Technology and Audit

AUDIT- THEN, NOW AND NEXT
INNOVATION AND IMPACT OF TECHNOLOGY IN THE AUDIT FILED
Audit- Then, Now And Next
Innovation And Impact Of Technology In The Audit Field
-by SADAF MAHFOOZ
Programme- PGDPA
1. DEFINITIONS
i) AUDITING
In general terms, Auditing, is an independent examination of the books of accounts and
vouchers of the business whether profit or not for profit organization by an independent
auditor qualified under the Chartered Accountants Act (in India), in order to ascertain their
accuracy and express an opinion thereon.
ii) AUDIT
The word Audit comes from the Latin term “Audire” which means listening. In general terms,
it is a synonym to control, check, inspect, and revise.
Plan -> Do -> Check-> Act

Authorize
Monitor and
Establish Implement review Improve
1.Objectives 1.Schedule audit 1.Monitor
2.Extent 2.Evaluate Auditors 2.Review
3.Responsibilities 3.Select teams 3.Identify need for
4.Resources 4.Direct Activities corrective options
5.Procedures 5.Maintain Records 4.Identify opportunities to
Improve
Auditor Competence Audit Activities

iii) TECHNOLOGY
Technology is the most difficult term to define. It is the use or purposeful application of
knowledge, information, data to turn resources into goods or services in order to enhance or
improve human conditions and their efficiency.
IT AUDIT
1.
INFORMATION
GATHERING
6. CUSTOMER 2. REVIEW
SATISFACTION PRIOR AUDIT
EVELUATION ISSUES
5.EXECUTE IT 3. RISK
AUDIT PLAN ASSESSMENT
4. DEVELOP IT
AUDIT PLAN
2. INTRODUCTION, BACKGROUND AND HISTORY OF AUDITING
The evolution of Auditing as a financial accountability field is the advent of the Industrial
Revolution.
Auditing existed primarily as a technique to maintain governmental accountancy, and record
keeping was its backbone.
Anciently, checking clerks were appointed to check the public accounts. To detect frauds as
well as to find out whether the receipts and payments were appropriately recognized by the
person responsible, these two were the were the main objectives of auditing in those days.
Period Audit ordinates Auditors The objectives of the audit
People of the The punishment of the thieves for the funds

Up to Kings, emperors.
state or changing direction
1700 Churches and the state
scribes
Protecting the assets
1700 – States, Courts and Repressing fraud and punishment of the

Accountants
1850 Shareholders authors Protecting the assets
Professional
1850 – The state and the Avoiding fraud and errors and attesting the
accountants
1900 Shareholders viability of the balance sheet
or lawyers
1900 – The state and the Professionals Avoiding fraud and errors and attesting the
1940 in audit and viability of the
Professionals
in audit and
1940 – The state and the Attesting the honesty and regularity of the
accounting
1970 Shareholders historical financial data
and
counseling
Professionals Attesting the quality of the internal control

1970 – The state, the third
in audit and and respecting the accounting norms and the
1990 and the shareholders
counseling audit norms.
Attesting the clear image of the accounts and
The state, the third the quality of the internal control in respecting
1990+
and the shareholders the norms. The protection against
international fraud
3. AUDIT TECHNOLOGY
Now a days, Big 4s are using leading-edge digital technology to power and deliver the end-to-
end Digital and High-quality Audit to their clients. It enhances the way world looks at audit
risks, reduces client burden and provides unrivaled insights.
Audit using technologies helps the Audit Firms to meet both their expectations and the
evolving needs of businesses, regulators and investors. Big 4s invest in innovation with the
ambition to build a better working world and providing the capital markets with greater
confidence, a better business perspective and enhanced transparency.
Technology drives both clients and the Audit firm’s business. At the same time, a
technological revolution that offers so much opportunity also brings with it more complex
risks, competition from divergent angles and stakeholder scrutiny that is forensic in focus.
Technology provides the auditors the best possible tools to use in their work. By investing in
a number of critical tools, auditors have been able to bring a significant amount of digital
innovation to the audit.
The Audit Companies now a days have developed their own foundations of digital audit:
online audit platform; data analytics platform; and cloud-based knowledge platform that
delivers the latest accounting and auditing content.

Audit Companies are also investing in emerging technologies such as advanced data
analytics, artificial intelligence (AI), blockchain, drones and automation.

4. MAJOR TECHNOLOGIES THAT WILL TRANSFORM THE WAY OF AUDITING
In order to derive maximum benefit from technological change in auditing begins with
interacting with their stakeholders, people who will affect that change—and those most
affected by it. To that end, one of the most important findings of the Forbes Insights/KPMG
report “Audit 2025” is that four in five respondents—80%—say auditors should use bigger
samples and more sophisticated technologies for gathering data and performing analysis in
their daily work.
Therefore, the most considered question which crops up and needs to be answered is: What
exactly will these sophisticated technologies be, and how will they function now and in
future?
Below are three fundamental areas where technology will change the face of auditing—with a
detailed view of how the technology itself works and what results these innovations will
yield.
A. How Cognitive Technology Will Develop and Enhance Audit Quality
Cognitive technology—also known as artificial intelligence (AI)—can dig through vast tracts
of data and perform digital analysis of this data in a way that is impossible even with teams of
auditors today. Cognitive technology comprises algorithms that enable software to gather data
and transform them into information, reason and think in ways similar to humans. It also
incorporates a process known as machine learning, where computers can course correct and
try new strategies as they encounter obstacles or unknowns in their work.

Auditors can use cognitive technology for redesigning and re-planning their work so they can
conduct analyses of structured and unstructured data in easiest and time saving ways.
“Auditors can then use this analysis to deliver high-quality audits that dig deeper into the
data and reveal more about a company, its risks, its financial reporting controls and its
operating environment,” says Brian Foster, KPMG’s U.S. Emerging Audit Solutions Leader.
Yet even with all the benefits of cognitive technology, the human auditor plays the capstone
role. “The bottom line is that cognitive technology will empower and enable our professionals
to make key judgments and deliver high-quality audits in a world of exploding data and
ubiquitous information, and provide our auditors with access to richer, more detailed audit
evidence and valuable insight that we can use to differentiate our service proposition,” Foster
says.
LEVERAGE QUALITY
INNOVATIO
INSIGHT
N
INNOVATION: Rapid prototyping and industry-relevant procedures
INSIGHT: Deriving meaningful insights from previously untapped unstructured data
LEVERAGE: Leverage industry experience and artificial intelligence

QUALITY: Auditor “supervised cognitive” technology to focus on higher-value audit
judgments.
PREDICTIVE
ANALYTICS
DATA
ANALYTICS
COGNITIVE
TECNOLIGIES
DIGITAL
AUTOMATION
B. Data Analysis: The Power Of Predictive Analytics
As the sub-heading implies, predictive analytics involves using advanced data analysis
techniques to make predictions—based on probabilities—about the future, and may involve
advanced technologies such as artificial intelligence and machine learning to cultivate those
forecasts. In the context of the high-quality audit, auditors can employ digital tools to extract
information from an organization’s systems, and then use predictive analytics for the purpose
of identifying patterns that either align or don’t align with anticipated outcomes and trends.
This type of analysis is conducted for various reasons, but it is especially useful in gaining
deeper insight into a client’s business and financial risks.
Specifically, auditors can use client data—and combine it with industry or market data—to
enable a deeper and more robust understanding of the state of the business and any risks. That
doesn’t mean, however, that predictive analytics tells you what will happen in the future.
Rather, the focus is to provide probabilities that indicate potential outcomes.
Here’s how this works in real time: External auditors working with a client can use predictive
analytics to assess whether the client’s financial or other data conform to the expected norms
for comparable historical data from both within the company as well as from companies in
comparable circumstances. As this capability comes into wider use, auditors will have a
powerful tool to grasp the accuracy of reported information and promote audit quality—with
comparative data as a benchmark.

A New Platform Dive: Smart Digital Hubs
Not long ago, auditors worked in an environment surrounded by landline phones, fax
machines and desktop computers: In effect, they were chained to a desk. Thereafter, mobile
technology made it possible for auditors to take their work—and much more vital
information—outside the office and into the field. Now, the latest wave of financial
technology introduces digital hubs into the equation. Simply put, these serve as “smart
platforms,” whereby auditors can work remotely, and in real time, utilizing data and
analytics, automation and visualization. For example, work from home facilities using their
respective firm’s VPNs, securing their work even in external environment and remote areas.
Yet to be as effective as possible, these platforms must possess three characteristics.
i) Cloud Based: First, a smart platform interface must be agile and able to work in a cloud-based
environment.
ii) Adaptable: Second, it must ideally be configured to support integration into future
innovations not yet available but anticipated within the next few years.
iii) Reduce workload: And finally, it must avoid piling layers of needless complexity onto an
auditor’s already challenging workload.
Putting It All Together: Auditing At The Speed Of Change
Just as audit-related technology is getting faster, it’s also changing at a faster rate. As digital
innovation speeds ahead, the audit profession needs to align with the change. The question is
no longer “whether” the auditor needs to change; it’s “how fast?”

