Application of Information Technology on Auditing

This article discusses the impact of information technology on auditing, including audit support systems, blockchain technology, and artificial intelligence. It also explores the benefits and drawbacks of each technology and their effects on the audit profession.

Running head: APPLICATION OF INFORMATION TECHNOLOGY ON AUDITING
Application of Information Technology on Auditing
Name of the Student
Name of the University
Author note

1
APPLICATION OF INFORMATION TECHNOLOGY ON AUDITING
Dear jack,
In response to the changes in the process of auditing system and the implication of
technology it become a challenge for the auditors to adopt with the new process of auditing.
Though the technological improvement will help us to serve the clients more efficiently but at
the same time these technological improvements will eradicate many manual works and that
will affect our jobs. In this mail I will elaborate you some of the major issues of the use of
technology and its positive and negative effect.
There are three major technologies that are affecting the profession of audit these
three technologies are audit support system, blockchain technology and the artificial
intelligence. The description so each of these technologies and the effects on the audit
profession are stated below
Audit support system
The audit support system is a technology that bring a revolutionary change in the
profession of audit the system brings more efficiency and enable the auditor to provide high
quality of audit report. The major benefits that the auditors will get from the use of the audit
support system are providing accurate audit evidences, easy to use mitigate the risk related
with manipulation of documents.
Block chain
A block chain is a digital ledger that is developed to record all the transactions in a
single network. It is a peer to peer internet based distributed ledger that cover all the
transactions. The block chain technology helps to provide real time settlement of transactions.
The peer to peer distributed network helps to ensure smooth communication in the audit

2
APPLICATION OF INFORMATION TECHNOLOGY ON AUDITING
process. It contains system of double checking of every transaction which ensure that all the
transactions a re recorded correctly.
Artificial intelligence
Artificial intelligence refers to the machine undertaking tasks that demands some kind
of intelligence which typically refers to the things like learning knowing thinking sensing
reasoning, creating achieving goals and generating and understanding technologies. Recent
progress in AI has been based on techniques such as machine learning and deep learning,
from which it is possible to classify objects or predict values through statistical analysis or
large amount of data rather than through explicit programming (Vasarhelyi and Halper 2018).
Rationale
Audit support system
Communication system
Through the audit support system it will be possible for the audit firm to communicate
easily to each other as the entire communication system will be linked with each other and
that will ensure that there is no miscommunication occurred among the team members during
the process pf audit and all the information are communicated to every one at the time when
it is required (Fieweger et al 2015).
Analytical procedures
The audit support system provides accurate bias free documents to the auditors which
will help the audit firm to make more efficient analysis that will ensure that all the areas of
the audit process are covered and there is no gap in the audit pregame. In case of auditing it is
very essential to check that all the documents are analyses properly based on the analysis of

3
APPLICATION OF INFORMATION TECHNOLOGY ON AUDITING
these documents a audit report will be prepared. So, by providing error free documents the
audit support system helps the audit firm to analyze these documents and give accurate audit
report (Hinton and Cohen 2016).
Check susceptibility to biasness.
The audit support system is done through cloud accounts or other online systems. This
ensure that all the data that are available to the auditors are free from any human errors and
the risk of getting wrong information will be reduced. This ensure better accuracy while
taking any major decisions (Issa Sun and Vasarhelyi 2016).
Blockchain system
Affect communication within the audit team
The peer to peer system of the blockchain technology helps in the effective
communication system as in blockchain system through a single network system it will be
possible to connect to everyone it will be easy to make communication system smoothly.
there is one loophole in the blockchain system as there is only one network system if that
system fails to work then in that case the entire communication system will collapse (Apte
and Petrovsky 2016).
Support auditor’s analytical procedure at various stages of audit
Recording a transaction in a blockchain may or may not provide sufficient appropriate
audit evidence which is associated with nature of the transaction. This implies that a
transaction recorded in a block chain system may still be unauthorized fraudulent and illegal.
As in the audit process it is very essential to ensure that all the data are authorized and free
from any biasness so it can be said that the blockchain method may not be that effective for

