New technologies are transforming the traditional audit and enhancing the quality of the risk assessment, fieldwork and processes required to produce a robust audit.

As part of ICAEW’s virtual conference on digital disruption, Nick Frost, KPMG Audit Technology and Innovation Lead, explained that technology had greatly expanded the scope of the auditor in his webinar: "How technology is enhancing audit quality".

He said: "It enables a much better conversation with the client, a much richer discussion and appreciation of risk across the audit team, and ultimately a better-quality audit.” 

Five ways technology can enhance an audit

Technology improves an audit by harnessing data, unlocking more value from the audit process and generating better results for clients. Discover below five key ways in which technology enhances the audit process by:

1. Improving auditors' judgement

Technology informs auditors and helps them to make better judgements, for example when assessing whether an asset is impaired or not, and if it is recoverable. Frost said: “Technology can brings us to a whole new level of diligence and robustness in terms of audit evidence. It’s also not biased, whereas humans may be.”

2. Informing the entire audit

Technology should be applied at the start of and throughout the audit process to maximise its value and improve the overall quality of the audit. This means you can tailor the audit as it progresses based on findings as they arise. Visual technologies can show the transactions of an entire process, creating a picture that depicts their volume and value, and stop the auditor from being distracted by low value transactions.

3. Expanding the scope of the audit

Prior to advances in digital technologies, an auditor may have looked at risk in the context of how likely something is going to happen, and secondly, the size of that issue. By using new technology-enabled tools, for example a dynamic risk assessment, auditors can look at many different factors including the velocity and connectivity of risk, its attachment to other risks, clusters of risk and risk contagion.

4. Delivering better audit insights to clients

Technology enables auditors to share insights with clients, helping them to see their processes in a completely different light, perhaps showing inefficiencies at various steps and repetitions throughout the process. Audit firms are increasingly using platforms and dashboards to show information to clients and to also enable clients to send information. In addition, clients are frequently able to put in place technologies that sit on top of their enterprise resource planning (ERP) systems, which can then be used to inform audits. In his webinar, Frost said: “This is leading to a very different type of interaction with the client compared to the old days of producing a written report with a few bar charts and line graphs.”   

5. Leading to a higher number and quality of scenarios

Auditors are no longer confined to narrow forecasts. Technology can ingest the data that sit behind forecasts, for example, cashflows, and use algorithms to provide unlimited scenarios around what might actually happen. By using technology, auditors have the ability to produce probability curves that provide a much higher quality of insight, quality of debate and discussion with clients. Scenarios can be altered according to different data inputs, such as market data, client feedback and the historical accuracy of forecasts. 

How auditors can add value 

Mark Edmondson, CEO of Inflo Software, was another contributor to ICAEW’s virtual conference. His webinar focused on how data analytics can add value to typical compliance services, such as audit, and how finance functions can use analytics to provide advisory services. The webinar also explored the challenges of shifting the value proposition and gave tips on how to implement analytics into client services.

• Watch Mark Edmondson's webinar: Analytics and adding value to your client

How technology is impacting internal audit:

• 2018 State of the Internal Audit Profession Study
  More than 2,500 audit professionals and senior executives contributed to PwC's 2018 State of the Internal Audit Profession Study, which confirms that internal audit functions are expected to have a point of view on new technologies, be able to provide advice on implementation, while managing risks and imposing strong controls.
• Internal audit 3.0 - the future is now
  In this report, Deloitte outlines its blueprint for "Internal Audit 3.0" - the next generation of internal audit. The report draws upon the experiences of audit committee chairs, executives and business leaders, to try and clarify the expectations of those involved in audit, along with the necessary skills and enablers to deliver those expectations.