5. PROGRESSING WITH COGNITIVE TECHNOLOGIES
It's likely that in the coming years, substantial portions of public and private company audits
will be boosted by cognitive technologies. In fact, much of the audit profession is exploring,
experimenting, and moving forward with efforts to use various cognitive technologies in the
audit.
To be clear, it's unlikely that the profession will arrive at a fully automated audit with no
human intervention on the horizon, and it continues to hire more auditors each year. But there
is a consensus within our organization, at least, that cognitive technologies can bring
substantial value to the audit process for auditors, clients, and the investing public.
Three basic factors characterize a sound approach to a cognitive-enabled audit:
A. A global approach
This approach involves the formation of a global audit innovation team with members across
the global organization. One of the team’s tasks is to constantly investigate into and evaluate
new technologies to develop there own coordinated projects that are expected to ultimately
facilitate agile, cognitive-enabled audits anywhere in the world.
B. Best of breed components
While there is already much investment within the audit profession to build and leverage
Proprietary automation, and cognitive and analytics capabilities internally, there are two basic
approaches to implementing external advanced technologies. One is to embrace a single
developer’s approach, employing multiple capabilities from that one provider. The other is a
“best-of-breed” approach employing components from multiple developers. Advancements in
cognitive technologies increasingly prefer the latter approach, given that even the largest
developers typically offer a component-based architecture using a set of application program
interfaces (APIs).
C. A process for cognitive audit development
A conclusion can be drawn from working with cognitive technologies across the audit, that a
task or activity often isn’t ready for cognitive transformation. An audit task might, for
example, currently be executed in different ways throughout the world to accomplish the
same objective. Or it might be performed without benefit of any technology, suggesting that
there may not be enough digital data for a cognitive approach.
D. Simplify and standardize
Step one is to create a common, simplified process or procedure for performing the task. At
this point, no new technologies are introduced—there is simply the creation of process flows
and procedure documentation. This step isn't necessarily easy, because even though audits
may be conducted under a common audit methodology to facilitate consistent global audit
quality, auditors may perform individual sub-tasks or routines in different ways around the
world—dependent, in part, on how information is received (or extracted) from an individual
client (or client system). This fact makes it significantly more difficult to adopt a single,
technology-enabled approach.
i) Digitize and structure
Digitization—transforming a task into an information technology form, that can collect data
and monitor performance. This is a prerequisite to cognitive technologies that learn from data.
Digitization is also the next step in structuring the task. The technology employed typically
specifies the order and stages in which activities are performed.
ii) Automate
Once the task has been digitized and structured, it is usually a straightforward process to
automate its performance, typically with some sort of proprietary workflow or even robotic
process automation tool. This step reduces the need for manual labor and generally improves
cycle time and consistency. For example, Deloitte uses workflow technology to fully
automate the confirmation process within an audit. They have built an integrated digital
platform to prepare, authorize, distribute, collect, manage, and evaluate the results of the
confirmation process.
iii) Advanced analytics and analysis
Automated processes can be monitored with descriptive analytics, and may be tested with
predictive or prescriptive analytics. Also, client data can be supplemented with external data
to further improve the risk assessment process or to identify substantive testing outliers.
iv) Cognitive
The final step in the transformation to a cognitive-enabled task is to actually implement
cognitive technologies to make the task more intelligent, thereby learning from auditor
interaction with the underlying data (e.g., machine learning). Cognitive technologies might
learn to perform the task better over time, or might apply intelligent decisions to an aspect of
the task (such as extracting and analyzing contract provisions).
The future role of auditors
One might consider the possible reduction of need for auditors or even their elimination, with
the increasing use and implementation of cognitive technologies. It is evident that cognitive
technologies have enabled the automation of tasks that have been conducted manually for
decades, such as counting inventories or drafting communications. Thus, liberating the
auditor's time to focus more on risk areas and less on routine tasks. Yet the potential of
cognitive technologies doesn't just automate routine tasks—it can also enhance an auditor's
professional judgment by modeling thought processes that can be contrasted with initial
conclusions.
The end result is an enhanced role for auditors. Freed of performing repetitive manual tasks,
they can enhance audit quality by monitoring the outcomes of automated tasks, reviewing
advanced analytics, and assessing the implications of findings. By allowing auditors to spend
more time exercising their professional judgment, and enabling them to better understand
their client's business, we are confident that future-state cognitively-transformed audit
processes will also enhance the skills and satisfaction of the auditor. Although new skills will
be required, we see plenty of demand for well-trained auditors for decades to come.
6. IMPROVING AUDIT QUALITY WITH SMARTER AUDITS
A) Shaping the future of accounting
Audit quality is most important. It should also anticipate the changes of an evolving, growing
business and adapt continuously. Big 4s audit does this—by using advanced technology,
design thinking, and our professionals’ experience.
B) Ensuring audit quality. Advancing technology.
Audits and audit quality remain vital as today’s businesses evolve. In fact, audit is an even
more valuable enabler of our vibrant capital markets. It embodies continuous innovation,
applies agile auditing, and is grounded by risk-based methodology and workflows.
As the methods for achieving audit quality progress, Audit firms stay ahead by embedding
advanced technology into every audit. They take the technologies transforming the
marketplace—such as cloud, process automation, data visualization, and cognitive analytics—
and build them into the audit.
But it doesn’t end there. A Big 4 audit showcases our most valuable asset: the skills and
expertise of our professionals. Their experienced auditors not only take the lead in ensuring
audit quality, but they also rely on contributions from data scientists and subject matter
resources. That mix enhances the audit team’s ability to use data insights pulled from our
technology and your data to reveal and describe business issues for you to consider.
“Every part of our organization is dedicated to audit innovation. By harnessing new,
advanced capabilities, we’re elevating quality, providing objective insights, and delivering a
differentiated audit.” —Jon Raphael, national managing partner, Audit Innovation and Client
Service Delivery, Deloitte & Touche LLP.

7. BLOCKCHAIN AND FINANCIAL REPORTING
Blockchain: Audit's new standard?
Blockchain has become the latest disruptive force that senior-level financial executives need
to consider when creating long-term plans. As of today, a majority of a CFO's engagement
with the technology comes in the payments and banking sector as blockchain-based crypto
currencies—such as Bitcoin—gain traction. At the same time, blockchain is moving beyond
speculative traders and technology enthusiasts into cross-border payments and capital market
structures.
It has been interpreted by an increasing number of stakeholders and professionals that it won't
be long before blockchain becomes the industry standard for accounting and reporting,
upending decades of backend systems and reporting practices.
This disruption would be a logical next step given blockchain's underlying format of an open,
trusted, and easily accessible ledger system that speaks directly to the financial reporting
community.
To explore how blockchain is currently being adopted in the financial reporting community,
auditing and accounting firms are working with the Financial Executives Research
Foundation (FERF) to better understand its potential for industry disruption and the realistic
next steps for the technology to be embraced.

Following is an excerpt from the interview below:
Q: Jon, how would you rank blockchain and distributed ledger technology in terms of
possible influence on accounting and financial reporting, especially when compared to other
issues like artificial intelligence and regulation?
A: "Blockchain has the potential to be very transformative. By itself, blockchain will likely
change how records are maintained and how value is transferred between counterparties.
Blockchain’s impact is often compared to the impact the Internet has had on information.
Today, the Internet is an integral part of the fabric of our lives – for example, most research
is conducted online. Blockchain, when it reaches scale, could produce the same type of
impact in terms of how transactions are recorded, and on the transfer and evidence of value.
I’m confident we will witness this as we start to see scaling of blockchain applications over
the next couple of years.
Most compelling, however, is blockchain’s potential for transformative analytic capabilities.
One of the beneficial outcomes of blockchain is easy access to structured data, which can
then be used to generate advanced analytics and accelerate machine learning. This will
enable tools to get smarter and drive us further and faster toward more continuous auditing
and assurance."
Q: Realistically, where do you see blockchain adoption within financial reporting in the next
10 years, rather than just theoretically?
A: "Ten years is a really long time to project what will happen. Many of the use cases over
the next few years will be transaction-oriented or will digitize and record ownership, such as
a blockchain derivative transaction that references an interest rate going up or down. The
ability for the blockchain to leverage smart contracts to be able to reference a data source to
see whether interest rates moved up or down, and then automatically facilitate the settlement
and recording of transactions is one use case. Also, things like deeds, titles, even ownership
of music or other digital assets, having them exchanged via blockchain, thereby also
facilitating the appropriate collection of royalties also has great potential.
Again, think back to how the Internet evolved. It existed for a very long time before it was
adopted by the masses. Initial use cases were generally intra-entity or within a closed loop of
entities, which is very similar to what’s happening with blockchain today. Over time, it
achieved more scale, became more pervasive, and then simply integrated into the fabric of
how we function.
One of the strengths of blockchain, of course, is that participants can see the information.
How much information everybody is comfortable sharing—and that information could
provide a strategic advantage—still needs to be resolved. The desire to make that information
available for other parties to see is something companies will need to think through for each
use case. This is one of the challenges that lie ahead for massive scaling of blockchain."
Blockchain in accounting
With more companies exploring blockchain business opportunities—including the blockchain
audit trail—many accounting firms have undertaken blockchain initiatives to further
understand the implications of this important and versatile technology. Audit and assurance
professionals should stay abreast of developments and continue to learn more about
blockchain business applications, blockchain in accounting, and blockchain audit technology.

