There is no question that technology is reshaping every element of our lives, with every advancement pushing the boundaries of what the human race is capable of. This is also true for organisations and how they are audited.
But technology and artificial intelligence (AI) have in fact been around for quite some time. The IBM AI, Deep Blue, was already beating world champion Gary Kasparov at chess 23 years ago and we have been using Computer Assisted Auditing Techniques (CAATS) and audit documentation software for more than 20 years. So what is the big fuss about using technology in our audits today? Will it really help us improve audit quality and efficiency in a new and radical way?
These are some of the questions I considered during my presentation at the Audit
& Assurance Faculty’s inaugural one-day conference on audit. As I noted in my introduction, it is important to maintain a sense of perspective when considering this topic. We all experience seamless digital interactions daily, so it is not surprising that organisations expect the same smart use of technology in their audit. Advanced technology is here and available to all of us, which is why PwC is investing in a dedicated digital audit team as well as digitally upskilling every single auditor.Automating tasks like recording work in repositories, extracting data and sampling have already improved the quality of audit. What used to take weeks to learn and programme using deep experts, is now easily available to all our auditors after some simple training. The result may be increased efficiency and fewer errors, but the benefits are wider reaching and personal. Relying less on tasks that provide limited value, particularly in a busy season, frees up teams to really focus on the business. This should result in a happier audit team, improved retention of talent and confidence that we are all better informed.
At PwC, we approach technology in two different ways: auditing digital and digital auditing. We think that there is a real opportunity to improve quality and efficiency in the way we audit our client’s technology (auditing digital) and how we use technology to audit in a different way (digital auditing). There is also an opportunity for other firms of all shapes and sizes to benefit from our approach, by considering it when they are thinking about how they (and their auditors) approach technology today, how they may approach it in the future, and how to make the journey.
Auditing digital
All organisations, big and small, are investing in technology to improve their business. As their auditors, we rely on that technology and are required to test its operating effectiveness.
Digital auditing
It is time to digitise the way we deliver audit through automation and innovation. There are exciting new technologies to help capture data, automate procedures, analyse information and focus on the real risks. There is also a great ecosystem of auditing tool vendors that make technology available and accessible to all. The opportunity is in understanding how technology can help and then applying it to our auditing challenges.
So far, investment in technology across the profession has largely been focused on developing and using tools to automate and enhance existing processes, such as data analytics and collaboration and sharing tools, which help to drive quality in audits today. While this will remain core to the role of technology in the audit, as we look further ahead, there are many opportunities where more advanced technologies such as AI and drones could have an even bigger impact (see box). Such technologies may also play a role in evolving the scope of the audit (eg, in using data analytics and machine learning to help identify fraud).
One example of how the use of technology is changing audits is PwC’s new, award-winning tool Cash.ai. It uses AI to automatically read, understand and test client documents including reported cash balances, bank reconciliations, bank confirmation letters, foreign exchange and the financial condition of the bank – in essence, the complete audit of cash.
Developments such as this are made possible by automated AI tools and platforms that can remove some of the barriers that prevent organisations from adopting machine learning by performing some of the functions of an expert data scientist. What is so exciting about using AI to build AI is that it allows the quick and accurate development of AI algorithms, and it has enabled Cash.ai to be deployed without the need to employ an army of data scientists.
Technology doesn’t just mean that auditors will be doing different things, there are increasing elements of the audit that clients can do themselves. This is an opportunity to work collaboratively with clients to improve quality and identify where the use of technology can remove duplication and excessive review. Central to making a success of digital audit remains investment in people. Without the necessary skills, individuals will not be able to make best use of the technology available to them.
Audit quality
The impact on quality is obvious: we can easily move from sample auditing to full population of transactions being reviewed or re-performed; we can free up time for audit teams to analyse the information and better understand the business they audit; and we can reduce the risk of manual errors. We all know technology requires an element of upfront investment and it can be challenging to implement, but the value once it is up and running is undeniable.
With so much exciting technology in the pipeline, it is important that people remain at the heart of the debate. I firmly believe the future of audit will not be determined by digital giants, but by how effectively audit teams work with technology experts and clients to improve the delivery and quality of the audit.
Audit’s tech journey
While all industry sectors are affected by the emergence of new technologies it is important to remember that the auditor’s needs are unique. There are five questions it is important to ask and answer – at all stages of your tech journey:
What problems are you trying to solve
Often we are so impressed with what technology can do that we lose sight of what needs to be done. The secret to success is knowing how to apply technology to a known business problem. Think about what would make your audit easier or better and how you will measure return on your investment.
Which technology can help you?
There are a number of tools available and many vendors and start-ups using data acquisition, manipulation and visualisation tools. Consider how comfortably these solutions will integrate into your current processes and flag any potential implementation issues early on.
How will you equip your people to make best use of the technology available?
Technology is only as good as the people using it. Training and development are critical to ensure teams understand how and why they are using the technology. This can also be a great opportunity for junior staff to lead in an area they may feel more comfortable.
What are the risks?
Keep up with the latest expert advice on emerging technologies, latest tools, data protection and cyber security.
How will your people and clients be affected?
Ensure that all parties understand the technology being introduced, how it will be used and the benefits it will bring. This should help mitigate some concerns, but not every person in every organisation is comfortable with technology and some may need more reassurance.
Audit tech support
The Audit & Assurance Faculty and other parts of ICAEW make various resources available to assist individual auditors and firms on their audit tech journey. Audit & Beyond articles on technology and audit include:
Leap of faith
Kreston UK firms share their early experiences with audit data analytics
Lessons learned
A follow up, 18 months later, with practical audit data analytics tips
Moral maze
The ethical challenges around the profession’s adoption of AI
Soaring above
How drones can drive audit transformation
Almost human
The implications of robotic process automation for financial statement audit
The cognitive audit
Exploring the potential of cognitive technology for audits and clients
There are also a number of faculty webinar recordings with a technology theme at icaew.com/aafwebinars
The ‘Audit and Technology’ section of the ICAEW website offers various resources, including articles, blogs and reports plus links to related publications from the UK Financial Reporting Council and the International Audit and Assurance Standards Board.
To help accountants keep up to date with tech issues and developments, including AI, blockchain, big data, and cyber security, ICAEW collates and collects related material together on a hub page at and other tech-related resources are available (some free and some behind a paywall).
ABOUT THE AUTHOR
Marc Bena, partner and digital audit leader, PwC
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