New tools are transforming the audit process. We take a look at what’s popular and what tools could soon be deployed in auditing.
Adoption of technology among auditors is picking up speed. It is still arguably slower than it should be, and awareness of available technology may be one of the reasons for that. An appetite for change, the effort and resources involved, and skills needed for change are some other barriers.
Another obstacle for firms is inertia due to a sense of being overwhelmed by available options. There are so many choices nowadays that many firms don’t know where to start. For these reasons, we provide you with the lowdown on increasingly popular digital tools that auditors are already using, as well as some that auditors may be adopting very soon.
Large audit firms have been experimenting with data analytics, machine learning and robotic process automation within the audit process for the past decade. Crucially though, they have been busy creating their own proprietary audit technology tools, too.
KPMG’s cloud-based audit began with the launch of KPMG Clara, while PwC offers global clients Aura; Deloitte has Omnia, and EY has Helix.
These proprietary tools have transformed the audit process at the Big Four. However, among other audit firms with fewer resources and expertise in technology to invest in their own bespoke tools, options have been limited. Until now.
Over the past five years, the audit tech market has bloomed with a plethora of off-the-shelf digital tools, many of which have pay-as-you-go options, with the result that the benefits of audit tech are permeating more and more mid-tier and many smaller firms.
Automation through open APIs, AI and smart contracts is growing. This option completely removes manual processes, allowing auditors and other professionals more time to focus on greater analysis and judgement-based insights.
Confirmation, part of Thomson Reuters, has become a popular tool for validation of financial and other sensitive data. Its products allow auditors and others to centralise all bank confirmations and reduce time spent on the previously manual-based process. It boasts 1.5 million users, including auditors, bankers and financial professionals, around the world, who use its products to validate data and identify fraud, processing millions of secure digital confirmations across 170 countries each year.
Launched in 2017, Circit is another platform for bank, legal and fund confirmations for independent audit evidence, allowing auditors to confirm balances and arrangements directly with banks and solicitors seamlessly within one system.
Three-year-old E-circu, a French-built platform, is another cloud-based option for customer and supplier confirmations and bank confirmations. It boasts more than 2,000 users, processing almost 150,000 confirmations since its inception.
Workflow efficiency and collaboration tools have also become central to improving the audit process. The Big Four have all developed their own client and auditor collaboration platforms, but there are also a number of different cloud-based workflow tools on the market.
Most often, audit management software is used in large-scale, complex audits in heavily regulated industries such as chemicals, pharmaceuticals, healthcare, or food and beverage. These tools can be used by auditors or by client operations managers to schedule audits and analyse results.
One tool that has become popular among UK firms is Inflo, which aims to save audit teams time, allows them to work securely, and claims to improve the audited entity’s experience. The software offers modules that allow auditors more effective cooperation, and to import complete datasets from clients; it also offers visual dashboards among other tools.
Intapp is another popular workflow tool as it supports client and team collaboration, and is integrated with Microsoft 365.
Launched in 2017, AI-led audit tool DataSnipper automatically extracts and cross-references supporting documentation in an audit sample. This tool allows auditors the option to cross-reference Excel with supporting evidence, such as PDFs, images, and Word and Excel files. The referenced files are stored in the workbook, allowing for a straightforward and efficient review of audit procedures.
It also automatically matches Excel data with supporting documents, such as invoices, bank statements and contracts. This AI-powered feature finds the correct text, date and/or number in a source document, automatically creating a reference in sample data. Its ‘find all sums’ feature also lets auditors automatically verify the mathematical accuracy of a financial document.
There are dozens of innovative products on the market that promise to improve the audit process. Another popular tool used in UK audit firms is AI-audit software provider MindBridge, which can analyse 100% of transactions and learns to become more efficient at spotting risks and anomalies. This helps auditors to better understand the risk of material misstatement and design more effective audits.
For all the celebration around blockchain technology over the past decade, it remains in its infancy, for now. But ICAEW considers it a disruptive technology for audit professionals.
Currently, auditors can, in theory, use blockchain to verify 100% of digital currencies. Firms are, however, struggling with some aspects of how to audit cryptocurrencies. But that, for now, is less of an issue for auditors.
The ability for auditors to use blockchain technology to authenticate original documents to support transactions has substantial potential to detect and prevent fraud. And that will be huge for auditors.
Request.Network, a new blockchain project, is one to watch. Request is an open network for payment requests. Request.Finance, part of the Request.Network ecosystem, can be used to generate, track and pay invoices. That could be huge for auditors.
Some consolidation is expected in the marketplace as new tools and processes emerge. An example of that is seen in the takeover of Fluidly – a cash flow forecasting tool powered by machine learning and launched in 2017 by digital bank OakNorth, which will integrate the product into its organisation.
As new tools and technologies evolve and emerge, the audit process has the potential to become almost unrecognisable from its traditional processes. Are we on the brink of wholesale audit transformation? Perhaps not yet, but it certainly seems like the age of talk is over and the time for adoption has begun.
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