As we look forward to what the future holds for auditing, it is clear that technology will play an ever increasingly significant role in shaping the profession. Artificial Technology is coming more and more into our lives and is getting more powerful every time it is used. There is also a rise in remote audits, Augmented Reality (AR) and data visualisation. These advancements are helping auditors find new ways to become more efficient, both with time and money, and accurately analyse what they see and financial data that they come across. These emerging technologies offer a wealth of benefits, including improved data accuracy, faster audit completion times, and enhanced risk management.
In this blog post, we'll explore how these technologies are already transforming the audit process and discuss how they are likely to continue to shape the future of auditing in the years to come. By understanding the impact of these tools and technologies, auditors can position themselves for success and thrive in an ever-changing business landscape.
AI (Artificial Intelligence) will have a significant impact on the future of auditing. It will do this by transforming the way auditors work and the value they can provide to their clients. One of the most significant benefits of AI in auditing is the ability to analyse large amounts of data quickly and accurately. With the help of AI-powered tools, auditors may be able to identify patterns, trends, and anomalies in financial data that may indicate potential risks, fraud, or errors.
AI will affect the future of auditing through the automation of routine tasks, such as data entry, report generation, and testing controls. This will enable auditors to focus on more complex tasks that require human judgment and critical thinking skills, such as evaluating the accuracy of financial statements and identifying potential risks.
AI-powered auditing tools can also improve the quality of audits by providing auditors with insights and recommendations based on data analysis. For example, AI can help auditors identify areas of potential risk that may have been overlooked or suggest ways to improve internal controls.
Finally, AI should improve the efficiency and effectiveness of audits by reducing the risk of errors and omissions. By automating routine tasks, AI can reduce the risk of human error and provide greater consistency in the audit process.
Fully remote audits happen currently, but they are not a preferred way of auditing. However, this may change. With the advancements in technology and Augmented Reality, (which will be talked about later on), there is no reason for remote audits to be the preferred way. But why?
Remote audits will cut down client’s costs, associated with travel and accommodation, potentially for both the audit team and their internal staff. Remote audits can also be in favour of the auditor, as they reduce time by not having to travel, and reduce the associated carbon footprint of the audit, whilst working from where they want to and still getting the same results.
However, remote audits are not always possible… This is because there will be times and visits where the auditor will need to be on site, such as to witness operational control and assess the infrastructure and environment for the operation of processes.
There can be a good debate from auditors and customers as to what is the better way of auditing. However, it completely relies on the risk to the audit objectives and any certification(s) held.
In 2021, a joint survey of more than 4000 participants was carried out by the IAF, ILAC and ISO. The survey shows that many are ready to embrace new methods and procedures in remote audits, assessments, and evaluations.
This shows that remote audits are already a big thing and are well accepted by auditing bodies. The biggest stat that came from the survey, is that nearly 100% of the professionals who took part, agreed that new technologies and techniques relevant to the times should be used.
View the full survey and results here.
Augmented reality (AR); what is the first thing that comes to mind. Let me guess… People making a fool of themselves in goggles that link to a device. Was I right? Of course, I was.
As funny and entertaining as these goggles can be. They are extremely powerful and can be used for so much more than playing games or pretending to be on rollercoasters.
AR will never completely remove the need of having an auditor or an industry experienced professional. AR could be used to provide auditors with a more immersive and interactive experience, allowing them to visualize and analyse complex data more effectively. For example, auditors could use augmented reality to overlay financial statements onto the physical environment, making it easier to spot discrepancies and identify potential issues. Additionally, augmented reality could be used to provide auditors with real-time updates and alerts during audits, improving their ability to respond to emerging issues. They could also use BIM related information on a construction project to analyse satisfaction of technical specifications.
Remote audits could be transformed by having AR. This is because it could allow the auditor to enter this digital world and see the Client’s office, literally through their own eyes and just like what they would see if they were there in person, but this can be done from anywhere in the world. Linked with data and AI together, it could be an incredible resource to extend the audit sample through geographic reach and access to more detailed information.
Data has always had a significant part to play in auditing and it is more and more likely to have a larger impact in the future. When you combine the advancements with Big Data, AI and the technological developments, if harnessed effectively it could create a powerhouse of evidence to validate audit conclusions.
Data Visualisation will enable auditors to have the ability to analyse large chunks of data to gain relevant insights into the auditee organisation’s finances, medical records, accidents and reports, risk assessments and much more, enabling them to have a better understanding of the organisation and allowing them to use the data to assess the effectiveness of any management system based on the past performance and what improvement actions the auditor can identify in the present. Not only can the data be used like this, but it will also allow the auditors to have many strenuous tasks automated, such as identifying anomalies in financial or other performance data and evaluating compliance with applicable statutes or regulations. This will enable auditors to focus on more complex tasks that require human judgment and critical thinking skills, such as in reviewing the interactions between processes and the residual risks.
When AI is used in conjunction with data visualisation, the AI system could update and make any necessary changes to the system based on the updates in close to real time, enabling identification and analysis of variances outside tolerance in the automated processes and facilitating a more focused approach to both problem solving and nonconformity analysis, whilst responding immediately to reduce risk.
Technology of course has a critical part to play in all of the above. This is because without the technological advancements, none of these advances would be possible.
Technology is constantly transforming the way audits are not only conducted, but also how the results of the audits and the findings are communicated, addressed, and integrated in a way that meets the governing scheme requirements and both the current and future needs of trade and industry. Organisations are constantly evolving, with some not even having head offices already and others collaborating in virtual spaces, whilst supply chains to continue to be globalised.
Furthermore, other potential advances include the use of blockchain technology which can create immutable records of audit trails, making it more difficult for bad actors to manipulate data, providing further confidence in the process. Additionally, the rise of cloud-based auditing solutions means that auditors can potentially access critical information from anywhere, enabling audit teams and relevant experts to conduct remote audits, providing greater flexibility in approach.
Overall, technology promises to improve the quality and reliability of audit outcomes, leading to improved decision-making, enhanced confidence, and ultimately more trust in the auditee organisations for consumers and end-users of the products and services provided.
The International Accreditation Forum (IAF) have been holding an event in Belfast, Northern Ireland, that has been running from 30th April and finishes on Monday 8th May. Every day the event offers different talks and conferences starting from 8:30 am and the last talk ends at 9 p.m. on some days. On Wednesday 3rd May, the IAF Working Group Digitalisation held their first hybrid meeting, with the participants meeting both in Belfast and online. During this talk, discussions covered updates to documents to address digitalisation and how IAF can leverage technologies and future mechanisms to stay up to date with the latest trends.
Just like this blog, everyone is trying to stay educated and talk about the future of our industry, because if you fall behind you may never catch up to your competitors. Below is a picture from the groups meeting in Belfast. You can also follow the link to find out more about the IAF and stay up to date with industry updates!
In conclusion, this is a profession that does not change as rapidly or intensely as the retail or computing industries, but there are changes coming that will revolutionise the way we work, for the better. This is thanks to technology and the benefits that it can bring when it is integrated into the way you work and paired with other advancements, such as AI, AR, and Big Data.
As the industry changes and technology becomes more intuitive, the ones who change with the times and embrace the tools they have at their disposal, will be well-positioned to continue to strive.
However, it is important to note that these technologies should not replace the auditor completely, but instead compliment the way they work and their ability to carry out audits competently and successfully.
The future looks bright!
Check out the Chartered Quality Instituite (CQI) video of professionals in the industry talking about their experience at the 'Future of Auditing' conference back in September 2022. Listen to what they say below.
