Implemented properly digital tools have the power to transform the sector.
Digital tools and artificial intelligence are transforming the business landscape. But what does the digital revolution mean for audits and auditors – particularly those in smaller practices?
A new playbook, produced by ACCA and Chartered Accountants Australia and New Zealand, is a practical guide for audit firms of all sizes. It is especially relevant for small and medium-sized practices, setting out the ways in which digital technology is transforming the audit process.
The audit and technology playbook also explains how firms can manage the key risks associated with technology and look at the implications for practices in terms of talent management and governance.
The guide's aim, says its foreword, is to equip readers with "knowledge and tools to make the most of technology becoming available while maintaining the quality and integrity of your work."
Tech trends
The guide looks in detail at the six technology trends that are shaping the business landscape: artificial intelligence (AI) and machine learning; blockchain; cyber security; the internet of things; robotic process automation; and big data and analytics – and their applications, impact and relevance to audit work.
It directly addresses the perception that smaller firms are less likely to engage with advanced technology and less likely to benefit from it than their larger counterparts.
"Smaller firms are increasingly agile in terms of implementing software and off-the-shelf solutions are increasingly powerful," says Steven Watson, managing director of the National Audits Group Australia, who is quoted in the guide.
The guide details several types of audit software solutions that could potentially lead to higher-quality audits and greater profitability for smaller firms:
· conflict-checking and cross-referencing software that allows firms to screen client data against internal databases to identify potential conflicts of interest or independence issues
· chatbot audit assistants that can resolve common questions
· optical character-recognition technology which converts PDFs, screenshots and other documents into editable and searchable data
· cloud-based solutions to improve the client engagement process through data-sharing.
Risk factors
The guide is clear that while technology brings huge opportunities, notably in the case of generative AI, it also comes with considerable risks.
"While technology can support and accelerate decision-making, an over-reliance on these tools has the potential to compromise audit quality. This is because the tools are not infallible; GenAI tools, for example, analyse what statistically appears to be most likely to be correct," the guide says.
The output of these tools can also be compromised by poor-quality data.
The guide also stresses that human input remains the most important component of the audit function: "Auditors should maintain professional scepticism and exercise professional judgment in assessing the ac
