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Personal Finance

Future of audit in digital economy

digital technology
Audit function should keep pace with changes in digital technology. FILE PHOTO | NMG 

Digital technology is rapidly growing across diverse fields, including block chains, robotics, 3D printing, artificial intelligence, and the internet of things. We are now entering the 4th Industrial Revolution and technology is drastically changing the way we live, work, interact, and do business.

In the modern business world, the gold standard of corporate governance is reliable internal control over financial reporting. Good financial reporting is an indicator of good corporate governance. Automation and artificial intelligence will result in effective, secure, and reliable performance across all government and business processes.

The audit function is a key element of good governance and accountability in both public and private sector organisations. Auditors play a critical role in protecting organisations and promoting governance, risk management, and controls.

Audit function should keep pace with changes in digital technology. An organisation’s technology-based processes and activities must result in decisions and actions that are in line with its ethical, social, and legal responsibilities. Audit is intended to provide assurances that proper governance structures are in place and followed, including oversight and accountability surrounding government’s or an organisation’s use of digital technology.

Governments and organisations should heavily invest in new technologies for more efficient and effective management of their functions and processes. This includes better IT mobility, enhanced cloud platforms, and improved technology infrastructure.

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By leveraging new technologies, auditors can better evaluate and improve an organisation’s processes and systems. The optimal use of audit management systems and collaboration tools can also improve the audit function’s own processes. For example using data analytics software to automate test procedures and assist other departments in implementing a continuous monitoring approach. This replaces the need to conduct repetitive audits and instead enables auditors to provide a higher value advisory role in which it ensures the automated tests are running properly.

In determining which portfolios auditors should prioritise in their annual work programme, one of the risk indicators includes a sentiment analysis using artificial intelligence that reviews thousands of news articles from publicly available sources. In addition, a machine-based clustering is used to group the departments and help identify which to audit.

Auditors must continue to develop their own skills in this age of digital transformation so that they possess the knowledge and expertise necessary to provide high-quality technology advisory and assurance services. In addition, they must have sufficient knowledge of key IT risks and controls as well as available technology-based audit techniques to perform their assigned work.

There is a deficit of audit professionals with expertise in digital technology. Governments and organisations that want to leverage and benefit from emerging technologies must support the skills development of their auditors in such areas as data analytics, programming language, machine learning, algorithms and advance modelling, and robotics.

It is important that we share knowledge and collaborate to help one another keep pace with advances in digital technology. Knowledge partnerships should be pursued among firm agencies, and with fellow public sector auditors, private sector internal auditors, technology experts, and the academic world. By proactively sharing knowledge and continuing to explore and exploit new technologies you will improve as audit professionals.

By keeping pace with the changes in digital technology, leveraging new technologies, and continuing to develop your own skills, you will greatly contribute to strengthening the audit function in your respective public sector organisations.

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