Artificial Intelligence (AI), Robotic Process Automation (RPA) and intelligent forecasting are at the forefront of changes in financial and audit technology. Amid a move towards more digital audits, how are emerging technologies impacting how Finance and auditors interact?
Greater access to data
As auditors, we rely heavily on the degree of sophistication of clients' own IT landscapes when determining the extent to which we can deploy technological solutions effectively. Combined with RPA and low-code satellite platforms, modern Enterprise Resource Planning (ERP) systems allow businesses to implement standardized and highly automated processes that connect multiple departments, locations, and functions. This creates a standardized data trail that enables Finance to apply advanced analytics and monitoring. It also enables auditors to use data in every step of the audit.
Audit efforts can also be standardized, centralized, and modernized as clients bring activities together in shared-service centers, centers of excellence and capability hubs. I have seen first-hand how this benefits clients through higher quality, process efficiency and a better audit experience by avoiding surprises and reducing disruption to management.
What is the impact on audit methodology?
Amid such extensive change, blending audit methodology with the latest technologies, client data and interactions is critical for auditors. At KPMG, we are building a global ecosystem of technology-based audit tools that can be brought together in an integrated yet governed way. This range of powerful, agile solutions are delivered through our KPMG Clara platform.
In risk assessment, we use data to better understand processes and spot unusual trends with KPMG Clara Business Process Mining, for instance. In audit response, we derive substantive audit evidence through targeted general-ledger and sub-ledger analytics procedures with KPMG Clara Analytics directing our focus to risks that really matter.
How does automation enhance audit quality and effectiveness?
Historically, risk assessment, controls testing, and substantive testing have largely been targeted in isolation. Now, technology can be used to interrogate transactional data to provide evidence over all three areas at once. As well as continuing to replace simple, repetitive, and high manual effort tasks such as sampling and general ledger analytics, automation is rapidly extending into judgmental audit areas. New tools and techniques are increasingly able to accommodate more challenging, unstructured data sets.
Predictive forecasting, AI and machine learning complement human insight are starting to deliver more robust assurance. This gives clients higher quality and peace of mind that the technologies and interrogation techniques on their audit will bring fresh perspectives on risk.
Is the profile of a typical audit team evolving?
Classical audit foundations will still be required to opine on financials, but there is also a need to be proficient in the use of data analytics, automation, and emerging technologies. Like Finance departments, auditors must adopt a data scientist's thinking to deal with data and large, unstructured data sets.
I believe it is unrealistic to expect educational institutions to keep pace with this disruption. Industry and auditors must build these capabilities and close the gap in the market by investing further in STEM (science, technology, engineering, and math) capabilities and revamp training curriculums to drive innovation and digital transformation. As specialist roles are blended with traditional audit roles, the typical audit team will change. Clients will see benefits through access to a broader knowledge pool, new data-driven perspectives, and a deeper understanding of technology risk.