helps audit firms automate and document parts of an auditor’s job, while minimising human errors and providing more thorough reviews.
Its offering of intelligent automation with its suite of products is able to help document and cross-reference financial statements in a more efficient and accurate manner, with the option to add on specialised services such as tax advisory or forensic accounting services.
Furthermore, AI can identify any unusual spikes or anomalies in the data that may be difficult to detect the old-fashioned way, helping firms to track their finances and mitigate risk.
This can have an overall positive effect by enabling both higher staff productivity and satisfaction for workers in highly competitive fields (such as audit and finance) where keeping skilled personnel can be a key concern. In fact, one study showing how AI could make work more satisfying for audit and finance workers revealed that 80 per cent of them were more likely to stay at firms using AI compared with those firms using productivity software but not AI overall, the trend was positive. But there were also some negatives. Many organisations struggled to deploy new software effectively: sums for unexpected expenses, limited visibility into usage data, integration problems with existing systems, etc.
Remote auditing
When it comes to remote auditing we do see many benefits, but what about ensuring the trust of auditors and clients – something probably more difficult when the auditor is not present in their client offices physically? Advancements in ICT can solve this problem because it has the function of live video conferencing or data streaming, where the viewer could freely select a live video feed or data streaming need by him.
ICT solutions foster clear channels of dialogue between the auditee and the auditor, since it reduces the number of interruptions during the meetings, and reduces travel times, and allow the auditor to spend more time to conduct more quality sealfies. As another personal example, before ICT solutions were implemented both the external company auditors and the inspectors had to come to the school regularly for both external and internal inspections.
Remote auditing removes the need to travel to dangerous or remote locations, reducing both the cost and risk to the business, as well as for the employees carrying out the audits. It also allows auditors to review and assess areas of a facility that would otherwise be inaccessible (such as areas sensitive from an operational or risk point of view), which can be particularly useful in Life Science audits, for example, where compliance with regulatory standards and other practices relating to manufacturing and distribution of medicines and food must be assessed.