4
APPLICATION OF INFORMATION TECHNOLOGY ON AUDITING
an analytical procedure at various stages of audit as it can not provide authorized and error
free data. As many data are recorded in the financial statement reflect estimated values that
are different from historical cost. Auditors will still need to consider and perform audit
procedures on managements estimates even if the underlying transactions are recorded in a
blockchain (Liu Wu and Xu 2019).
With blockchain helps to record transactions on digitized method the auditors can use
more automation analysis process and machine learning system on a near real time basis.
Thus, the blockchain technology will help in the machine-based analysis of various
documents (Ølnes Ubacht and Janssen 2017).
Reduce the influence of the biasness
The blockchain technology is not much helpful in reducing the biasness of the
documents as it does not help to provide unauthorized documents beside it can be
manipulated easily and it can be operated offline also it can be manipulated easily and thus it
is not effective to give biased free information.
Artificial intelligence
Communication
The AI system helps in the proper communication of the data to all the members of
the audit team through a centralized communication process the AI system provide all the
information with accuracy at the right time.
Analysis
The AI system helps in the analysis of the evidences very easily as it uses various
statistical tools to interpret any document it becomes simple for the auditors to easily interpret

5
APPLICATION OF INFORMATION TECHNOLOGY ON AUDITING
any document and make analysis on that basis. The AI system also enables the auditors to
raise better questions to its clients o the matters that are related with their process of
maintaining books of accounts. In this way the AI provides better quality of audits and an
exciting future for the auditors (Kokina and Davenport 2017).
Biasfree documents
As the artificial intelligence system is very difficult to manipulate so it provides high
quality of documents that are free from any kind of biasness. The security system is very high
and so no one except the user can manipulate the data that are kept in the artificial system.
Affect on the jobs of human auditors
All the three technologies have potential to replace the human auditors but according
to my opinion as the artificial intelligence system can not operate automatically and need
human interference it will not affect the jobs of the human auditors but it will further enhance
the quality of the human auditors. On the other hand, the block chain system and the audit
support system will affect the job of the human auditors (Wei and Ding 2017).
Among these three technologies artificial intelligence will be the best for our firm
It will be better for our firm to adopt the artificial intelligence system as it will ensure
better techniques of auditing and at the same time it will not put negative affect on the jobs of
the manual auditors. The artificial intelligence system enables the auditors to interpret the
various audit documents through proper analysis and that helps in raising more valuable
queries during the verification of the documents. The artificial intelligence will not reduce the
work of the human auditors but it will help to assist them in interpreting documents more
easily and appropriately and thereby saves time of the audit process. The ai enables humans
to investigate large number of data in much shorter time than is possible with the traditional

6
APPLICATION OF INFORMATION TECHNOLOGY ON AUDITING
manual process. The ai will help the auditors to optimize their time enabling them to use their
human judgement to analyse a broader and deeper set of data.

7
APPLICATION OF INFORMATION TECHNOLOGY ON AUDITING
Reference
Apte, S. and Petrovsky, N., 2016. Will blockchain technology revolutionize excipient supply
chain management?. Journal of Excipients and Food Chemicals, 7(3), p.910.
Fieweger, J.A., Wadley, M., Azzolino, A. and Sassin, M., Intralinks Inc, 2015. System and
method for information delivery based on at least one self-declared user attribute with audit
records. U.S. Patent Application 14/720,247.
Hinton, H.M. and Cohen, R.J., International Business Machines Corp, 2016. Multi-tenant
audit awareness in support of cloud environments. U.S. Patent 9,460,169.
Issa, H., Sun, T. and Vasarhelyi, M.A., 2016. Research ideas for artificial intelligence in
auditing: The formalization of audit and workforce supplementation. Journal of Emerging
Technologies in Accounting, 13(2), pp.1-20.
Kokina, J. and Davenport, T.H., 2017. The emergence of artificial intelligence: How
automation is changing auditing. Journal of Emerging Technologies in Accounting, 14(1),
pp.115-122.
Liu, M., Wu, K. and Xu, J., 2019. How Will Blockchain Technology Impact Auditing and
Accounting: Permissionless Vs. Permissioned Blockchain. Current Issues in Auditing.
Ølnes, S., Ubacht, J. and Janssen, M., 2017. Blockchain in government: Benefits and
implications of distributed ledger technology for information sharing.
Vasarhelyi, M.A. and Halper, F.B., 2018. The continuous audit of online systems.
In Continuous Auditing: Theory and Application (pp. 87-104). Emerald Publishing Limited.

8
APPLICATION OF INFORMATION TECHNOLOGY ON AUDITING
Wei, M. and Ding, R., 2017, December. Research on Financial Audit Innovation Based on
Blockchain Technology. In 2017 International Seminar on Social Science and Humanities
Research (SSHR 2017). Atlantis Press.