WHAT IS BLOCKCHAIN TECHNOLOGY?
All information transferred via

A digital ledger that keeps a record of all
blockchain is encrypted and every
transactions taking place on peer-to-peer
occurance recorded, meaning it cannot be
network
altered.
Encrypted information can be

shared across multiple
providers without risk of a
privacy breach
It can be used for much more than the

It is decentralized , so there is no need for
transfer of currency; contracts, records,
any central , certifying authority
and other kinds of data can be shared
Highlights on Blockchain:
 Blockchain technology has the potential to impact all recordkeeping processes, including the
way transactions are initiated, processed, authorized, recorded, and reported.
 Changes in business models and business processes may impact back-office activities such as
financial reporting and tax preparation.
 Both the role and skill sets of CPA auditors may change as new blockchain-based techniques
and procedures emerge. For example, methods for obtaining sufficient appropriate audit
evidence will need to consider both traditional stand-alone general ledgers as well as
blockchain ledgers. Additionally, there is potential for greater standardization and
transparency in reporting and accounting, which could enable more efficient data extraction
and analysis.
Independent auditors will need to understand blockchain technology as it is implemented at
client sites, whether clients are pursuing blockchain business opportunities, implementing
blockchain business applications, or applying blockchain in accounting.
The potential impact of blockchain on the audit and assurance profession
Some publications have hinted that blockchain technology might eliminate the need for a
financial statement audit by a CPA auditor altogether. If all transactions are captured in an
immutable blockchain, then what is left for a CPA auditor to audit?
While verifying the occurrence of a transaction is a building block in a financial statement
audit, it is just one of the important aspects. An audit involves an assessment that recorded
transactions are supported by evidence that is relevant, reliable, objective, accurate, and
verifiable. The acceptance of a transaction into a reliable blockchain may constitute sufficient
appropriate audit evidence for certain financial statement assertions such as the occurrence of
the transaction (e.g., that an asset recorded on the blockchain has transferred from a seller to a
buyer). For example, in a Bitcoin transaction for a product, the transfer of Bitcoin is recorded
on the blockchain. However, the auditor may or may not be able to determine the product that
was delivered by solely evaluating information on the Bitcoin blockchain. Therefore,
recording a transaction in a blockchain may or may not provide sufficient appropriate audit
evidence related to the nature of the transaction. In other words, a transaction recorded in a
blockchain may still be:
 Unauthorized, fraudulent, or illegal
 Executed between related parties
 Linked to a side agreement that is "off-chain"
 Incorrectly classified in the financial statements
Furthermore, many transactions recorded in the financial statements reflect estimated values
that differ from historical cost. Auditors will still need to consider and perform audit
procedures on management’s estimates, even if the underlying transactions are recorded in a
blockchain.
Widespread blockchain adoption may enable central locations to obtain audit data, and CPA
auditors may develop procedures to obtain audit evidence directly from blockchain. However,
even for such transactions, the CPA auditor needs to consider the risk that the information is
inaccurate due to error or fraud. This will present new challenges because a blockchain likely
would not be controlled by the entity being audited. The CPA auditor will need to extract the
data from the blockchain and also consider whether it is reliable. This process may include
considering general information technology controls (GITCs) related to the blockchain
environment. It also may require the CPA auditor to understand and assess the reliability of
the consensus protocol for the specific blockchain. This assessment may need to include
consideration of whether the protocol could be manipulated.
As more and more organizations explore the use of private or public blockchain, CPA
auditors need to be aware of the potential impact this may have on their audits as a new
source of information for the financial statements. They will also need to evaluate
management’s accounting policies for digital assets and liabilities, which are currently not
directly addressed in international financial reporting standards or in US generally accepted
accounting principles. They will need to consider how to tailor audit procedures to take
advantage of blockchain benefits as well as address incremental risks.
Is the blockchain audit trail in our near future?
There are still many unknowns with respect to how blockchain will impact the audit and
assurance profession, including the speed with which it will do so. Blockchain is already
impacting CPA auditors of those organizations using blockchain to record transactions and
the rate of adoption is expected to continue to increase. However, in the immediate future,
blockchain technology will not replace financial reporting and financial statement auditing.
Financial statements reflect management assertions, including estimates, many of which
cannot be easily summarized or calculated in a blockchain.
Furthermore, the process of an independent audit of financial statements enhances the trust
that is crucial for the effective functioning of the capital markets system. Any erosion of this
trust may damage an entity’s reputation, stock price and shareholder value, and can result in
fines, penalties, or loss of assets. Users of financial statements expect CPA auditors to
perform an independent audit of the financial statements using their professional skepticism.
CPA auditors conclude whether they have obtained reasonable assurance that the financial
statements of an entity, taken as a whole, are free from material misstatement, whether due to
fraud or error. A blockchain is unlikely to replace these judgments by a financial statement
auditor.
That said, CPA auditors need to monitor developments in blockchain technology—it will
impact clients’ information technology systems. CPA auditors will need to be conversant with
the basics of blockchain technology and work with experts to audit the complex technical
risks associated with blockchain.
In addition, CPA auditors should be aware of opportunities to leverage their clients' adoption
of blockchain technology to improve data gathering during the audit. They should also
consider whether blockchain technology would allow them to create automated audit routines.
The auditing profession must embrace and "lean in" to the opportunities and challenges from
widespread blockchain adoption. CPA auditors and assurance providers are encouraged to
monitor developments in blockchain technology because they have an opportunity to evolve,
learn, and capitalize on their already proven ability to adapt to the needs of a rapidly changing
business world.
8. ADVANTAGES OF TECHNOLOGY UNDER AUDIT
A) TECHNOLOGY IS MAKING THE IMPOSSIBLE POSSIBLE
Technology is continuously transforming audit and assurance, leaving it’s impact on
businesses, auditors and regulators
Technology has changed the way we live, work and communicate with each other. It is
disrupting virtually in every industry that exists, upending old business models and creating
new ones. Innumerable start-ups are connecting the power of technology to find innovative
solutions to complex problems.
Some of these are problems that have vexed humans since the dawn of time, such as
generating more food from an unproductive field or finding ways to prevent the spread of a
virulent disease. Others are exclusively modern issues – for example, automating the trading
of crypto currencies.
“This is not science fiction,” says Dr. James Canton, CEO and Chairman of the Institute for
Global Futures and author of Future Smart. “We’re at the edge of creating smarter,
connected, vastly more powerful digital platforms that may end up transforming industries
such as agriculture and health care, as well as finance and trading."
“We are also on the edge of creating autonomous thinking machines,” he believes. “Within 20
years, artificial intelligence (AI) will have become so successful that it will be a key
component of creating guaranteed income for a large part of the global economy.”
I. The future of finance
What does this smarter, more connected world mean for finance teams?
It has been widely forecasted and experienced that man can expect to hand many of their
routine manual tasks over to machines – jobs such as account reconciliation, financial
modeling and report generation. Thus, reducing their time taken up with handling basic
transactions and preparing financial statements and reports, they can rather focus on providing
valuable insight that helps to drive business performance and growth. In other words, finance
is evolving from being a compliance-driven, backward-looking function to a more strategic,
forward-looking one.
In many organizations, the transformation of finance into a technologically savvy business
partner is already well under way. This has been aided by the move toward digital reporting
and the obligation for companies to digitally file tax returns or tag their accounts using
extensible business reporting language (XBRL) or inline XBRL (iXBRL) in various
jurisdictions.
“Momentum toward digital reporting is growing at the moment,” says Phil Fitz-Gerald,
Director of the Financial Reporting Lab of the UK’s Financial Reporting Council (FRC).
“That’s helped by the fact that all EU companies will have to report digitally by 2020.”
In present, finance functions want three basic characteristics in the technological tools used by
them: “connect” (e.g., software that allows them to scour swathes of data to identify trends
and challenges), that “automate” (e.g., robotics that process expenses) and that are “smart”
(e.g., advanced predictive analytics that model the future direction of the business).
These 3 tools allow finance functions to perform existing tasks in a more efficient and
effective way, in lesser time than before and to undertake new tasks that they could never
perform in the past. In other words, they are enabling the finance function to make
the impossible possible.
POTENTIAL BENEFITS OF BLOCKCHAIN
 Reduce cost of over all transactions
 Reduction in systematic risks
 Irrevocable and tamper-resistant
 Fraud minimization
 Improved security and efficiency of transactions
 Enabling effective monitoring and auditing by participants, supervisors, and regulators

II. Innumerable data
The need to interrogate an ever-growing quantity of data is the biggest driver behind the
reinvention of the finance organization. Huge data will facilitate finance functions to reduce
many of the financial risks that organizations face, such as credit risks default risks. Risks are
related to uncertainties. If big data gives you more insight into your competitors or your
clients, you can manage the uncertainties. With the use analytics we can forecast what is
going to happen so that you can reduce your risks.
Predictive analytics is transforming the role of the CFO and the finance function. CFOs have
gate to a lot of data that we can process to gain insights – everything from understanding the
ROI of different marketing programs, to which products are working and where we should be
making new investments, to which sales reps are most productive. By providing perceptions
to our budget holders and stakeholders, the finance function acts as a strategic catalyst.
With the way finance is changing, the pattern of human resource recruitment and hiring is
changing too. Now, CFOs are seeking for aspirants with good interpersonal skills and the
ability to support corporate decision-making when they make new hires.
CFOs are becoming much more involved in determining a company’s strategic direction,
focusing on performance and business growth. They are capitalizing the benefits and
advantages of advanced technologies such as analytics; they are involved in data management
and governance initiatives. By utilizing the available information they help their organization
to implement strategies that drive performance.

