How much time will it take to send money from America to Europe in the next few minutes? Thanks to the new innovations and technologies you can get on with your transactions by pressing just a few buttons from your cell phone. A few years ago no one could have even imagined these things. However, with the passage of time you have to cope up with new trends to continue your race with the rest of the world. Peat Marwick Mitchell, a chartered accountant in the early days of KPMG mentioned that in the 1960s they had a very strict dress code for work when only black and white shirts were allowed. However, now in the present, firms do not have such strict policies.
The main purpose of the auditing profession remains the same from the start to date, which is providing a high quality of services for the betterment of industry and individual organizations. During this extensive journey covered by the auditors and for the future to come, the auditors should adopt new trends and techniques introduced in the field to avoid any reputational crisis and financial scandals.
For example, many audit firms are happy to use data analysis and artificial intelligence as a tool to improve audit quality and meet the audit requirements for more complex organizations and industries. Now many leading audit firms are hiring data scientists, actuaries and mathematicians to evaluate the figures in a more meaningful way to the investors.
Following are the audit trends which significantly improve the quality of audit firms.
Use of Artificial Intelligence:
Artificial Intelligence (AI) is a computer program which possesses qualities like human intelligence. In the field of accounting, it automates a lot of operations which were previously done manually. Now auditors are using these AI programs to identify and investigate transactions which shows deviation from the data set.
These AI programs are best in time-saving and useful for both the client and audit firm by analyzing completely all the ledgers and other financial data. The AI technology allows the auditor a richer financial picture than ever before.
Organization’s Data Security:
Growing dependence on the internet and cloud-based software, every organization is now trying their best to secure their important data from any cybersecurity threats. Cybersecurity becomes a very hot topic for the whole world after the Cambridge Analytica scandal. Now businesses are paying more attention towards data security by implementing stricter rules, regulations and modern tools. The organization also conducts its information system audit after some time interval to check the credibility of implemented tools and techniques.
Modern auditors should also keep their skills and techniques updated to ensure that the business secrets are well protected and secure.
From the cybersecurity point of view, the auditor is required to:
- Understand the business information system and its impact on a company’s financial statements.
- Understand the organization’s automated system and its impact on internal controls.
- Understand the business information system and identify any weak areas which can be used to manipulate the financial data.
- It can be said that cybersecurity risk becomes the core area for the auditor, as it can vastly affect the business financial statements.
Importance of Data Analytics:
From the introduction of different data analysis software and tools, auditors are now in a position to evaluate bulk data in minimum time. These analytical tools are also used by modern world organizations for the analysis of different data and taking decisions about future products.
These tools and techniques help the auditors to analyze different organization information and check whether the trends and patterns of data are normal or irregular. These tools make the work of auditor faster with better results by eliminating human errors. The most common analytical tools for auditors are:
- Microsoft Excel
- IBM Cognos Analytics
- SAP Business Objects
Adoption of New Technologies:
As mentioned at the beginning, to continue with the world you have to get adapted to the new trends and techniques. The auditors should have full understanding of the latest technology used in the field of accounting and finance. For this purpose, most of the top or middle-level audit firms are investing in new technologies and organizing training programs for the audit team to update them with the technological trends and practices.
The growing change in technologies also brings some opportunities and challenges to the audit firms. Now, the auditors should consider the audit scope and decide whether to expand their assurance services to areas which are not directly related to financial statements.
Following are the three main benefits, brought by the use of new technologies:
- Increased efficiency by eliminating human errors.
- Auditors can test 100% of financial data instead of testing sample data.
- Is less time consuming which allows the auditor to concentrate more on important tasks.
At the end I would say that these new trends are the betterment of the audit industry and firms should adopt them to compete in the market.