In this blog , we will look at the impact of technology on auditing and how it can help improve the working relationship between auditors and Compliance teams.
In recent years, the Compliance burden has increased, and organizations that breach the rules have come under intensified scrutiny. As a result, the role of Compliance teams and their influence within the business have grown as well. Many Compliance teams have developed their own controls and audit procedures to enable them to monitor and measure the effectiveness of the organization's governance and Compliance processes. But they are not the only ones involved.
The role of an internal auditor is critical for achieving the objective of organizational governance and Compliance. Traditionally viewed as an organization's third line of defense, auditors are responsible for providing reasonable assurance that the company complies with governmental and industry-based regulations.
But in practice, auditors and Compliance teams often work in silos. Differing – or even conflicting – approaches and communication styles create the potential for duplication, omissions, and even a lack of clarity about who is responsible for complying with every risk management obligation. How can auditors and Compliance teams work more closely together to minimize this siloed structure? In short, using technology in auditing.
How Technology is Transforming the Audit Process
Technology used by auditors that integrates Governance, Compliance, and Risk Management, enables them to break down these silos, streamline processes, centralize business assets, and ensure that all departments work collaboratively. In fact, the use of sophisticated technology and data-powered analysis in an audit is fast becoming a standard operating practice as auditors embrace the digital-first approach to engagements.
A global survey highlights the top benefits of technology in auditing that companies expect from their auditors: 90% want deeper insights into risk and control vulnerabilities, and 86% want to benchmark against KPIs and increase data coverage.
Technology used in Auditing as an Enabler, not a Replacement
According to the Journal of Accountancy, “It's important to state that for all of technology's benefits, it is not intended to replace humans in the audit. The human qualities of evaluation, analysis, and judgment remain an irreplaceable part of the audit process, and the use of technology can give the people on an audit the ability to focus on those higher-level skills rather than getting bogged down by mundane, rote processes.” Research by SSRN underscores this point by explaining that as automation becomes integrated into the audit process, accounting firms are looking for auditors with more cognitive and social skills. That’s because tasks that require human interactions and more high-level thinking, are in high demand and unlikely to be replaced with technology.
The bottom line: Auditors and technology are the way forward. Auditors that don't embrace the digital revolution will be left sitting on the bench. However, human interaction is still crucial.
6 Benefits of Technology in Auditing
Traditional manual audits have long since been a source of frustration for auditors and auditees. Manual processes, spreadsheets, screenshots, and similar tools to review controls, are labor-intensive and time-consuming. Technology can alleviate much of the burden, and turn the third line of defense into a collaborative and important one. Here’s a number of advantages of information technology in auditing:
- Reduced Toil on Auditees
Manual audits are notorious for placing a significant burden on the auditee organization. Points of contact and control owners must spend time addressing the auditor’s needs rather than delivering on their goals. Technology used in auditing reduces the toil by automating the collection of evidence and other workflows, ensuring the auditees’ time is spent on strategic matters.
- Elimination of Duplicate Effort:
When auditors carry out an on-site audit, fill out a massive amount of paperwork and then have to type up their notes when they return to their desks, it is a frustrating duplication of effort and an enormous waste of time. The impact of technology on auditing is readily apparent in this area. With technology, paperwork is eliminated and gaps are easily highlighted and can be mitigated quickly. This effectively cuts the time it takes to prepare for, conduct and report on an audit. For example, an auditor determines a finding is associated with a control. Traditionally, he or she would write up the finding, put the finding in a Powerpoint, and create a Jira ticket for the finding to be fixed if possible. With technology in auditing, this process can be orchestrated in one system and save time.
- Reduced Human Error:
It is not unusual to find errors on the auditor’s part when connecting documents via Excel spreadsheets. Fat fingering another 0, or attaching the wrong link to a specific document will cause problems for the auditor, especially when peer-reviewed for quality assurance. Of course, some mistakes are inevitable, but using technology that double checks the auditor’s work and realizes common patterns (i.e. a specific person is @ mentioned in a document except for one instance) can help reduce minor errors that could end up costing hours of explaining.
- Improved Data Accuracy:
Manual audits often involve written notes or checklists without accompanying evidence. A significant way technology has changed auditing is it enables auditors to capture evidence in real time directly from the source applications and attach files to their findings, including media files such as videos, audio, or images, eliminating the need for lengthy notes describing every detail. In fact, AICPA guidance highlights the need to use automation and technology in audits when capturing supporting evidence.
- Enforced Standardization:
Using 20 different systems to do the auditing work is an administrative nightmare and increases the risk of something falling through the cracks. Having a consistent approach to communication and housing all the information in one place improves the working relationship between auditors and Compliance teams. The effect technology has on auditing is that all the evidence and the audit reports are readily available and enable all parties to understand why the auditor has made a particular decision and what corrective action is required to manage risk.
- Quicker Time to Compliance:
Working from paper trails makes Compliance challenging to prove – a single missing file can cost the organization the audit. When it comes to saving time, the importance of technology in auditing cannot be understated; it allows auditors and Compliance teams to efficiently plan and schedule regular internal audits, with automated workflows triggered when a finding is raised. This makes it easier to demonstrate organizational commitment to regulations and other quality standards with a comprehensive audit trail for the future.
The Impact of Technology on Auditing in the Future: Data-Centric Compliance Automation
To unlock the power of technology in audits while substantially reducing Compliance costs, the leading Compliance service provider Coalfire has partnered with anecdotes, one of the world's leading security technology engineering firms, to incorporate advanced automation capabilities in its Compliance Essentials platform, enabling faster time to Compliance and greater visibility for clients. Customers can manage Compliance workflows and risks, automatically collect evidence and execute audits within the platform – making it one of the market's most comprehensive Compliance and risk management automation solutions. The partnership delivers a powerful combination of state-of-the-art technology and professional services to help Compliance teams and auditors maximize the impact of technology on auditing, stay ahead of the curve and achieve Compliance faster. Reach out to discover how technology used in auditing can enable your organization to manage Compliance risks quicker and easier.
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