The Impact of Technology on Auditing: Current and Future Position

AUDITING (P23001)
1.0 Introduction
With the increased developments in the technological innovations in the fields of
artificial intelligence (AI), data analytics and blockchain technologies, the auditing functions
have significantly enhanced over the years (Issa, Sun, & Vasarhelyi, 2016). There are a few
benefits of the impacts on technology and professional bodies and regulators are increasingly
relying on the various tools and techniques for carrying out the audit functions. Nowadays, the
use of advanced technology in the profession of auditing has been simplified. It is undoubtedly
that auditors can easily manage the work and also enhance their strategic value in the workplace.
Hence, the purpose of writing this report is to further evaluate how and why the role of
technology in auditing may affect the profession in the short and long term.
2.0 How Technology Is Used
2.1 Current Position
The big four firms namely Deloitte, EY, PwC, and KPMG are the biggest service
providers in the auditing and accounting industry. One of the significant attributes of the services
of these large-scale service providers is a large amount of data that needs to compile to assessed,
which leads these entities to embrace innovations continuously (Raphael, 2017). For instance,
KPMG has partnered with International Business Machine (IBM) in the year 2016, in the
adoption of the cognitive techniques towards attaining audit assurance (KPMG , 2018). One of
the key terms that have become the buzzword in the industry is the ‘Know Your Data’ (KYD).
This term has gained more significance over the ‘Know Your Client’ (KYC) in recent years in
the finance and accounting profession. Besides, the emergence of Cloud computing and cloud
storage has opened up previously unimaginable possibilities for data collection and analysis. The
said technologies allow the auditors to collect and analyse broader industry data sets that were
previously beyond the reach.
The technology leads to enhanced efficiency by facilitation of the audit fieldwork through
automation of the time-consuming manual and clerical tasks (Salijeni, Samsonova-Taddei, &
Turley, 2018). An instance of technology is the interface created between the audit client’s

systems to facilitate the automatic transfer of the compile data. Another significant impact is in
the form of improved testing to gain more in-depth insight into the company’s operations.
Currently, Big Four audit firms are using different technologies such as CAATs (“Computer
Assisted Auditing Techniques”). By considering this tool, it can be easy for the auditors to
search from the irregularities from the given data. This further enables the timely and better
analysis of the clients’ trends and risks against industry standards. It is analyzed that CAAT
supports forensic accounting and assist in simplifying the data in the automated form and further
integrate according to their needs.
Thus, it can be stated that many companies are using CAATs for auditing are attaining
benefits related with the simplification of the work concerning the operations of the company
(Miller & Skinner, 2015). Another technology used in audit execution is the Robotic Process
Automation (RPA). The ‘RPA’ commonly is uses for repetitive tasks like revenue and payroll
testing in which it can help auditors to improve productivity, expanding their risk coverage, and
help in address the regulatory compliance burden they are fulfilling in a more cost-effective
manner (PwC, 2015-2019). https://www.pwc.com/sg/en/audit/audit-technology.html
2.2 Future Position
Some of the future trends that may be led in the field of auditing by the increased use of
technology are explained as follows. There is expected to be staffing changes in the form of
increased demand for the skilled auditors, leading to an increase in salaries to attract and retain
experienced, high-level staff. The trends are working in favor of drones, mechanical robots, and
robotic software processes towards the augmentation and assistance and even replacement in
some instances in even the auditing industry. How the development of technologies will affect
the future of the audit remains to be determined. Some predicted that with the help of
technology, future audits will provide a higher level of assurance than today's "reasonable
assurance". By considering the latest technology by the auditors, it is examined that the future
position will offer more benefits to the companies in relation to the overall activities managed in
the competitive market. There are three key areas where technology will change the face of
auditing, namely (i) cognitive technology, (ii) predictive analytics, and (iii) smart digital hubs.

(i) Cognitive technology also stated as Artificial intelligence (AI) which can mine vast
amounts of data and carry out digital analysis of these data in a way that even today audit teams
are unlikely to be able to do. The artificial intelligence possessed with signifies algorithms that
enable it to process substantial data and complicated analysis, for instance, statistical analysis of
large number of data, classify and predict the same values. The algorithms of cognitive
technology enable the software to absorb information, reason, and thought in a human-like
manner. In addition, it also includes the process of machine learning in which when computers
encounter obstacles or unknowns in its work, it can learn, correct, and try new strategies. (ii)
Predictive analytics includes the use of advanced data analysis techniques to predict the future
based on probabilities and may involve other advanced technologies such as ‘AI’ and machine
learning to refine those predictions. Such analysis helps auditors to gain robust understanding
and deeper insight into the business and financial risks of clients based on comparative data
therefore, improves audit quality. Last, another future trend that is emerging on the lines of
financial technological advancement is the introduction of the (iii) smart digital hubs which serve
as “smart platforms,” enabling the auditors to work remote locations, in real time inculcating the
techniques of automation and visualization (Forbes Media LLC, 2018).
Other areas whereby technology will alter the way of auditing would be the blockchain. It
is a foundational concept in the way the data is stored. It refers to a complex system of consensus
and verification to generate a single agreed-upon permanent record (Dai & Vasarhelyi, 2017).
Therefore, with the blockchain approaches the auditors can manage their complex work and also
it will be considered as an effective method. As a result, it helps to maintain the ‘universal entry
bookkeeping where there is sharing of the data with the participants (Nowiński & Kozma, 2017).
In the coming future, advanced technologies will also impact on maintaining
cybersecurity. Issues related to cybersecurity that the auditors are facing will be minimized. The
cybersecurity focuses on the protection of networks, systems and also other devices. Hence, it
can be argued that technology can provide an opportunity for the auditors to achieve success for
the long term as well as for the short term. With the use of the latest technologies, the auditors
have focused towards simplification of the operations. This has helped to maintain a competitive
advantage in the market (Lee, Su, Tsai, Lu, & Dong, 2016).