Technology has been the major reason behind success of CFO.
By providing insights to our stakeholders, the finance function acts as a strategic catalyst
Dylan Smith
Box
“Finance staff are becoming integral to decision-making processes,” says Matt Weston, a
Director at recruitment company Robert Half UK. “Automation is facilitating this change by
taking away a number of labor-intensive and time-consuming tasks.”
III. The digital audit
Along with the finance teams, technology has enabled the auditors to perform things they
have never done before. The basic area of audit today remains what it has always been; to
give assurance to the capital markets that a company is correctly reporting its financial results.
Nevertheless, auditors are now using powerful technological tools to deliver more
comprehensive and even higher-quality audits. These tools also save time that can be spent
focusing on complex areas of the audit and those that require judgment. And because the tools
enable the analysis of a complete data population, they allow the auditor to add value by
commenting on processes and discussing related business issues with audit committees and
company boards.
Robotic process automation (RPA) – the automation of rule-based processes and routine tasks
using software applications known as “bots” – is one of the digital enablers of the
transformation of the audit. RPA is a fast, accurate and efficient way of processing structured
data from bank accounts and financial systems. It can be used to perform general ledger
analysis – for example, finding journal entries that do not balance, are duplicated or are of a
particularly high value – and to create audit-ready work papers.
Indeed, in Australia, over 50% of EY’s bank a robot lodged audit confirmations for the 2017
30 June year-end. Robots submitted the confirmation requests; it managed the process
(including exceptions) and provided work papers back to the audit team, along with the
formal confirmation. This spared the audit teams with ample time and efforts to focus on
judgmental areas rather than administration, accelerated and identified issues earlier, reduced
potential audit surprises, and improved client service. Further solutions that employ RPA are
now being developed.
IV. Advanced analytics
The development of audit technology is enabling a much more forward-looking process. Data
Analytics technology is having the biggest impact on the audit today. It is the technology that
discovers and analyzes patterns, deviations and inconsistencies in data. Data Analytics
enables an auditor to analyze an entire population of data rather than simply rely on a sample
of data, which has been the traditional practice. Data Analytics helps to examine not only
numeric data rather it also helps to compare two or more documents and state the differences
and changes. It shows higher-level accuracy when compared to the sampling method, thus it
helps the auditor to perform better-informed risk assessments. Analytics supports monitoring
that can be carried out remotely rather than particularly on the client site.
With the use of data analytics an analysis of full population helps to achieve much higher
audit quality than when done with sampling. It also guides the auditor to give their clients a
comprehensive story caught.
For example, analysis of lease contracts of large international groups. The new lease
accounting standard has had a significant impact on the audit, and this is an area where
analytics is really proving its value. Large international groups have thousands of contracts
around the world, in different languages, that need to be reported on their balance sheet.
Locating all these contracts would be a huge – if not impossible – task for humans.
Specific data analytics is designed by different Audit firm to analyze the contracts. These
softwares are used to scan the relevant data sets by the auditors and legal teams to determine
whether a document is a genuine a contract, and whether there appears to be an embedded
lease contained within that contract. After the scanning is done, AI reads through the relevant
contracts and applies judgment, on the basis of its past knowledge of various legal terms and
phrases, to extract key information about leases. The AI also translates the foreign language
documents to an understandable language. After the AI produces the output, now is the turn
of the auditor or legal teams to raise challenging questions to the management to support the
audit process.
AI works on the basis of training embedded by the user. The AI is trained to scan
unstructured data, in various formats such as .pdf, .jpeg, etc; it also recognizes patterns in vast
volumes of data. By mining this ocean of data, auditors could gather supplementary audit
evidence on a scale that was never possible before. AI has changed the way of Auditing.
Deep learning has proven to be very effective in understanding and analyzing unstructured
data. For example, it can help auditors review contracts more efficiently by pointing to a few
relevant clauses within a 500-page contract.
‘Deep-learning’ can also produce continuous improvement in results and become more
relevant over time. By linking this technology with a large volume of unstructured data and
the expertise of subject matter experts, deep learning provides huge opportunities for finance
departments and professional services.
It is estimated that 80% of the world’s data is unstructured, so the opportunity is huge.
Along with the evolution in nature of Audit, the skillsets of auditors are evolving, too.
Finance functions and auditors alike are changing their people and talent mindset,
encouraging innovation, and trying to create a culture of trust, in order to accelerate the
adoption of new ideas.
“We are building more diverse teams, which we call ‘suits and jeans’,” explains Boillet. “This
is where we want to take the best of the traditional way of working, our people’s experience,
expertise and knowledge, and mix that with the new generation – the ‘jeans’ – who are more
open to doing things differently and questioning why have we been doing things a certain
way.”
Overall, the development of audit technology is enabling a much more forward-looking
process. “In the past, our audit was mostly focused on the past – what had happened and what
we could do to limit potential risk,” Boillet explains. “In the future, we will be able to build
scenarios, anticipate what will happen and alert a business to trends so that it can adapt ahead
of potential changes.”
v) On the regulators’ radar
The world is changing at a very fast pace, financial professionals need to be very flexible and
keep up with the change. Training and leadership messaging can transform the finance
culture, aiming at introduction of flexibility and innovation mindset. Whereas, Technology is
evolving so fast that it is difficult for regulation to keep up with it. AI in particular could
present serious compliance and oversight issues.
From a finance point of view, digital currencies (also known as crypto currencies) have
attracted the greatest regulatory attention to date because of their threat to national currency
systems and their attractiveness to criminals.
Accounting standard setters also have crypto currencies on their radar. The US-based
Financial Accounting Standards Board is exploring the idea of creating an accounting
standard for digital currencies, while the Australian Accounting Standards Board has called
for the International Accounting Standards Board to do likewise.
Regulators are also taking an increasingly close interest in how technology is applied in the
audit process. In May 2017, Jeanette Franzel, a board member of the Public Company
Accounting Oversight Board (PCAOB), announced that it had a number of interdisciplinary
initiatives under way to “evaluate the implications of new audit innovations and technologies
on PCAOB auditing standards, inspections, and oversight generally.”

Mark Babington, Deputy Director of Audit Policy at the FRC, believes that any tool that
allows an auditor to gain an understanding based on a much wider interrogation of the data
and a much wider understanding of the issues should be welcomed.
“But in any audit situation, we always challenge the application of appropriate professional
skepticism,” he adds. “Just because you’re relying on data analytics, it doesn’t mean you
simply trust the box. You’ve got to understand why, and you’ve got to be able to use the
output of the data analytics to ask challenging questions of management to support your
audit.”
Ultimately, the convergence of technologies such as RPA, analytics and AI is creating the
platform for something close to a real-time audit – an audit that will provide an integrated
vision of risks and that will be more forward-looking, with a broader and deeper scope.
With these technologies set to give audit and finance professionals the opportunity to do
much that would have been almost unthinkable not so long ago, what can possibly be left? In
the fast-moving world of new technology, we probably won’t have to wait long for the
answer to that question.
B) REDUCE THE BURDEN ON YOUR TEAM
With the progression and availability of technology in the present era, people should spend
less time supporting the needs of your audit. Technology reduces administrative burden,
prevents surprises, supports focus on audit quality and deliver quality audit.
Aligning with the technology financial professionals deliver greater value by becoming
increasingly adaptive and agile through transparency and smart automation in a few ways:
Introducing a comprehensive planning process:
This helps the financial firm design or outline a procedure that fits key issues and timing for
business, teams, and audit committees. They also use the lab to help determine the mix of
technologies to deploy given the state of your company’s data, industry, and regulatory
factors.
 Enabling visibility, transparency, and information sharing. Using a digital portal,
financial professionals can share digital information with clients on a real time basis. Sharing
information on areal time basis improves efficiency, communication, and precision. It also
aids decision-making by informing the right people of relevant details on time.
 Remaining agile. As the audit progresses, the financial firms’ process remain agile and flexes
to change. They can implement additional tools, launch sprints to resolve issues, develop and
deploy new analytics, and identify process improvements for future audits.
C) SMART TECHNOLOGY. SMARTER AUDITS.
Financial firms such as big 4s, audit technologies are built into all that they do, allowing them
to achieve smarter audits. Their technologies have handled vast quantities of data, gained
efficiency, predicted risks, and continue to advance. And their cloud-based audit platform is
designed to:
 Bring together our suite of technologies and analytics capabilities
 Scale to meet the needs of our clients—all sizes and industries
 Evolve easily with technology advancements

Business insight: Technology is at the core of audit. With it, teams manage data, conduct
advanced analyses, and uncover insights. Technology not only handles big data sets, but it
also integrates and combines tools for auditors.
 Conducts optical character recognition, natural language processing, and machine learning
 Analyzes trends, regression, risks, and anomalies
 Automates processes and routine cognitive tasks
 Aggregates data, both structured and unstructured
 Flexes to scope, scale, data quality, and industry
Transparency: Eg. Deloitte Connect is an intuitive, cloud-based client portal. It improves
efficiency, quality, transparency, and trust among teams throughout the process and helps
reduce the administrative burden on clients by:
 Facilitating document sharing, data sharing, real-time visibility, and scheduling
 Enhancing transparency, communication, accuracy, process improvement, and customization
 Communicating alerts, project status, and schedules
Audit delivery: People have the tools to gather and manage big data sets efficiently and
securely. Here are a few of the tools used:
 Icount: Enables auditors to collect data on mobile devices accurately and efficiently and
upload from the field into a secure, online database
 Iconfirm: Automates and streamlines the confirmation process and coordinates secure
collaboration between audit stakeholders

 Drones: Remote-sensing, advanced imagery drones, and post-flight software analysis are
being tested for hard-to reach inventory observations and asset inspections
As we move toward a more connected future, we will continue to invest in innovation,
transformation, and emerging technologies that deliver greater quality, insights, and value to
our clients and the capital markets.
Audit innovation—it’s not just for big companies anymore
Scalable technologies mean organizations of all sizes can benefit
In a featured byline in Accounting Today, co-authors Roger Nanney and Jon Raphael reveal
how cutting-edge tools, artificial intelligence, and advanced analytics are helping private
companies gain access to insights that can help drive performance improvement and pinpoint
risk more effectively.
Scalable audit innovation delivers insights that can enhance business performance for private
companies
In a featured byline in Accounting Today, Deloitte partners Roger Nanney and Jon Raphael
address how cutting-edge technology and innovation are transforming the audit, yielding
broader, and deeper business insights, streamlining the audit process, and significantly
reducing the manual data collection and processing that have traditionally made audits so
labor-intensive and time-consuming.
Innovative tools like workflow automation, artificial intelligence, and data analytics are
driving audit quality to new heights and generating valuable insights that can help private
companies address risk more effectively and enhance business performance overall.
D) IMPROVEMENT IN AUDIT QUALITY
Advanced technologies such as Cloud, Artificial Intelligence and data and analytics benefits
the external audits.
Improvements to the audit aren’t just incremental. Here are the primary tools auditors are
using today and how they’re improving audit quality.
i) AI: There’s a tremendous amount of unstructured data, and it is growing in leaps and bounds.
Information technology researcher 451 Research found that most enterprises are managing
storage capacities of 50 the majority of that is unstructured data, which is expanding at a rate
of 40% to 50% annually. Given some parameters, AI can systematically mine these internal,
unstructured sources and identify any red flag, be it a contract that may have a clause that
violates some country’s regulations or a vendor transaction that may have some suspicious
characteristics and was previously overlooked. AI can also monitor external data sources like
social media, television, and other video and audio sources for additional information that
may expand the comprehensiveness of the audit.
ii) Visualization: Data visualization technology is based on a simple premise: Graphical
representation of data is a better way to absorb information. Think of stocks: A chart
immediately allows one to see years of price trends, whereas seeing the same prices listed in a
table would require more time to identify any trend, if one could discern one among the
figures. Similarly, in the audit, heat maps; bubble charts, interactive graphs and other visuals
are making it easier to truly understand all the structured data companies have on hand. “This
has been really exciting. It’s had a real impact on our auditors by giving them more insights
into transactions, systems and trends. This allows them to make better judgments and
decisions, resulting in higher quality work,” explains Bill Tomazin, Managing Partner, West
Region and National Audit Solutions at KPMG US.

