Businesses are increasingly investing in new advanced technology and adapting to new technologies, such as robotic automation, artificial intelligence and blockchain. Maria Diver from our Audit team explains how digital transformation requires new ways of providing assurance over the use of technology, including protecting businesses from the new risks it brings.
This is what’s meant by ‘technology assurance’. In the face of these new risks, such as cyber-attacks, companies need to be prepared with additional or redesigned internal controls to monitor and protect themselves.
How can technology assurance change the audit?
Technology is quickly changing financial reporting. Machine learning, natural language processing and AI can automate tasks that would previously require time-consuming manual oversight. As part of the financial statement audit, auditors are now increasingly providing assurance over automation and even artificial intelligence used within the financial accounting organisation of businesses.
As part of KPMG’s own digital transformation, our firms not only equip auditors with new technologies, through KPMG Clara, but also with the skills and competencies to thrive in a more digital world. The goal is to audit advanced technology with advanced technology, making financial audits more efficient and providing organisations with a better audit experience overall.
For example, cyber security is the body of technologies, processes and practices designed to protect networks, computers, programs and data from attacks, damage or unauthorised access. KPMG has developed sophisticated cyber security maturity assessments and assurance frameworks to help businesses operate technology in financial accounting with reliable quality and security. To do this, KPMG itself leverages certified bots and data and analytics capabilities.
How can technology assurance impact businesses and specific industries?
Digital acceleration brings exciting opportunities to transform any business, but the need to ensure financial data and controls remains front and centre. Against the backdrop of digital transformation, today’s companies are facing an evolving regulatory environment with increased oversight. For this reason, digital transformation is having a significant impact on how KPMG firms provide assurance using technology.
Continuing the cyber security theme, developing a strong cyber strategy often starts with looking at an organisation’s processes, controls and partners. Audit committees looking to gain reassurance around cyber security and privacy protection will want to be sure that management has examined their processes from beginning to end, identified areas of potential vulnerability, and put in place plans for controls.
What are the potential risks?
While automation helps drive efficiencies in financial accounting, it also introduces new risks. Audit committees need to ensure that management has a solid understanding of how automation (such as the use of bots) is being used in the company and can recognise signs of potential tampering.
While automation helps drive efficiencies in financial accounting, it also introduces new risks.
What is KPMG doing to enhance technology assurance services?
KPMG firms have invested in developing tools to automate and drive value to our audits by using data analytics, robotic automation and artificial intelligence. Around this, we have established a global methodology focusing on delivering assurance over emerging technologies.
As such, we have incorporated our AI/ML experience, tools and methodologies, as well as our multidisciplinary capabilities around governance and risk management into a globally consistent approach.
We provide independent assurance, where permissible and approved, on specific algorithms with our technical deep dive and review, showing whether it’s reliable, explainable and ethically responsible. Our own use of AI in audit supports our ability to bring trust and quality to the use of AI.
With change comes challenge
There’s no doubt that while digital transformation brings many opportunities, driving efficiencies and competitive advantage, it also exposes companies to new risks and threats. Technology assurance can build confidence in new and exciting technologies.
Speak to Maria Diver for more information on the benefits of technology assurance in your audit. We look forward to hearing from you.
Maria Diver
Director
KPMG in Ireland
