ACC321: Impact of Technology on Audit Engagements and Auditors

This report examines the impact of technology on audit engagements, specifically addressing a colleague's concerns about the future of auditors due to technological advancements. It explores the influence of audit support systems, blockchain technology, and cognitive technologies on the auditing process. The report highlights how these technologies are automating tasks, changing communication and analytical processes, and influencing decision-making. It discusses the benefits of incorporating these technologies, such as enhanced efficiency and accuracy, while also acknowledging potential impacts on human auditor roles. The report emphasizes the importance of adapting to technological changes and implementing cognitive and audit support technologies to improve audit firm services. It also references key aspects like the Internet of Things (IoT) and the need for internal auditors to manage its associated risks. The report concludes by recommending the implementation of these technologies to automate decision-making and provide more accurate results within audit firms.

Running head: REPORT ON AUDITING AND PROFESSIONAL PRACTICES
REPORT
ON
AUDITING AND PROFESSIONAL PRACTICES
Name of the Student
Name of the University
Author Note:

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Email to the colleague:
Dear Savannah,
I am writing this mail to inform you that as per your concern a detail analysis on the
Audit profession has been done. Followed by that investigation several significant aspects has
been identified which are highly related to your concerns. Considering the concern related to
advancement of the audit industry due to the rapid growth of the advance technology it has
been noticed there are several impactful technologies present in the auditing industry which
are replacing the human resources. Those identified technologies includes the Audit support
system, cognitive technologies in the audit processing as well as the block chain technology
in the audit industry. While analyzing the impact of these identified technologies in the audit
industry it has been noticed that due to the incorporation of the Audit support system the
behavior of the auditor has significantly changed. Along with this technology the same has
happened due to the incorporation of all of the above mentioned technologies. Those
significant changes includes the change in the communication procedure, analytical process
as well as the influence in the decision making process.
Since, you have asked me to analyze the aspects of the above findings it has been
noticed that there while applying the audit support system in this field it has been noticed that
the audit support system is nothing but an information system which enables an audit firm to
effectively perform the information management process in order to enhance the auditing
process. Along with this the application of Block chain enhances the record keeping process
in the audit application platform as well as the cognitive technologies in the auditing firm
enhances the decision making process, analyzing process and the prediction process in the
audit firm. Followed by these aspects I would like to inform you that in the professional
practices of human auditors there is a huge impact of these identified technologies as it is

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mentioned above that the application of these technologies reduces the human efforts by
making it more automatic. However, this holds a significant impact on the enhancement of
the auditing services the application of IT technologies as well as the cognitive technologies
reduces the human effort which is directly influencing the jobs of individuals as it is highly
significant that due to the incorporation of the above mentioned technologies the auditing
industries has enhances their performance by utilizing the machines, followed by which the
necessity of human powers in the industry is reducing.
Apart from considering the risk factors to the human resources it has been noticed that
it is highly essential to incorporate the effective advance technology in the auditing firm
which enhances the firm services. Hence, it is suggested to you to implement the cognitive
technologies as well as the auditing support technologies into the audit firm infrastructure in
order to automate the decision making process of the audit firm as well as to provide more
accurate results.
In order to support the above findings a brief discussion of these key aspects are
provided in a separate attachment below. Please go through the document and decide wisely.
Than you
Yours Sincerely

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Supportive Document:
Audit supporting systems are major technology applications that are
installed by audit firms for facilitating effective and efficient audits. Auditing and accounting
standards, electronic work papers, decision aids and relevant legislation are included in these
systems. Changes in technology and audit supporting system mergers in last few years raise
question if representative of decision types support current employers in audit system. 3 key
regions where auditing will be faced by the technology with close view of what results will
be yielded by these innovations and how the technology works itself (Dowling & Leech
2014). The systems are differentiated as per the development’s location, use policy and audit
system’s role within audit process. Essential differences were found in the design of audit
support system, which includes how the audit support system is seen as enforcer or an enabler
for the audit process of a firm. All the five firms of audit support system are globally
developed and tailored for achieving with specific standards of the country. System’s
voluntary use has potential in impacting auditing effectiveness and efficiency due to
development of unsuitable audit plans which need collection of insufficient or too much audit
evidence (Omoteso 2016). This problem is decreased by use of audit support system by
assisting auditor to tailor audit program to circumstances of the client.
Blockchain is digital ledger which is created for capturing transactions
conducted between several parties within a network. It is distributed ledger based on internet,
peer-to-peer that includes every transactions since it is created. Every participants who are
using this shared database are connected to blockchain, ledger’s identical copy is maintained
by each participant. With more organizations considering opportunities of block chain which
includes trial of blockchain audit. Blockchain initiatives have been undertaken by several
accounting firms for understanding further the versatile and essential technology’s
implications (Kozlowski 2018). Assurance and audit professionals should be alongside with

