Audit technology is a hot topic and continues to change the way firms work. But how’s an audit firm to keep up? Here we look at major audit tech trends and cover what firms need to know.
- Artificial Intelligence
When it comes to AI, anyone could be forgiven for dismissing it as a buzzword. Whilst this tech is in its infancy, it’s already relevant.
A great example of AI being useful in audit is the IRIS Ai Auditor, based on software developed by MindBridge, that applies machine learning and other AI techniques to help auditors identify data anomalies and risky transactions within a company’s financial data. This is currently being used at several large UK accountancy firms.
For smaller firms, you’ll be able to leverage the learnings from the current trials of this cutting-edge technology. The activities at large companies are acting as a sandbox for the future of this tech. By keeping your ear to the turf, you can act on these innovations at the right time, rolling out projects that have been tested on your behalf.
- Data Analytics
There is overlap with AI here, as a lot of AI tools enhance data analytics. This tech consists of tools that quickly extract, validate and analyse large volumes of data. The tools are applied to complete populations, i.e., 100 percent of transactions, and they can be used to support judgements, draw conclusions or provide direction for further investigation.
Data visualisation is another useful part of analytics. This is simply a way to present data that makes it easier to analyse it, bring it to life and help people understand the significance of the findings. Improved data-visualisation interfaces means that data analytics can be used by non-specialists.
- Distributed Ledger Technology/Blockchain
Are distributed ledger technology (DLT) and blockchain the same thing? Not exactly. DLT is built on some of the ideas and philosophies of blockchain. In fact, a blockchain is a type of DLT.
A DLT is a database of records that is not stored or confirmed by any one central body. What makes it different to blockchain is that the implementator has greater control over it, which makes it a more feasible project in the short term. Many idealists, however, see it as a step towards blockchain and a fully decentralised world. Any data which is stored in this way is encrypted and distributed across a network of different servers.
A great example of this tech in action comes from a pilot at Ernst and Young. The EY Blockchain Analyzer helps EY audit teams gather an organisation’s entire transaction data from multiple blockchain ledgers. Auditors can then interrogate the data and perform analysis of transactions, reconciling and identifying transaction outliers. The technology has been designed to support testing of multiple Cryptocurrencies and several other crypto-assets managed or traded by exchanges or asset management firms.
What can you do today?
You may think, “Why should I care about this? I can live with how my firm operates now.” Perhaps the most important reason is that your competitors care. You can’t afford to lose clients to firms that use tech to provide a superior customer experience. But you don’t have to do everything at once. Look for small wins. Changing your mentality and developing a digital philosophy for your firm is a big first step.
Confirmation will be at Accountex to help get you started. Please visit us at Stand 865!
