Rethinking the Audit: Innovation Is Transforming How Audits Are Conducted - and Even What It Means to Be an Auditor

By Raphael, Jon | Journal of Accountancy, April 2017 | Go to article overview

Rethinking the Audit: Innovation Is Transforming How Audits Are Conducted - and Even What It Means to Be an Auditor


Raphael, Jon, Journal of Accountancy


Today's audit profession is driving exciting and unprecedented changes that are fundamentally evolving the role of the auditor and how audits are performed.

Breakthrough innovations in areas such as artificial intelligence, workflow automation, and data analytics are eliminating a number of the tedious and labor-intensive manual processes traditionally associated with an audit. More importantly, innovation is enabling auditors to deliver powerful insights that simply weren't possible before. These changes can enhance audit quality and deliver higher value for audit stakeholders--from clients and audit professionals to investors and the capital markets as a whole. (See the article "How to Enable Audit Innovation," page 33, for details on how Deloitte nurtures in-house ideas to innovate audits.)

INSIGHTS ENHANCE QUALITY

Automation and other cutting-edge innovations reduce the amount of manual and time-consuming data collection required for an audit. But that's just the beginning.

An even bigger benefit of audit innovation is the ability to generate new kinds of insights that increase the value of an audit and bring audit quality to a new level. Powered by innovative technologies and supported by a risk-based methodology, auditors now have more resources, tools, and time to strategically apply their most important skills--professional skepticism and judgment--to business issues, controls, and risks. What's more, auditors are armed with advanced analytical tools to provide deeper insights, including areas beyond the limits of a more traditional audit.

For example, using the latest technologies, auditors can analyze complete data sets rather than samples. Advanced tools can be applied to all of a company's contracts related to an area of audit interest, or to metadata about an automated key control. This can reduce audit risk by making it less likely for an unusual transaction to slip through the cracks. Also, given the transformational nature of advanced technologies and analytics, innovative audit tools can readily reveal valuable insights about a business for clients to consider, such as operational inefficiencies and areas for potential improvement.

INNOVATIONS RESHAPE THE AUDIT

Technology and innovation are advancing at breakneck speed with unprecedented computing power to transform the audit. These advanced technologies, sometimes referred to as "exponentials," represent technological breakthroughs at the intersection of information technology and science, and they are increasingly a driving force behind audit innovation. Here are some examples of how these exponential technologies and other forms of innovation are powering audits forward and promise a bright future for audit professionals:

Artificial intelligence

Artificial intelligence (AI) involves the theory and development of computer systems able to perform tasks that normally require human intelligence. Because AI technologies (also called cognitive technologies) can tackle many tasks performed traditionally by humans, they can enable an audit to avoid the typical trade-offs between speed and quality. Two AI technologies that are especially relevant to audit are natural language processing (NLP), which enables a system to read and understand key concepts in electronic documents, and machine learning, which enables a system to improve itself without being reprogrammed. As audit evidence increasingly becomes more digitized, these technologies, combined with workflow automation, enable auditors to do significantly more analysis in less time. This can allow auditors to spend more time on tasks that add more value to the audit.

Workflow automation

Through the creative use of technology, many audit activities that previously required time-consuming manual processing by auditors can now be automated. As a result, much of an audit's tedium can be reduced and enable analysis that is faster and more comprehensive. …

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