iii) Robotic Process Automation: Robotic process automation (RPA) uses software to capture and
interpret a transaction, manipulate data, send standardized responses and automate
communication with other processes. It has been widely implemented in tax and advisory
services and is increasingly being deployed in the audit since it can streamline enterprise
operations and direct one’s workforce to more value-added endeavors.RPA is well-suited to
reconciling revenue-based transactions or more routine tasks, which then allows auditors
more time to focus on clients, analyze data and gain new insights from enterprise information.
“The excitement around RPA is well-founded, and the accounting profession is readily
embracing this technology. RPA-based audit procedures have the potential to improve audit
efficiency and effectiveness,”
It is evident, advanced technologies offer great platform to the audit. But it’s important to
know that that for all the potential AI, data visualization and RPA offer, these technologies
are only as good as the audit team guiding them and analyzing the results. As Harris noted in
a speech to an annual meeting of the Public Company Accounting Oversight Board: “As
powerful as these tools are, or are expected to become, they nonetheless are not substitutes
for the auditor's knowledge, judgment and exercise of professional skepticism.”
The takeaway is clear: Technologies will augment the work of auditors and ultimately go a
long way toward improving audit quality.
E. CFOS ARE LEVERAGING DATA FROM ADVANCED TECHNOLOGIES
In the current scenario Data is multiplying at an exploding pace. There exists more than 16
trillion gigabytes of stored data around the world, according to IDC, and by 2025, this will
surge another tenfold. This is in stark contrast to the 360 billion gigabytes present just a
decade ago.
With so much data around, it is really difficult and confusing to sort the useful and waste data.
It is necessary to identify which data is relevant to the business and which is not. It can be
overwhelming, especially if one doesn’t know where to start. Many experts get lost in the sea
of data, assuming they need to use every data point. In reality though, some data isn’t useful
at all.
Taking the assistance of advanced technologies like artificial intelligence (AI) and data
analytics, executives can better sort through this information and determine what’s important
to their organization. Armed with data and the tools available to process it, CFOs and finance
executives can ultimately take on a more strategic and analytical role within their firms. This
can happen both when data is being collected, such as faster responses to sales trends, and
with the audit, when deeper insights of recent activity can be crafted. Here are three ways
finance executives and audit professionals can put this wealth of data and the insights
provided by advanced technologies to use today.
a. Improve Processes: Not all enterprises are profitable, about 2/3rd of every company’s
business is profitable. Using data analytics to identify ways to boost their company’s bottom
line. Financial professionals can adopt cloud-based systems to quickly see the profitability of
every product sold to every customer every time, summed into any configuration (customers,
products, operations). With this new data and improved ability to see end-to-end processes.
CFOs can identify inefficiencies and areas for improvement.
b. Managing Bias: Artificial Intelligence has expanded to costing area as well and can be
utilized to effect human decisions. It flushes the uncertainty of human bias in decisions that
can lead a head to choose a costlier option. AI can, over time, identify and weed out biased
behavior through statistical analysis. For instance, there may be a division head that always
builds a margin in some particular area of their budget, but AI can identify whether or not that
spending level has ever been needed. If it isn’t, you can redeploy that resource to another
department or business initiative.
Identifying such anomalies and data outliers is seen as another leading benefit of advanced
technologies by CFOs. Still, AI is only as good as the people who design it. CFOs and other
executives need to oversee AI to make sure it’s properly identifying trends and making
recommendations in line with goals and policies. For instance, finance executives should
ensure algorithms don’t reinforce racial or gender bias through either programming or the
data sources they use.
3. Demanding (And Getting) Improved Audits: Deeper understandings don’t end with the
internal operations of finance departments. Data and advanced technologies can also improve
the effectiveness and quality of the audit. After laying out the audit objectives and the data
available, auditors can determine what would best help them design the strongest audit
procedure. What’s more, in such a data-robust environment, its likely audits can be performed
more quickly, enabling faster corporate reporting and ultimately boosting trust among
stakeholders and counterparties.
We can skillfully ingest huge amounts of data by training the softwares to be smarter at
identifying key attributes needed to make more effective decisions in the audit, resulting in
higher-quality audits.
Saying it time and again, technologies can certainly enable audit procedures, depending on
their users. Auditors play the biggest role in designing and executing high-quality audits;
technologies are just a complement to their planning and sound judgment.

Financial Officers have a more proactive and predictive role within their organizations, its no
surprise that the skills required to lead and succeed today are shifting. It’s no longer limited to
keeping the books, but instead one of leveraging new technology and the right data to move
their organizations forward.
With so much of technology surrounding today and projected in the future, finance executives
are going to be partly data scientists, knowing what’s happening with all the data and being
able to make inferences from it.

9. THE 6 COMPONENTS OF SUSTAINABLE AUDIT QUALITY
Audit quality is the single most important factor in our decision-making, and the key measure
on which our professional reputation stands.
A lot has been accomplished by Audit firms, which have launched Sustainable Audit Quality
(SAQ) as a strategic program focused on improving audit quality. The changes introduced
through SAQ require significant investment and create a positive change for their people and
the companies they audit. SAQ is globally consistent approach to driving the highest level of
quality of work. The primary focus of Sustainable Audit Quality is maintenance of Audit
Quality. It is the single most important factor in the decision-making, and the key measure on
which professional reputation stands.
SAQ is making an impact by continuously improving the audit quality results.
The six components of the SAQ program:
1. Tone at the top
2. Strengthen people capabilities
3. Audit technology and digital
4. Enablement and quality support
5. Simplification
6. Accountability
Tone at the top
‘The top’ implies Global Chairman and Chief Executive or the Global Vice Chair for
Assurance, it also focuses on the messages conveyed by the audit partners dispersed across
the globe, which are equally essential to maintaining a culture that is focused on quality.
The top places great emphasis on culture, consultation and communication.
It is important to set the right tone from the top by establishing and maintaining a culture
underpinned by high-quality, effective risk management and continuous improvement.
Such a culture fosters an environment of confidence, trust and pride which, in turn, enhances
mutual accountability and develops high-performing teams.
A consistent tone from the top helps our people understand that shared values and
commitment to quality are central to everything that we do at all levels of the organization.
It is critical that the stakeholders view financial entities as the leading audit organization in
terms of a quality culture, and we are developing a number of initiatives to make this happen.
We believe that by asking the right questions, our auditors can serve the public interest.
Strengthen people capabilities
To provide high-quality audits, we need high-quality people. The Audit firm should be
committed to attracting, recruiting, developing and retaining outstanding audit professionals.

Our audit professionals must be knowledgeable and skilled at what they do. In addition, the
audit professionals need to act with integrity and to demonstrate appropriate behaviors, such
as curiosity, good judgment and professional skepticism.
Audit firms such as The Big Fours place a lot of emphasis on supporting our people to
develop these skills and make the most of their abilities throughout their career journey. They
invest in their people by offering them opportunities to enhance their professional skills and
personal development.
Simplification
As the world of accounting and auditing becomes more complex, the need for simplification
becomes more pronounced.
The pace of standard setting — both accounting and auditing — continues to accelerate, and
the scope of regulatory oversight is expanding. New accounting standards are changing the
way that certain assets and transactions are recognized, which creates additional work not
only for management, but also for auditors.
We are continuously searching for ways to enhance efficiency and effectiveness so that our
people can be more productive in the workplace, enhancing their knowledge and skills. The
less time they spend on administrative tasks, the more time they have to focus on higher-risk
matters.
The simplification of our audit methodology and associated guidance is an important
component of our strategy to deliver SAQ. Simplification underpins efficient and effective
audit processes that are customized to the requirements of each individual engagement. It also
supports consistency of processes on audits.
Where we have applied simplification comprehensively and vigorously within our network,
we have already seen a measurable improvement in audit quality.
By converting complexity to simplicity, we are supporting our teams to carry out better-
quality work.
Audit technology and digital
Big 4’s audits are powered by leading-edge digital technology. By integrating the latest
technologies into their audit processes, we are able to deliver high-quality audits that are
agile, efficient and insightful, while meeting both our expectations and the evolving needs of
businesses, regulators and investors.
They provide their auditors with the best possible tools to use in their work, which is why we
are continually enhancing and upgrading our foundational audit tools including: a global
online audit platform; a suite of data analytics; and a cloud-based knowledge platform that
delivers the latest accounting and auditing content.
Big financial firms also invest in emerging technologies such as advanced data analytics,
artificial intelligence (AI), blockchain, drones and automation.

