The Way Emerging Technologies are Changing the Audit Profession

In today's world, we can witness how new technologies transform our daily lives, from the most delicate details to the most significant tasks. Emerging technologies, such as cloud computing, Artificial Intelligence, Robotics, and other digitization trends, are changing how everything is done. Technology now touches on almost all business operations areas, creating new opportunities as well as challenges. The audit and assurance profession is not an exception, with emerging technologies impacting the whole profession significantly. Traditional functions are being transformed and businesses are having higher expectations. The article sheds light on some of the most recent technologies and how they are transforming the auditing profession.

Emerging technologies disrupting the audit and assurance profession:
Today, all phases of audit and assurance processes, from initial planning to final reporting, are being largely and rapidly digitalized using the latest emerging technologies. Many audit and assurance companies nowadays invest in these technologies, such as Artificial Intelligence (AI), data analytics, blockchain, Robotic Process Automation (RPA), Internet of Things (IoT), cloud-based platforms, and others.

The following lines highlight some expected opportunities created by example technologies.

Artificial Intelligence: AI depends on simulating human intelligence using machines and computers, which enables processing a vast amount of data in the minimal time expected. AI technology is vital in auditing and assurance due to the massive amount of data generated. AI techniques, most prominently machine learning, save lots of effort and time in auditing by enabling analysis and extracting data very quickly from unstructured data, such as contracts, invoices, and images, to gain further audit evidence. In addition to allowing the analysis of large sets of data to help identify, assess, and respond to different risks, such as fraud.

Blockchain: is one of the most revolutionary digital technologies in financial services. A blockchain is a database that is distributed and shared among the nodes of a computer network and electronically stores information in digital format. It allows the replacement of random sampling, carried out by auditors to improve the review of fraud suspicions.

Data and analytics:  Using Big Data analysis and with the help of cloud-based software, large volumes of data are analyzed by combining complex algorithms allowing auditors to assess risk and focus on items of significance to carry out auditing and assurance services more efficiently and effectively and also giving more significant insights improving the quality and the client’s experience and offering tailored solutions.

The impact of digitization on the audit profession:

Creating greater visibility around business and risks is the most significant benefit of digital auditing. Data analytics allowed auditors to gain better insights from the data dealt with, making the audit more valuable to the audited organization and its stakeholders.

Towards a “digitally-fit” auditing firm International best practices emphasize the importance of developing a 'digitally fit' audit function to keep pace with the digital changes occurring within businesses. Being “digitally fit” in the audit profession refers to having the right skills and competencies in place, in addition to changing the internal audit processes and services, to ensure capability of responding effectively to risks. This can be achieved effectively through some transformative steps: - Align the digital auditing and assurance as an integral part of the whole digital strategy of the organization. - Upgrade and inject new talents needed to drive digital transformation forward. - Use the right emerging technologies to automate and streamline audit processes. - Engage with digital decision-makers to stay abreast of the latest digital developments across the audit industry.

To be more specific, working with AI tools means achieving more benefits to customers, such as greater confidence and trust, reducing human errors margin, providing consistent reasoning with high precision and accuracy, and increased quality as a result of analyzing larger samples of data.

On the other hand, blockchain technology can help streamline processes, enhance transparency and create new ways of working. When combined with AI and Internet of Things (IoT), blockchain plays a major role in transforming the auditing function towards highly automated tasks, giving the workforce more time to focus on strategy and operations.

Conclusion: The future of audit and assurance looks different from today.
The adoption of emerging technologies is gaining momentum in businesses worldwide, and auditors must keep pace with these changes to continue providing effective assurance and added value. Those emerging technologies provide vast opportunities; however, they pose many challenges.

Ahmed Mamdouh & Co. Kreston Egypt, as an established international competitor in the Egyptian auditing market, places adopting latest emerging technologies at the heart of its work and strategy. This is being facilitated by the strong interest of the Egyptian government in recent years to support emerging technologies through formulating the needed regulations (such as the recent IoT regulatory framework as well as the data protection regulation) to benefit from opportunities and mitigate challenges posed by emerging technologies. Top-notch emerging technologies are currently being adopted by Kreston throughout the different services provided, showing major transformation in performance and efficiency.

References:
Technology Disruption in Audit and Assurance, https://www.ifac.org/system/files/meetings/files/20210126-IAASB-Agenda-Item-1-A-Disruptive-Technologies-Research-Summary_0.pdf
Blockchain explained, https://www.investopedia.com/terms/b/blockchain.asp