How tech is revolutionizing accounting: The internal auditor
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How tech is revolutionizing accounting: The internal auditor

24 days ago · 2 min read

The use of new tools is helping internal auditors provide more value to their organizations.

Internal auditors: Focusing on big-dollar risks

Internal auditors working on reconciliations once had to manually check the general ledger for discrepancies with the accounts payable and accounts receivable records. Now, in a matter of seconds robotic process automation software can perform checks that once were a time-consuming requirement for members of the internal audit staff.

This allows the staff to turn its attention to more value-added tasks. “They can focus on the big-ticket items where the big dollars are,” said Lal Balkaran, FCMA, CGMA, a risk, governance and internal audit consultant based in Scarborough, Ontario, Canada.

The new software arrived just in time for internal audit professionals, who are dealing with unprecedented — and growing — amounts of data. Traditional auditing approaches are no longer sufficient to handle these amounts of data, Balkaran said.

“By enabling artificial intelligence to make machines think, they can look at correlations and relationships between these large amounts of data, and give the information back to the auditors to enable them to make decisions,” he said.

This information helps them determine the most effective approaches to take in their audit planning. Meanwhile, during the audit engagements themselves, AI is helping internal auditors fully examine entire populations of data rather than using sampling.

“That’s a significant improvement in auditing by leveraging technology,” Balkaran said.

One of the biggest areas of potential fraud in the current environment is cybersecurity, which Balkaran said has been keeping C-level executives awake at night. Internal auditors are taking advantage of the extra time they have to implement stronger cybersecurity tools and techniques while creating preventive controls to keep hackers from gaining access to organizational systems.

Internal auditors also are shifting toward a focus on continuous auditing, which enables performance of risk assessment procedures and testing of controls on a frequent basis rather than on the yearly calendar that might have been the norm for audit plans in the past. Ongoing testing of 100% of transactions makes continuous auditing possible.

“It’s an integral part of an auditor’s arsenal,” Balkaran said. “It’s no longer like sampling in the past, but an ongoing risk assessment and assessment of the controls that management has put in place.”

Internal auditors are broadening their skill sets to take advantage of the new tools that are available to them. Digital literacy is important, Balkaran said, but it also needs to be combined with the deep understanding of the business that helps internal auditors put the technology to work.

It’s a learning process that seems destined to accelerate in the coming years. Balkaran predicts that there will be even more technological innovation integrated into internal audit in the future.

Meanwhile, he expects drones to be used to provide instant results in inventory counts, particularly in warehouses that are large or difficult for auditors to gain access to.

“In terms of technology and audit,” Balkaran said, “the sky is the limit, I would say.”

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