Audit Firms, with the progression of their technical teams now develop an analytics-driven
audit approach. Technology is deployed to its fullest potential to deliver a high-quality audit
that puts greater emphasis on risk identification and gives the clients an opportunity to
demonstrate an increased level of professional skepticism.
Accountability, enablement and quality support
Accountability and enablement are seen as critical drivers of audit quality. This is why these
two are the main components of SAQ.
Accountability is about professional pride and individuals taking ownership of their work —
as an auditor, one is accountable not just for his work, but also for his entire team, the
organization, and our stakeholders. Financial firms strengthen the importance of
accountability through SAQ program, quality ratings and partners’ performance evaluations.
Enablement is about giving teams the resources they need to deliver high-quality audits.
Those resources encompass the technological tools, and the Client Portal, as well as a
network of experienced professionals, Quality Enablement Leaders (QELs) around the globe.
QELs provide on-the-ground support and mentorship to the teams, helping them to set and
achieve high standards and providing additional assistance as and when it is needed. Audit
firms also enable their teams to work more efficiently by simplifying and streamlining audit
methodology and associated guidance.

The drive for better-quality audits is a collective endeavor on the part of the entire global
audit profession. This means that we collectively need to inspire auditors across the world to
deliver high-quality audits.
As a result, the employees and auditors are encouraged to become role models, to think
proactively about how they can inspire those around them, and to embed quality within their
DNA.
The commitment to audit quality is inevitable and that it is having an impact on outcomes.
Summary
The mission is to make audit organization the highest-quality profession.
We are living in the Transformative Age, where the signature characteristic is being
connected, whether it is to data, interfaces, people or experiences.
Organizations continue to invest heavily in new technology to harness this connectivity and
many now leverage large-scale digital transformation to radically evolve traditional business
models.
This can be seen across a world that is increasingly connected by data and through a range of
new technology advancements. Examples include the rise of on-demand media, increasingly
pervasive automation, and artificial intelligence and even drone technology.
Within the corporate world, this transformation has created a fundamental shift in many
companies not traditionally perceived as digital enterprises. These organizations, however, do
understand that their digital transformation is an imperative and a significant cultural change
that drives value. They know they need to be the disruptor versus being disrupted and are
prioritizing investments in new systems and data analytics technology to better understand
their business and the needs of the markets they serve.
And, although not part of the organization, who is better positioned to observe this change
than the auditor? Auditors have a front-row seat to this large-scale transformation and are
directly impacted by the evolution of operating environments, business cycle disruption,
changes to organizational models and the overall digitization of processes.
The digital revolution of the audit
As companies’ digitization generates more and more data, audit professionals’ roles are
required to evolve. This growing volume of information needs to be used effectively to
deliver high-quality audits and allow auditors to put greater emphasis on risk identification
and business insight. The sheer volume and untapped potential of data generated by new
technologies drives the need for the ongoing digitization of the audit.
Similar to corporate organizations, audit firms need to address how transformation will alter
their approach to doing business. For example:
 Could one technology platform be developed to connect large audit teams in different sites to
one another and to the companies being audited?
 How could the potential of a connected digital audit be realized through centralization,
standardization and automation?
 How can data analytics be made integral to the audit?

 How could auditors drive value through innovation to the companies being audited?
These are vital questions that auditors reflect on in developing the Digital Audit, connected
data-driven audit.
By harnessing the connectivity and insight enhanced by technology, stakeholders are
provided with greater confidence in the financial reporting of the companies audited.
Company management and finance teams can experience an audit that is more effective, and
audit committees can benefit from greater risk insights and new perspectives.
More than a transformation in technology, this is also a transformation in how auditors do
their work. It improves connectivity, uses automation to help increase time focused on areas
requiring judgment, and helps improve analysis and insight.
The digital audit is no longer an aspiration; it is a reality. It also builds a better working world
through inspiring confidence and trust to help a complex world to work.
Summary
The role of an audit professional is evolving in response to the digital transformation of
companies. Using automation for increasing volumes of data can help to deliver high-quality
audits and allows auditors to focus more on risk identification and business insights. This
audit evolution is leading to greater connectivity and transparency and as a result, greater
stakeholder confidence.
SUSTAINABILITY ACCOUNTING:
Social
Environment Economic
10. HOW BIG DATA AND ANALYTICS ARE TRANSFORMING THE AUDIT
We explore the key issues facing auditors as they embrace big data and analytics.
Historically, data was something you owned and was generally structured and human-
generated. However, technology trends over the past decade have broadened the definition,
which now includes data that is unstructured and machine-generated, as well as data that
resides outside of corporate boundaries.
“Big data” is the term used to describe this massive portfolio of data that is growing
exponentially. The general view is that big data will have a dramatic impact on enhancing
productivity, profits and risk management. But big data in itself yields limited value until it
has been processed and analyzed.
Analytics is the process of analyzing data with the objective of drawing meaningful
conclusions. Major companies and organizations have recognized the opportunity that big
data and analytics provide, and many are making significant investments to better understand
the impact of these capabilities on their businesses. One area where we see significant
potential is in the transformation of the audit.
Transforming the audit
As we continue to function in one of the challenging and most uneven economic climates in
modern times, the relevance of the role of auditors in the financial markets is more imperative
than ever before. Audit firms must continue their vigorous audits to serve the public interest
by increasing quality on a continuous basis and by delivering more insights and value to the
users of the financial statements. Professional skepticism, and a continued focus on the
quality of audit evidence, is required throughout an audit. Meanwhile, companies are
expecting an enhanced dialogue with their auditors and more relevant insights.
While the profession has long recognized the impact of data analysis on enhancing the quality
and relevance of the audit, mainstream use of this technique has been hampered due to a lack
of efficient technology solutions, problems with data capture and concerns about privacy.
However, recent technology advancements in big data and analytics are providing an
opportunity to rethink the way in which an audit is executed.
The transformed audit will expand beyond sample-based testing to include analysis of entire
populations of audit-relevant data (transaction activity and master data from key business
processes), using intelligent analytics to deliver a higher quality of audit evidence and more
relevant business insights. Big data and analytics are enabling auditors to better identify
financial reporting, fraud and operational business risks and tailor their approach to deliver a
more relevant audit.
While we are making significant progress and are beginning to see the benefits of big data and
analytics in the audit, we recognize that this is a journey. A good way to describe where we
are as a profession is to draw parallels with the TV and film subscription service Netflix.
When the company started in 1997, it adopted a DVD-by-mail model, sending movies to its
customers, who returned them after an evening or a week of entertainment. Netflix always
knew that the future was in online streaming of movies, but the technology was not ready at
that time, nor was high-speed consumer broadband as prevalent as it has since become.
It’s a massive leap to go from traditional audit approaches to one that fully integrates big data
and analytics in a seamless manner.

Today, we are engaged in the audit equivalent of DVD-by-mail, moving data from our clients
to EY for use by auditors. What we really want is to have intelligent audit appliances that
reside within companies’ data centers and stream the results of our proprietary analytics to
audit teams. But the technology to accomplish this vision is still in its infancy and, in the
interim, we are delivering audit analytics by processing large client data sets within our
environment, integrating analytics into our audit approach and getting companies comfortable
with the future of audit.
The transition to this future won’t happen overnight. It’s a massive leap to go from traditional
audit approaches to one that fully integrates big data and analytics in a seamless manner.
Barriers to integration
There are a number of barriers to the successful integration of big data and analytics into the
audit, though they are not impossible.
The first is data capture: if auditors are unable to efficiently and cost-effectively capture
company data, they will not be able to use analytics in the audit. Companies invest
significantly in protecting their data, with multilayered approval processes and technology
safeguards. As a result, the process of obtaining client approval for provision of data to the
auditors can be time-consuming. In some cases, companies have refused or have been
reluctant to provide data, citing security concerns.
Moreover, auditors encounter hundreds of different accounting systems and, in many cases,
multiple systems within the same company. Data extraction has not historically been a core
competency within audit, and companies don’t necessarily have this competency either. This
results in multiple attempts and a lot of back and forth between the company and the auditor
on data capture.
Today, extraction of data is primarily focused on general ledger data. However, embracing
big data to support the audit will mean obtaining sub-ledger information, such as revenue or
procurement-cycle data, for key business processes. This increases the complexity of data
extraction and the volumes of data to be processed.
While it is reasonably easy to use descriptive analytics to understand the business and identify
potential risk areas, using analytics to produce audit evidence in response to those risks is a
lot more difficult. One problem with relying on analytics to produce audit evidence relates to
the “black box” nature of the way in which analytics works, with algorithms or rules used to
transform data and produce visualizations or reports. When the auditor gets to this stage, they
need to find the appropriate balance between applying auditor judgment and relying on the
results of these analytics.
The transformed audit will expand beyond sample-based testing to include analysis of entire
populations of audit-relevant data.
The value of integrating big data and analytics into the audit will only be realized when used
by auditors to influence the scope, nature and extent of the audit. This will require them to
develop new skills focused on knowing what questions to ask of the data, and the ability to
use analytics output to produce audit evidence, draw audit conclusions and derive meaningful
business insights.
It requires a ground-up initiative to better understand and influence the education students get
at universities and colleges, enhancing learning and development programs, and establishing
the appropriate implementation and enablement programs to support audit teams to
effectively integrate big data and analytics into the audit.
Analytics dilemmas
A further issue is how auditing standards and regulations can be aligned with the use of data
analytics. In general, the auditing profession is governed by standards that were conceived
some years ago and that did not contemplate the ability to leverage big data. Below are four
areas that require further consideration.
1. Substantive analytical procedures: These examine the reasonableness of relationships in
financial statement items, to uncover variations from expected trends. However, the standard
doesn’t cover using big databased analytics to provide “substantive evidence.” One of the key
differences with analytics techniques is that the procedures are used to identify unusual
transactions or misstatements, based on the analysis of the data, and usually without the
auditor establishing an expectation. Big data and these kinds of analytics techniques did not
exist when the standard was conceived, so were not considered as a source of audit evidence.
The gap creates uncertainty regarding the relevance and applicability of analytics in providing
anything more than indicative evidence.
2. Validating the data used for analytics: As auditors receive information from the client, they
determine its clerical accuracy and completeness, and whether it is appropriate as audit
evidence. This applies whether they receive printed documents (such as contracts) or
electronic data.
But audit analytics do not use or rely on reports generated by the system; instead, relevant
master and transaction data is extracted directly from the underlying databases. Procedures
are then performed to validate the accuracy and completeness of the data, and it is reconciled
to system-generated reports. The auditor is then confident that their analysis is based on the
same data the company uses to produce its financial information.
While the standards provide some guidance in this area, they could not have anticipated the
type and volume of data that auditors are extracting. Inevitably, there are limitations in the
extent to which auditors can derive evidence from the procedures that may be performed in
relation to such data.
3. Defining audit evidence: The standards provide a grading of evidence, with third-party
evidence at the top and management inquiries at the bottom. However, the standards do not
indicate what type of evidence analytics provides. It is possible to relate some of these types
of tests to the current framework in the standards, but not all. Without a proper description of
the type of evidence that analytics provides, auditors are reluctant to claim it as evidence,
thus negating the benefits.
4. Precision: An audit is designed to detect a material misstatement. When companies record
revenues amounting to billions of dollars and users of the financial statements expect them to
be free of material misstatements, what level of precision do the auditors require of their data
analytics? The standards need to provide more guidance in this area.
Ultimately, the audit of the future could look quite different from the audit of today. Auditors
will be able to use larger data sets and analytics to better understand the business, identify key
risk areas and deliver enhanced quality and coverage while providing more business value.
But to achieve this transformation, the profession will need to work closely with key
stakeholders, from the businesses they are auditing to the regulators and standard-setters
APPLYING ANALYTICS STEP BY STEP:
CHOOSE AND UNDERSTAND EXPLANATORY CHOOSE