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developments and pursue in learning more about business applications of blockchain, audit
technology in blockchain and blockchain accounting. Blockchain technology possesses the
potential in impacting every recordkeeping processes, which includes the way of how the
initiation, processing, authorizing, recording and reporting of transactions take place. Change
of business processes and business models might impact activities of back office like tax
preparation and financial reporting (Suzuki & Murai 2017). Blockchain technology is needed
to be understood by the independent auditors as it is installed at sites of clients, whether
business opportunities of blockchain are being pursued by clients, business applications of
blockchain are being implemented or blockchain is being applied in accounting.
Cognitive technology, also termed as artificial intelligence can plunge
through huge data quantity and this data’s digital analysis can be performed in a process
which is impossible for auditing teams of today’s generation as well. Cognitive technologies
consists of algorithms which enable software for absorbing reason, information and the way
of thinking is same as humans. It also possesses a process called machine learning, in which
course can be corrected and new strategies can be tried by computers as unknown obstacles
are encountered in the work. Cognitive technology can be used by auditors for redesigning
their work as analyses of unstructured and structured data can be conducted in ways that was
not possible in past years. For example, information can be examined by an auditor through
non-traditional sources, processing it with financial records of a client and advanced analytics
can be utilized for providing clear view about possible risks (Sulistyanto & Pranata 2017).
Though cognitive technology having all these benefits, capstone role is played by human
auditor. Internet of Things (IoT) has become integral part in everyone’s lives. For
organizations which are not fully awake to IoT, management can be advised about function
for internal audit about the benefits, competitive edges and importance which can be brought
to enterprise by IoT. The management can be demonstrated by the auditors about how IoT

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can be used in processes like inventory control and sales distribution. Moreover,
brainstorming sessions can be facilitated to management by them and research can be
performed for understanding advisory services, the objectivity should be maintained by
internal auditors and management responsibility should not be assumed. Internal auditors and
management need to acknowledge that many rewards can be brought up by IoT. It also
generates numerous risks (Pasquier et al 2018). Insufficient understanding of applicable
controls or risk environment can lead in organisation’s disaster. Furthermore, provided rapid
advancement and development of IoT, there are also rapid changes in associated controls and
risks. Internal auditors require to stay alongside with developments and advancements of IoT
for accessing controls and risks in the organization.

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References
Dowling, C. and Leech, S.A., 2014. A Big 4 firm's use of information technology to control
the audit process: How an audit support system is changing auditor behavior. Contemporary
Accounting Research, 31(1), pp.230-252.
Kozlowski, S., 2018. An audit ecosystem to support blockchain-based accounting and
assurance. In Continuous Auditing: Theory and Application (pp. 299-313). Emerald
Publishing Limited.
Omoteso, K., 2016. Audit effectiveness: Meeting the IT challenge. Routledge.
Pasquier, T., Singh, J., Powles, J., Eyers, D., Seltzer, M. and Bacon, J., 2018. Data
provenance to audit compliance with privacy policy in the Internet of Things. Personal and
Ubiquitous Computing, 22(2), pp.333-344.
Sulistyanto, M.P.T. and Pranata, K.B., 2017, August. Preliminary study of utilizing Internet
of Things for monitoring energy use in building to support energy audit process. In 2017 4th
International Conference on Computer Applications and Information Processing Technology
(CAIPT) (pp. 1-7). IEEE.
Suzuki, S. and Murai, J., 2017, July. Blockchain as an audit-able communication channel. In
2017 IEEE 41st Annual Computer Software and Applications Conference (COMPSAC) (Vol.
2, pp. 516-522). IEEE.

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