As stakeholders ask for meaningful insights in their audit report, smart machines give us the potential to redefine the audit profession. Technology will not only change how we perform audits but also how we allocate human resources. The question is: can we automate everything and remove the human touch?
Audit made easy with smart technologies
We can use artificial intelligence in predictive analytics, to analyse large data sets and spot patterns and anomalies. The machines are now able to ‘learn’ from their experiences and apply the learning to the next set of data. They remember and recognise the problems they have previously identified.
Intelligent machines can even analyse and translate a vast amount of structured data into a plain English summary. Financial services firms already use this feature to analyse emails and detect illegal activity. They could also apply it to corporate reporting. A machine could take general ledgers, sub-ledgers and other accounting records to write a summary that gives a balanced view of a company’s performance.
We’re also using natural language processing technology to help analyse complex and lengthy contracts. A machine can scan a 100-page contract in seconds, looking for words and phrases that might indicate a difficult revenue recognition decision, for example.
Machines won’t replace human auditors
They will, however, enhance their contribution. Smart machines can carry out the time consuming, lower judgement, repeatable elements of the audit. They can quickly deal with the data extraction and analysis of financial information which used to take weeks.
The human auditor can then bring his or her creativity and experience to interpreting the data, presenting deeper insight to businesses and their key stakeholders. Taking advantage of machine learning, these new insights can be fed back to the machine. This means that the machine-led analysis will be even stronger next time.
The assurance auditors provide goes way beyond that provided by detailed testing and analysis. It comes from thought and judgement based on the results of that testing and analysis. An auditor is not only able to identify issues, but also resolve them in the right way, using all of their emotional intelligence.
Human judgement and responsibility will and must remain at the heart of audit. We must, however, expect to adapt for a future where we no longer spend time performing detailed tests of transactions. Instead, we will check the algorithms and parameters set for the artificially intelligent machines and use judgment to reach conclusions.
If you’d like to read more about the impact of technology on the audit profession, check our latest paper, Confidence in the future.