FLOWCHART DISCRIPTIVE CONFIRMATOR EVALUATE
EXTRACT THE THE DATA ANALYSIS ANALUTIC
THE PROCESS STATICS Y ANALYSIS RESULTS
DATA POPULATION TECHNIQUES
11. HOW TO TRAIN AND TEACH AN ALGORITHM TO THINK AND PERFORM
LIKE AN AUDITOR?
Searching for the needles in the haysack.
A nomaly detection refers to a practice in which auditors detect accounting fraud by selecting
samples among journal entries, also known as a general ledger (GL), and testing them to
ensure accuracy. In a database of 100 million entries, maybe 10 will be cause for concern.
This means that highly experienced auditors try and identify the needles in the haystack by
sensing where audit risk might come from. They do this based on their knowledge about the
clients, including their businesses, accounting policies and governance.
The better the answer
Detecting the needles in the haystack
An innovative tool helps auditors detect anomalous entries.
Naoto Ichihara, an Assurance partner for Ernst & Young ShinNihon LLC in the Tokyo office,
always had a passion for programming. He develops models and systems for audit and was
interested in how machine learning could be applied to accounting data. After surveying
existing academic papers and algorithms, Naoto realized there was a better way to detect
anomalies through machine learning, and he coded an AI solution that could sense anomalous
entries in large databases — the first-of-its-kind in the auditing field. Never imagining
himself an inventor, the technology was patented and Naoto built a team of auditors and
developers to test and improve the solution’s detection method. This innovative tool was
named EY Helix GL Anomaly Detector, or Helix GLAD.
Without the support of auditors, the tool has limited value, since it relied on them to evaluate
the flagged entries and recommend action. The EY Helix GL Anomaly Detector team knew it
would be difficult to convince auditors that an unproven tool could help them do their job
better. So the team tested the solution against a data set where they had predetermined which
journal entries were fraudulent. As the Assurance team watched the algorithm correctly
uncover the fraudulent journal entries, they believed in its potential to help audit more
accurately.
However, auditors had no way of knowing why the algorithm sensed any particular anomaly,
which would be vital in evaluating its impact. The team devised a solution that leveraged data
analytics to create visual maps of the flagged entries and the reason for their detection — the
equivalent of an X-ray into its detection method.
The better the world works
Transforming the auditing field
Audit Technology
EY uses leading-edge technology to power and deliver the end-to-end digital audit.
In FY18, the solution was tested on about 20 engagements, and is expected to expand to 100
engagements in FY19. As it is used on more engagements, its detection methods become

more informed and accurate by auditors’ responses to its decision-making.
The team is also on a path of constant improvement. They’re invigorated with a pioneering
spirit, excited to develop and test new functionalities of the tool each day. They’re working
closely with the EY Professional Practice Group to incorporate the latest insights, knowledge
and proven experience in accounting fraud and audit methodology to improve Helix GLAD’s
effectiveness. The team is also working to globally expand usage of the tool to create higher
quality audits beyond Japan and across the entire EY Assurance service line.
Through relentless inventiveness, Naoto and the team have introduced a new technology to
not only the EY organization, but the wider auditing field with transformational potential.
12. HOW INNOVATION IN THE AUDIT IS HELPING BUSINESS DISCOVER HIDDEN
VALUE
Advanced technologies are creating new value for businesses. But this calls for a new
dynamic between finance, IT and commercial roles.
Changing technology is one of the main external reporting challenges that face the finance
function. This is because with masses of data now at CFOs’ disposal there is pressure to
deliver capabilities that include global and centralized systems, more transparent and regular
reporting and deeper business insights. Yet, this also poses an opportunity – new technologies
have the power to solve some of the finance industry’s most pressing challenges and uncover
hitherto unseen opportunities.
Technological innovation already enhances what finance teams can deliver. Teams can tap
into the power of intelligent machines, draw on developments in data analytics and implement
robotic process automation (RPA) and artificial intelligence (AI) to magnify existing
capabilities. These tools help enable data processing and analysis so they can reach their
finance and business goals faster and more efficiently than ever.
RPA – taking the robot out of the human
Consider RPA, which is having an unprecedented impact on routine audit tasks as
organizations strive to gather and digest ever-increasing amounts of data. EY has invested in
building a Hadoop platform to help auditors manage these volumes of data. The platform
frees up auditors’ time to focus on the higher-value work of interrogating the data to provide
unparalleled, actionable insights to clients, rather than trawling through mountains of

information to compile Excel spreadsheets. In other words, this new technology is helping
auditors uncover new value.
Advances like RPA and other technologies can help CFOs, in particular. Survey on Corporate
reporting resulted in 66% respondents claimed that the increasing pace and volume of data
significantly impacts the effectiveness of reporting. A lack of automation across systems is
one of the biggest technology challenges CFOs face in reporting, our survey found.
Technology integration
So how does the finance function get the most benefits from the latest technologies? What is
needed is a coordinated push for harmonization across the whole finance ecosystem. Without
commitment across the function – from business goal, to business process, to IT that supports
the function’s tools – the true potential of the technology won’t be achieved. The simple
reason being that implementing technologies in siloes rarely produces long-term gains.
The value of combining intelligent technologies can be seen in lease accounting, with new
global regulations such as IFRS 16 and ASC842. In this area, EY has developed a tool that
uses a mix of RPA and AI technologies such as deep learning, text pattern commonalities and
statistical modeling of text. As a result, this tool extracts substantial amounts of the
information required for lease accounting. The technology also allows teams to start grouping
contracts together, which can then be analyzed collectively. This allows us to automatically
extract 80% of the information required for lease accounting, which significantly reduces the
time a finance professional needs to work through contracts, particularly for large
multinational corporations where they can typically manage 100,000 to 200,000 lease
contracts of significant length.
Man and machine working side by side
But technology integration is just part of the story. Seamless workflows between technology
and people must also be developed, based on an understanding of where each person provides
the most value. That means developing new processes, roles and skills, and adapting to new
dynamics between different areas of the business. With new technologies in place, finance
teams will see their role begin to overlap and connect more with their commercial and IT
colleagues, with deeper business insights that give people the capacity to become more
forward-looking and predictive. Others will be called on to work more closely with
computing professionals to develop and implement complex technology systems. The more
people that have access to insights uncovered by advanced technologies, the easier it will be
to implement those insights across organizations.
It’s time to recognize that just implementing AI or trying out data analytics is no longer
enough without the integration and the wholesale change to back up the initiatives such as
creating centralized systems. The only way the finance organization will realize the full-range
and long-term benefits of these technologies is by rethinking finance processes and how the
entire ecosystem works together. From our experience at EY, and working with our clients on
their own innovation, I truly believe that the finance, IT and commercial teams can and
should all learn from one another.

Summary
The only way the finance organization will realize the full-range and long-term benefits of
new technologies is by rethinking finance processes and how the entire ecosystem works
together.
13. HOW TECHNOLOGY IS SERVING AUDIT COMMITTEE TO SEE THE BIGGER
PICTURE
Five experienced audit committee members discuss the impact of technological advances on
their companies.
Technology is transforming how companies do business and exposing them to new risks and
opportunities. It is also ushering in a new era of audit. Thanks to the emergence of powerful
new tools and techniques, technology in the audit now has the potential to provide companies
with greater levels of assurance and unprecedented insights. So what is the impact of
technological advances on the audit committee?
The real game changers are the new technologies that are being applied to the audits
themselves, because of the far-reaching insight they offer to audit committees. Data analytics,
in particular, is transforming the way that audits are conducted, because it enables auditors to
move away from auditing small samples of data to auditing large samples, or even entire
datasets.
“In the past, we would have tested a sample of data to see whether people were complying
with the travel and expenses policy, for example,” explains Dave Dillon, Chair of the audit
committee at multinational conglomerate 3M and US railroad franchise Union Pacific. “Now,
in the digital world, most companies can get every single expense report reviewed because the
additional cost of doing that is so small.”
Another powerful use case for data analytics is in fraud detection. Julie Brown, COO and
CFO of luxury brand Burberry and Audit Committee Chair for pharmaceutical company
Roche, explains: “With journal postings, for instance, you can search for entries over
weekends, outside normal business hours, or by staff who wouldn’t normally make them, to
pick up signs of fraud or manipulation of the accounts.”
She continues: “With data analytics, an auditor can identify risks very easily and tailor the
testing to do recalculations of higher-risk areas. So, in retail, the auditor could use analytics to
recalculate an expected stock provision based on the aging of stock. It could then compare
that with the stock provisions the client has put in place. So it’s a good way of doing top-
down analytical checks on data.”
Nasser Munjee, who is Audit Committee Chair for five Indian companies, confirms this. “The
role of financial control, as well as internal audit, has been vastly improved by the use of
technology over the last three to four years,” he says. “It’s brought much more oversight and
predictive oversight.”
Undoubtedly, data analytics is giving audit committees access to valuable insights that they
never had in the past. “We can assess the results of data analytics to understand why
something has happened,” says Dr. Maurice Ngai, Audit Committee Chair of China
Communications Construction Company and other listed companies in China. “Then we can
question management.”
“Data analytics is helping higher-quality discussions to take place between the audit
committee and the auditor,” notes Andrew Gambier, Head of Audit and Assurance at global
accountancy body ACCA, “and anything that helps the audit committee to reflect upon their
own independence and their role in governance is extremely helpful.”

