Impact of Automation in Audit Industry and Evolving Role of Auditors

Background:

Automation has changed the way businesses operate across the sectors and the industry of audit is no exception. With the help of Artificial Intelligence (AI), cloud-based solutions, Robotic Process Automation (RPA) and Data Analytics, the audit industry has reformed the way the auditors perform their work. The Routine and time-consuming tasks such as data entry, document processing, report generation are now taken care of with AI and RPA-based automation solutions.

The auditors are required to be more competent and knowledgeable so that they can meet the expectations of the clients. The auditors are required to be adaptable to new technologies so that they can change the way of their work depending upon the client requirements.  Overall, automation is changing the audit industry and the role of auditors, leading to more dynamic, proactive, and essential audit practices.

1) How do Automation Tools improve audit accuracy and efficiency?

Automation in the audit industry helps the auditor in various ways to improve the accuracy and efficiency of audit. Automation tools improve audit accuracy and efficiency in several ways:

• Predictive analytics: The automation tools process the huge amount of data, extract insights, and identify irregularities. Due to this analysis, the auditor can invest more time in focusing on those areas which really require their attention and making sure that they find the queries on those areas.
• Continuous monitoring: Automation tools help the auditors to monitor the problems and identify them and address them as soon as they arise. This ensures that the chances of fraud reduces and also makes sure that everyone follows the rules.
• Streamlined data collection and analysis: Automation tools can address inefficiencies caused by constraint applications, streamlining data collection and analysis. This helps auditors to stay up to date with regulatory changes and adapt their procedures accordingly.
• Standardized auditing processes: Automation tools ensure that audits are conducted consistently and uniformly, making it easier to trace processes and procedures. This leads to more accurate and reliable audit results.
• Real-time reporting: Automation tools can generate comprehensive and standardized reports based on the data post-analyzing, highlighting key findings, issues, and recommendations. Stakeholder decision-making is helped by the clear and simple presentation of these reports.

2) How do Automation tools helps Auditors to Identify Frauds

Automation tools help the auditor in identifying the frauds by using advanced technologies, such as Artificial Intelligence (AI), to detect potentially fraudulent activities early.

• The AI tools can identify patterns, inconsistencies, and irregularities in financial data that helps the auditors to solve the risks and safeguard an organization’s financial integrity.
• Due to automated data analysis, the AI can help the auditor to process the vast amount of data and identify any suspicious pattern. Based on the identification of the suspicion’s patterns, the AI also helps to prepare a detailed report. This helps the auditor to focus more on the areas which are risky and where the auditors need to give his more time for effective fraud detection.
• The Automation tools also assist the auditor to analyze the documents, reports and agreements. This analysis helps to identify any inconsistencies or irregularities which are present in the agreement or the contract. Such inconsistencies or irregularities can lead to the fraudulent activities.
• The Automation tools assist the auditors in finding any patterns in the irregularities and also helps to predict or forecast any irregularities based on the historical data.

This proactive approach helps the auditor to stay well ahead of the potentially fraudulent activities and take timely actions to mitigate or eliminate such frauds.

3) How has the Role of Auditor’s changed with Rise of Automation

With the rise of automation, the role of the auditors has significantly changed leading to a more strategic and value-based approach. Some key changes in the role of auditors include:

• Risk Assessment and Planning: In current time, the auditors take the helps of AI for the risk assessment activities, audit planning and continuous monitoring of the risks. Hence, the Auditors are leveraging the technology for the processing of data.
• Efficiency and Effectiveness: Automation focuses more on those tasks that are monotonous or time-consuming, assisting auditors in scheduling their time and enabling them to focus on more strategic aspects of the audit.
• Strategic Partnership: As the role of internal auditors’ changes, they are working more closely with the organizations, offering valuable insights to the organization, where the organization is heading with its existing goals, what risk they might face and how can they do better. They are becoming like guides who don’t only point out the problems but also suggest remedial actions for their future plan.
• Value Creation: In traditional auditing, the main focus of the auditor was on checking whether the company is following all the rules and regulations. With the emergence of Automation, the focus of auditor has changed. The new approach focuses on not only following rules but also creating value for the company.
• Human Expertise: While automation and AI offer significant benefits, they are not meant to replace human auditors entirely. The human element remains crucial for critical thinking, professional judgment, and understanding the organization’s unique context.

4) Some Examples of Audit Automation Tools

There are several audit automation tools available in the market that can help auditors streamline their workflow, enhance collaboration, and gain valuable insights. Some of the popular audit automation tools include:

• SAP Audit Management: SAP Audit Management is a module within the SAP ERP system that helps the planning, execution, and monitoring of audit processes. It helps organizations ensure compliance and effective risk management.
• Workiva: Workiva is like a digital assistant to auditors. It helps them to work together on documents, keeping everything up-to-date and makes auditing process smoother by automating tasks and keeping information at one place.
• Netwrix Auditor: Netwrix Auditor helps auditors by providing detailed insights into the activity and changes happening within an organization’s IT environment. It makes auditing easier by organizing things, helps everyone see what’s going on, and make sure that company follows rule and stays secure. 
• IDEA: IDEA (Interactive Data Extraction and Analysis) is a data analysis software used for audit, finance, and fraud detection. It enables auditors to analyze large volumes of data and extract meaningful observations. This helps the auditor to save time. 
• ACL Analytics: ACL Analytics is a data analysis and audit software that allows auditors to analyze large datasets, identify trends, and detect anomalies. It’s commonly used for financial and compliance audits.

These tools cater to different aspects of audit processes, from data analysis and risk management to compliance monitoring and overall audit management

Conclusion :

In conclusion, using automation in audit is a big change that makes things work better and help auditors to do their work better and helps the auditors to do their job more accurately. Automation takes care of regular tasks, so auditors can focus on thinking and making decisions. This teamwork between technology and the auditors helps to deal with the challenges of the digital age in a smart and flexible ways.

*****

Authors:

Umesh Vishwakarma | Manager | Email: [email protected] 

Preetam Sahu | Associate Consultant | Email: [email protected]