Innovation in audit: the story behind the numbers

Digitalization offers more and more opportunities and moves organizations forward. The same is certainly true for auditors and their clients. For example, the contribution of artificial intelligence to the auditing processes we perform for our clients is growing rapidly. Digitalization increasingly makes auditing financial statements better and easier. The over one hundred IT auditors and specialists in our Digital Assurance & Innovation department are increasingly able to automate routine tasks and processes. All of this improves both audit quality and efficiency.

We live in a world where more and more information about companies is in the public domain. It seems like everything is available to everyone everywhere and all the time. What remains of the relevance and added value of the auditor? Both the public and organizations need more than a purely statistical summary; they are looking for the relevant insights interpreted from those figures, and for strategic knowledge about the opportunities and challenges of their business. Because not everything that counts can be counted. That is where the auditor can excel, in our belief and experience: by also telling the story behind the numbers - in an understandable way.

We see it as our responsibility to play a role in this respect within our society. So in addition to ensuring high-quality audits, we also speak out clearly on potential risks in areas such as climate, (un)ethical data use, good governance, fraud and cyber security. 

Therefore, in addition to applications of new technology, AI and algorithms, our focus for audit innovation is on further training our staff, ensuring that they can properly identify and assess risks. Being able to distinguish facts from fake news, to understand the needs of stakeholders, to be able to interpret what is going on within an organization, seeing opportunities based on industry benchmarks, and consequently being able to communicate this clearly, with an independent view, to the company and other stakeholders (including Supervisory Board members and regulators, shareholders and NGOs) , for example at the General Meeting of Shareholders. 

In our employee training programs, we also pay attention to these trends. Of course, ‘auditing & accounting skills’ are the basis of such training, but in addition we also train our people in communicating about both auditing financial and non-financial information, including aspects such as data security, applying rules of conduct, understanding facts and interpreting opinions. Employees are also interested in such skills, as they want to do meaningful work. In this respect, the interests of clients and, more broadly, society are paramount.  

What do our clients notice about our use of AI and data technology? Take for example the audit of financial information: in audits, we use random samples and we compare large numbers of invoices with the corresponding order confirmation, quotation, packing slip, payment, et cetera. On that basis, we can make statistically significant statements with a certain reliability. But we are increasingly able to audit an entire data population through smart use of data analysis. This gives our clients greater insight and high reliability.

We are committed to developing new technology every day, including smart algorithm applications. For example, we started a project with the VU Amsterdam. Together, we are exploring how to take the use of AI in the audit process to a higher level. We are already able to flag entries with keywords of a questionable nature or from unauthorized sources by using AI, or to identify an unusually high number of journal entries. 

By innovating in the audit, KPMG is working towards a scenario we call ‘Informed Decision Making’. In this scenario, we make maximum use of automation with optimal relevance. This enables executives and other stakeholders to make well-informed strategic decisions.

The basis of our services is and will remain performing excellent audits of figures, to the highest standards. But next to that, our teams are also focusing on the stories and insights we can identify behind those numbers. For example with regard to what risks companies should pay attention to, how they can improve operational excellence, and how they can maintain the trust of all stakeholders around the company.

So our innovation of the audit process is not just about top notch digitalization and super-smart technology. It is also very much about our people, whom we continue to train in a wide range of skills. Because the future is more than digital.