The value of data
How technology improves oversight and fraud detection.
How audit can benefit from a dive into deep data
Higher-quality audits don’t just rely on higher-quality technological tools, however; they also
rely on higher-quality data sets. Few companies today have their data in a state where
analytics can be applied to it effectively, making this an area where audit committees are
driving change.
“A lot of audit committees have to spend a lot of time on making sure management is putting
in place a suitable database,” he says. “This is fundamental to financial control, because risk
management systems need to be informed by accurate data.”
Brown agrees. “You need to ensure that you’ve got a solid database, or a set of data and
foundational rules in place, so that when you extract the data, it becomes meaningful,” she
says. “It’s really important to get good data quality going into any analytics. With technology,
what you get out is only as good as what you put in.”
Data analytics is allowing higher-quality discussions to take place between the audit
committee and the auditor.
The mindset is critical to the successful application of data analytics to the auditing process.
Shifting from traditional models of auditing and data capture does require a different set of
skills and an understanding of how the outputs and the data can be used, So it’s important to
ensure that people are trained to treat data as a company asset, and that the teams in the
business get behind the cultural shift so that the data pool can be harnessed in new and
innovative ways.
The pressure on companies to keep data safe explains why cyber risk is a prominent item on
audit committee agendas. Steve West, Audit Committee Chair of US technology company
Cisco, says the audit committee there reviews cyber risk at its “deep dive” meetings and
monitors the cyber risk environment using a dashboard that it shares with the rest of the
board. Cyber security is also a top priority for Munjee, who says: “Companies must have
sufficient defenses, because they are going to be hacked, whether they like it or not.”
The potential of AI
Many companies are on the way to adopt and implement artificial intelligence (AI).
Artificial Intelligence is the “next frontier” for audit, after data analytics. The possible future
uses of Artificial Intelligence is the analysis of unstructured data such as emails, social media
posts and conference call files to search for evidence of fraud. It also includes extraction of
key information from large numbers of contracts, such as leases.
Artificial Intelligence is adding more logic to the “reasonableness” test that examines the
validity of accounting information. Before AI age audit professionals would find it difficult
and time consuming to judge the statistical variance and explain it’s reasonableness and the
reason behind the variations. Where as , today such results can be derived conveniently and
effortlessly by the Artificial Intelligence. It performs the analyses without any difficulty and
in lesser time with much accuracy. The quality of data derived by AI is way more reliable.
There are other emerging technologies that are successfully transforming the audit. Such as,
robotic process automation, which can be used to generate audit-ready work papers, and
drones, which can be an effective way for auditors to conduct inventory counts in remote
locations.
Together with data analytics and AI, these technologies could bring about substantive
improvements in audit quality in the future. “Auditors are trying extremely hard to see how
they can use technology to improve their audits,” says Gambier.
It pays to have a technology specialist on the board.
Given the significance of digitalization to company strategy and operations, should audit
committees and boards always include at least one director who is a dedicated technological
specialist? Who has a stronger technology background than others. It’s important to ensure
that people are trained to treat data as a company asset.
There should few people who are acquainted with technology and who ask right questions.
There should be a digital committee.
Another option for boards looking to improve their oversight of technology outside the audit
committee would be to set up a dedicated digital committee. There is no sign that these are in
widespread existence, however.

14. THE WAY TECHNOLOGY IS MAKING THE IMPOSSIBLE POSSIBLE
Audit committee members are required to understand what technology is capable of rather
than be expert technologists themselves, and the same principle applies to today’s finance
leaders. A CFO, doesn’t need to be an expert in technology rather excel in his own
specialization and appoint other people in the organization, such as data scientists, who are
the qualified experts. But CFOs, Audit Committee and finance leaders should have an
understanding of what technology is capable of and what good looks like. They can derive the
real advantage of technology by having a vision about how technology can be used to do
things differently rather trying to operate it.
All finance leaders need to grip digital disruption. It’s universal, so finance leaders should be
preparing their teams for the challenges that come with it, and understanding how and when
they can use big data in their decision-making.
They also need to work with other departments in the company, not only to ensure the
accuracy and completeness of data, but also to establish how it can improve the efficiency and
profitability of the company.

15. COMPATIBILITY BETWEEN TECHNOLOGY AND AUDIT COMMITTEES EVEN
MORE IN THE FUTURE.
Even though change is happening but the reality is that, while emerging technologies have the
potential to further transform both the audit and the way the audit committee works, this
transformation is still a work in progress. Technology does not yet have all the solutions to
the problems audit committees face.
The work Auditors revolves around judgment and technology can assist in that. It could help
the auditors to disclose issues that may be critical to the future performance of the company
so that we can prepare for it today, rather than wait until it happens. Technology can also be
used to interact with external auditors and environment.
The pace of technological advancement is making things to complex to catch up with. It needs
to be simplified and achieved. The board should inevitably incorporate technology and it’s
impact to remain a part of this world.
It is foreseen that soon audit committees will be assisted with technological tools that can
address issues and spare them time and efforts.
“The rate of technological change is absolutely staggering,”
As the use of technology is becoming more pervasive within organizations, and the risks of
using emerging technologies are more widely understood, there may be a requirement to audit
algorithms. Oversight of that auditing process would naturally fall within the remit of the
audit committee. The key role for audit committees will need a transformation.
“Digital is evolving in audit as it is in every other part of the world. There’s no end game
here. It’s just understanding where it is today and where it will be tomorrow.”
Summary
The growing complexity of technology, and particularly data analytics, is giving audit
committees a broader and deeper view of their companies than ever before.

Technology and Audit

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AUDIT- THEN, NOW AND NEXT

INNOVATION AND IMPACT OF TECHNOLOGY IN THE AUDIT FILED

Audit- Then, Now And Next

Innovation And Impact Of Technology In The Audit Field

-by SADAF MAHFOOZ

In general terms, Auditing, is an independent examination of the books of accounts and

accuracy and express an opinion thereon.

it is a synonym to control, check, inspect, and revise.

Plan -> Do -> Check-> Act

1.Objectives 1.Schedule audit 1.Monitor

2.Extent 2.Evaluate Auditors 2.Review

3.Responsibilities 3.Select teams 3.Identify need for

4.Resources 4.Direct Activities corrective options

5.Procedures 5.Maintain Records 4.Identify opportunities to

Auditor Competence Audit Activities

improve human conditions and their efficiency.

2. INTRODUCTION, BACKGROUND AND HISTORY OF AUDITING

Auditing existed primarily as a technique to maintain governmental accountancy, and record

keeping was its backbone.

Period Audit ordinates Auditors The objectives of the audit

People of the The punishment of the thieves for the funds

1700 – States, Courts and Repressing fraud and punishment of the

1940 in audit and viability of the

Professionals Attesting the quality of the internal control

Attesting the clear image of the accounts and

risks, reduces client burden and provides unrivaled insights.

confidence, a better business perspective and enhanced transparency.

innovation to the audit.

delivers the latest accounting and auditing content.

analytics, artificial intelligence (AI), blockchain, drones and automation.

4. MAJOR TECHNOLOGIES THAT WILL TRANSFORM THE WAY OF AUDITING

their daily work.

A. How Cognitive Technology Will Develop and Enhance Audit Quality

try new strategies as they encounter obstacles or unknowns in their work.

INNOVATION: Rapid prototyping and industry-relevant procedures

INSIGHT: Deriving meaningful insights from previously untapped unstructured data

LEVERAGE: Leverage industry experience and artificial intelligence

QUALITY: Auditor “supervised cognitive” technology to focus on higher-value audit

B. Data Analysis: The Power Of Predictive Analytics

techniques to make predictions—based on probabilities—about the future, and may involve

deeper insight into a client’s business and financial risks.

Rather, the focus is to provide probabilities that indicate potential outcomes.

comparative data as a benchmark.

A New Platform Dive: Smart Digital Hubs

Yet to be as effective as possible, these platforms must possess three characteristics.

auditor’s already challenging workload.

Putting It All Together: Auditing At The Speed Of Change

no longer “whether” the auditor needs to change; it’s “how fast?”

5. PROGRESSING WITH COGNITIVE TECHNOLOGIES

Three basic factors characterize a sound approach to a cognitive-enabled audit:

facilitate agile, cognitive-enabled audits anywhere in the world.

B. Best of breed components

approaches to implementing external advanced technologies. One is to embrace a single

“best-of-breed” approach employing components from multiple developers. Advancements in

developers typically offer a component-based architecture using a set of application program

C. A process for cognitive audit development

there may not be enough digital data for a cognitive approach.

D. Simplify and standardize

world—dependent, in part, on how information is received (or extracted) from an individual

i) Digitize and structure

specifies the order and stages in which activities are performed.

iii) Advanced analytics and analysis