Technology in Audit Engagements: A Comprehensive Analysis

Desklib provides solved assignments and past papers to help students succeed.

Technology in Audit
Engagements
1

To: [e-mail]
CC: [e-mail]
Subject: Response to Query
Dear Savannah,
In regards to your queries regarding the impact of recent developments in audit technology on
the job of auditors, I would like to share my views towards your Concerns. Technology has eased
the human work and it has also created significant changes in this achieving accurate results.
There are various activities that are undertaken by our Audit Firm and it is not possible for
technology to take charge of every aspect. Though there are certain technologies like Audit
Support Systems, Artificial Intelligence and Block chain that have the potential to impact the
work that we are doing. Block Chain has the credibility to manage complex data and do multiple
calculation with it in the same time. This is a very big advantage of Technology to reduce the
work load. It is also extremely fast, which also means that we can get faster results. There is
another technology called Cyber Security that protects all the crucial and vital financial
information of our clients. It is the most effective technique for risk management.
It is important to bring in notice, that even after having a great staff (quantity), sometimes we are
unable to provide the desired results. Humans are governed with multiple emotions which lacks
in any kind of machine. It can work uninterrupted for long hours and can give results in the same
manner.
A set back from the view of using technology in the audit process is that, it has disrupted the
process by driving inefficiencies. This is so, because the machines are programmed in a certain
manner and one cannot get results arising from different situations. If we need to find answers of
every question, we need to incorporate the particular program into it.
There are uncertainties that these technologies are extremely disruptive as they are making lots
of things obsolete. Introduction of every new software means there is farewell to the previous
one, but in the end it is to note that even after all, it cannot replace the human touch. There are
various examples that can be stated to prove the disruption it can cause and to what extent. It can
2

affect the way, we communicate, the analytical procedures that we follow to reach to certain
answers and most importantly affect the decision making process.
Applications like Robotic Process Automation is being used for Audit Execution and repetitive
tasks like revenue and Payroll Testing. These areas have witnessed decrease in the human labor.
So it can be said that with the enhancement of several machines that are very powerful in terms
of calculation, management, results and so on are slowly erasing the worth of mankind in various
areas.
As we can also see that the clients are updating as well. The software that the firms are using are
through ERP and SAP. They demand the auditing firm to be on the same page as they are and
work with them as a team. It is henceforth an obligation to follow what the client needs. They
want to get faster and accurate results as it saves time and money.
A machine can no doubt provide extraordinary results in the field of accounting, but it cannot
make decisions based on several factors. This is so because it is fed with the data, but not with
the conscience of what is right and what is wrong. The major setback to the use of technology
today and tomorrow will be that they will never be able to make strategic decisions.
I hope my views are able to satiate all your queries.
Regards,
John
There has been various doubts and queries in the minds of young professionals who are worried
about their future being in dark due to the use of latest technologies. In the field of Auditing,
there are certain technologies like Block Chain, Audit Support Systems, Cyber Security that are
snatching the jobs of auditors with their accurate results and impeccable timing. These are also
3

responsible for finding any fraudulent activities that are being taken place in the firm. It aids in
reducing the crimes that various firms are doing. These can be further explained as:
 Audit Support Systems: These are essential towards managing the functionalities of the
audit activities. The detailed system facilitates the audit firms in doing efficient and
effective audit. The Audit Support System include aspects like Electronic work papers,
extensive help files, accounting and auditing standards, relevant legislation and decision
aids.
 Block Chain: This technology is extremely effective in handling multiple type of
complex data that is used by the firms in making financial and operational decisions.
They are changing the ways in which the records were kept and managed. It is very
useful in creating a universal entry of bookkeeping, from where all the data can be
accessed.
 Cyber Security: It is the most efficient technology that is used to prevent the crucial data
from leaking. Financial data of the companies are very confidential and any small human
error is capable to destroying the data. Through the use of Cyber Security, one can be
sure that there are various challenges to get through the data. Henceforth it is kept safe
and guarded.
4

These technologies are equally disruptive for the way the auditors work and operate. It has a
significant impact on the way the auditors communicate with the team, how the plans are being
framed and executed. This can be further described as:
 Operation Of Auditors: The way audit is performed can significantly change in the
future due to the enhancement of the technologies. In the time of latest software, we are
moving from Continuous control monitoring (CCM) to Continuous Transaction
Monitoring (CTM) (Gal, et.al., 2016). These changes are possible through the help of
Block chain Technology.
 Communication: The impact of the technology on the communication can be summed
up as the way in which the reports, findings and other important information is
communicated to the Clients, it makes them feel more reliable than humans. Though it is
not completely effective as the data fed in the machine is also by man itself.
 Decision Making: The very major impact that is visible through the use of technology is
the decision making skills. The calculation provided by the software is extremely
accurate and the results derived from the given information lets the software make
decisions which are more profitable and practical. It also decreases the biasedness that is
sometime client based.
There are lot of ways through which it can be said that the software and the technology are
tampering the jobs of auditors. This is so because accounting is a result oriented profession and if
there has to be absolute commitment and focus towards the numbers.
The auditors feel insecurity that their jobs will be obsolete in coming years due to the rising
software and technology. This is not entirely true. Though it cannot be denied that machines
have taken over a lot of work from the humans, but still there are certain areas which the
machines are unable to beat the humans (Pan and Seow, 2016).
The machines are programmed to take decisions in a certain manner. There is a limit to the
creativity and innovation which is there in the machines. Audit is not a simple process. There are
5

several area where the human intervention is required. It comprises of rules, laws and standards.
These can be again programmed in the system, yet the human experience is incomparable.
It is not wrong to say that we are living at the cusp of change. Data Security, Artificial
Intelligence and Robotics is taking over the leading roles. They are working on extended time
periods and are also proving accurate results. This aspect is less in humans as we are not
machines and we need to adhere to the social environment that we are living in.
Technology can give you the feedback, but it cannot provide you with the directions that are
required respectively to achieve the set targets. In an audit firm, specifically, there are numerous
data and information that has to be processed with. This is achieved through the efforts of
humans who are committed to their jobs. Therefore, it can be stated that there will not complete
wrap on the existence of human jobs.
Amongst all these technologies, the best that can be adopted by the firm are:
 Block Chain
 Data Security
Both the technologies are very important and play a very crucial role in managing the audit
activities. A strong Data Security is needed to ensure that there is elimination of risk from
managing the very confidential information of the clients (Tarek, et.al, 2017). One can be
relieved from this point of view.
Block Chain on the other hand has the ability to manage and control all the intricate data with
ease and efforts.
6

References
 Gal, G., Amin, H.M. and Mohamed, E.K., 2016. Auditors’ perceptions of the impact of
continuous auditing on the quality of Internet reported financial information in
Egypt. Managerial Auditing Journal.
 Pan, G. and Seow, P.S., 2016. Preparing accounting graduates for digital revolution: A
critical review of information technology competencies and skills development. Journal
of Education for business, 91(3), pp.166-175.
 Rikhardsson, P. and Dull, R., 2016. An exploratory study of the adoption, application and
impacts of continuous auditing technologies in small businesses. International Journal of
Accounting Information Systems, 20, pp.26-37.
 Tarek, M., Mohamed, E.K., Hussain, M.M. and Basuony, M.A., 2017. The implication of
information technology on the audit profession in developing country: Extent of use and
perceived importance. International Journal of Accounting & Information
Management, 25(2), pp.237-255.
7