What does the future hold for the audit?

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The process of audit has changed significantly in recent years. Driven, in particular, by technological progress, the audit of today is fast moving towards a paperless and more efficient process. Challenges exist, such as the need to maintain high quality standards in the adoption of new tech, but there are many advantages too. For firms today, embracing the future potential of the audit is about embedding changes already available and making room for those yet to come.

Where has technology made the most impact so far?

Data is at the heart of the audit and advances in technology have presented an increasingly broad way to tackle its handling. Data extraction has always been a fairly standard part of the process, for example. Most firms have developed some type of system that allows for a small sample of data to be extracted so that it can be analysed. Historically, audit conclusions have often been drawn on the analysis of this small sized sample. However, now that is changing. Thanks to tech-driven innovation, analysis can be performed not just on a small sample size but 100% of available data. The advantages here are obvious – data is being sorted and analysed from the entirety of the client’s system, producing a much more comprehensive result and enabling conclusions that are not limited to a small sample that may not be representative.

Analysis and exceptions

Working with all the data in a system would have been impossible years ago. However, today auditors can spread the net wide and apply analytics via programmes with a number of parameters (set by the auditor using their own skill and also knowledge of the client) that will provide data exceptions. This approach can be used to identify issues in key documents, for example, or that set authorisation levels have been followed. The end result is a report of exceptions that can be further investigated. The review of exceptions is, for now, the only part of the process that still needs a more individual approach and a human eye to complete.

Laying the foundations for the changes to come

The application of technology to data presents significant opportunities for those firms that are willing to embrace it. However, there is more to come. The use of drones, for example, is one area where there is considerable potential for improving the efficiency and accuracy of the audit of the future. Last year it was established by ICAEW that PwC had worked with drones for audit stock count purposes with a client (energy business RWE). The drone improved the speed of the process, snapping images of the stock that enabled it to reduce a four-hour audit process to 30 minutes. Drones have a lot of potential to be useful, from recording humans doing a stock count to ensure it’s being properly performed to carrying out test counts on certain line items. There is no doubt that the audit of the future will feature drones.

From drones to data analysis, the audit is changing. Technology provides a wealth of opportunities for any firm to enjoy efficiency and cost saving benefits that can ultimately be passed onto clients too.