The art of auditing has taken a new shape; a transformation by advanced technologies and progressive forms of digitisation only makes the job easy. This is far from the traditional and labour-ridden processes that auditors go through just to arrive at a complete check of a company’s entire processes.
Companies now turn to the adoption of data-inclined processes in order to measure up to the world’s evolutionary pace, which is made feasible with the invention of artificial intelligence (AI), blockchain, robotics, and visualisation to efficiently run auditing, producing accurate and transparent results. Putting together literature reviews and statistical analysis, this article is woven to explore the multifaceted impact of digital technologies on the auditing profession, pinpointing its benefits and strategies needed to excel in a digital era.
The transformational era
In 2023, Nigeria’s foremost auditing firm, Deloitte, unravelled the data of a survey revealing that about 79 percent of existing audit firms in Nigeria have transcended their operations onto digital technologies, improving their service rates and having dominance in the competitive market. This data suggests that there’s increased demand for auditors with high-end technological skills, which is rather mandatory in order to stay relevant. The evolution from traditional to digital auditing is the dawn of a transformational era, crucial to the future of auditing and how it could be executed to enact significant change.
The technologies used in this era are marked by speed and accuracy, giving auditors an edge in thorough review, moving from retrospection and repetition to being proactive in spotting and filtering potential errors, especially as regards financial records.
Artificial intelligence (AI) and machine learning
Known for its power in efficiency and transformational speed, artificial intelligence is that technology that has taken over the world, including auditing operations. AI works hand-in-hand with machine language, helping auditors to analyse large and bulky amounts of data quickly and simultaneously. This process, if done manually, takes time and days, and errors might not be fully spotted, but with the help of machine language, whose systematic algorithms are trained to identify erratic patterns and detect faults, auditing becomes easy. Through the utilisation of AI tools, automation of processes is assured: reconciling accounts, curating data, compiling transactions, and filing reports. A report by Ernst & Young (EY) showed that AI has helped auditors to focus more on demanding tasks and reduce time wastage of tasks to a 50 percent rate, enabling auditors to be thorough and detailed with their work.
AI positions itself as the technology that gives information upfront, instilling the nature of proactivity. Here, they help to predict and analyse errors on time before they metastasise, preventing waste and cost for problem solving. This is mostly helpful in accounting units, as they are good spotters of fraud, identifying trends that possess traits of malfeasance. One of the big four accounting firms, KPMG, has been operative with AI tools; a typical format is their platform, ignite, powered to read and analyse heavy quantities of data, which has led to an improved rate of audit accuracy, levelling up task completion time to 30 percent. It’s therefore imperative that auditors hop on the AI train to maintain relevance and stand amongst competitors.
Blockchain technology
This technology offers its credibility in auditing by creating a decentralised form of transactions, while its algorithm is powered to track transactions chronologically, ensuring patterns are aligned and forms of errors can be quickly discovered. With this, the integrity of auditing is guaranteed, further reducing the possibilities of human errors as a result of elongated manual labour. Reports by KPMG suggest that blockchain technology is capable of reducing audit operational costs on a 25 percent basis, further trimming budgetary alignments.
Big data and analytics
As companies grow in their operations, so are their processes, leading to the rise of big data that allows auditors to have a better understanding of the technologies used for evaluation. Technologies of different forms, aside from AI, have emerged to analyse big data, providing intricate insights for auditors on either recommendations or suggestions to improve operational standards. Some of these technologies include Hadoop, Apache Spark, and several data analytics software empowered to process data and identify potential errors.
Technological perks
Technological innovations are quite useful to the auditing world. The value that they contribute is immense, such that they cannot be overlooked. Some of which include:
Topnotch accuracy and efficiency: The accuracy that digital tools provide is second to none. Imagine the work of a money-counting machine counting and analysing money; the difference with when it’s humanly counted is clear; more time and energy is saved, accuracy is assured, all contributing to a standout system efficiency. The amount of time AI spends on tracking millions of transactions would never be compared to when it’s done by humans. To this effect, the Institute of Internal Auditors (IIA) confirms that the utilisation of AI in auditing firms has reduced error rates up to 30 percent in 2022.
Effective data analysis and insights: Technologies are equipped to not just analyse large sets of data in an accurate form, but they also provide insights on possible ways of improvement. It tenders instructions on efficiency standards and spots when there’s an irregular pattern or sign of technological fault. This relays proactivity, enabling companies to be on their toes, taking necessary actions before it gets to a worsened stage.
Increased transparency and security: Gone are the days where companies’ information is casually stored on paper or just on Excel sheets, lacking security and prone to intrusion from computer experts. With the advent of blockchain technology, data is optimally secured, enhancing the trust of auditors because data stored on a blockchain ledger cannot be altered; even if the cyber security is breached, it would give an alert, and the situation can be better handled before it reaches the public.
These benefits testify to the potential that lies within digital technologies, offering a transformational era in auditing, hence calling for a massive adoption to increase the prestige of the profession. While there are beautiful benefits of digital technologies in auditing, it’s unsafe to sweep through its inherent challenges, which must be carefully handled in order for them to have no chance of eroding the integrity of auditors.
The issue of cybersecurity and data privacy has grown so malignant, becoming a major fear for companies; hence, while they utilise technologies for their operations, they invest heavily in cybersecurity, making sure their databases are out of breach. This also flows in line with the report by Cybersecurity Ventures, stating that the rise of cybercrime will possibly peak at $10.5 trillion on a quarterly basis by 2025. It’s therefore a signal for companies to spend more by employing more cybertech experts to protect the company’s private data.
Traditional auditors are still on the rave of their manual lessons. There’s a surge of underperforming auditors in technologically inclined firms, having situations with less technical competence of auditors. This skill gap calls for the need for digital literacy and training that would position auditors to upskill in order to fit into modern environments. Some of these skills to be learnt include data analysis with technologies, cybersecurity, data risk management, data interpretation, programming knowledge, and strategic thinking for desired competence, meeting with the current demands of the profession.
In recent times, the existence of excessive automated operations poses a threat to the ethical demands of the auditing profession. AI, machine learning, and a litany of other technologies are capable of enhancing accuracy and efficiency, but a total reliance on these technologies without the need for a little humanistic professional review might lead to some incorrect and less factual decisions, which would ultimately reduce the trust of a typical auditing process.
It’s therefore pertinent that these challenges are addressed with constant strategic approaches requiring the provision of transitional infrastructures from traditional to digital auditing operations and organised workshops aiding the development and future of the ethical auditing profession.
A futuristic view
The future of auditing in Nigeria promises huge dividends; having digital inventions stay on the rise, it’s almost inevitable to not attribute success to the career path. However, as cybercrimes linger in the digital space, it’s mandatory that auditors groom themselves in data security undertakings, proving their mettle to protect their firms from external invasion. This concern is therefore subject to future focus, as audit firms would be required to invest in the vital components of the entire audit process, from accessing records to evaluating cybersecurity structures and the effectiveness of IT assets; hence, the market for cybersecurity becomes another avenue to generate wealth if rightly invested upon.
Conclusion
Inclining digitally for auditing and its processes is transformative and has allowed for the sector to significantly perform in terms of accuracy, efficiency, and transparency. Despite the challenges of these technological inventions, including the need to bridge the skill gap, cybersecurity, and the concerns of professional ethical considerations, it’s important that audit firms develop structures to combat these challenges and stay attuned with the transformation the evolutionary wave yields.
The future of auditing centrally emphasises the need for continuous learning and proactive adaptability to new technologies and how to integrate them to ensure smooth operations.
