The COVID-19 pandemic had changed many things; one among them is the perception of the audit process as business processes have become more interconnected and interdependent.
Recently, the audit community has experienced several changes, ranging from misalignment with auditees to misunderstanding about evolving risk areas as a result of technological advancements. One area that auditors face difficulty with is the networked corporate environment. Even before an audit commences, it is critical for the auditor to adopt a holistic approach to examine the interconnected business environment's entire mechanism and activities.
To effectively assist enterprises and execute high-quality audits, future auditors must be technologically savvy. Data analytics, distributed ledger technology (DLT), robotic process automation (RPA), drone technology and machine learning (ML) are all gaining traction, and COVID-19 has accelerated the development of virtual audit capabilities significantly. Auditors have been experimenting with new technologies and leveraging big data in order to conduct audits that are higher quality, more efficient and more focused.
Along with understanding an increasingly complex collection of auditing tools and methodologies, future auditors must have more adaptability to adjust with developments in IT, data science and general business processes.
The new auditing roles may include duties such as:
- Providing effective feedback to top management
- Performing adaptability testing of new technology
- Giving continuous feedback for improving processes
- Improving operational standards
- Handholding during the implementation of standard operating procedures
- Creating awareness of information system security and cybersecurity
The Widening Gap Between Technology and Auditing
With a system of archaic disclosure and assurance requirements, some IT auditors have lagged in technology advances. As a result, the gap between current technology practices and accounting and assurance methods has become more significant in both the public and commercial sectors. With the advancement of cloud computing technologies, new risk has emerged, and new controls must be designed to ensure the security of information managed and stored in the cloud. Audits must also be tailored to the cloud’s unique requirements and characteristics.
The Way Ahead
The future of audit is no longer hypothetical. The future is here, and change is being accelerated by the COVID-19 pandemic, which is providing the impetus for more advanced technologies and innovations that will benefit the future of audit.
Future auditors must master an increasingly complicated set of auditing tools and techniques, and demonstrate a thorough grasp of the intake, processing and output of data from various sources.
Advances in technology create both challenges and opportunities for the future audit, but a few fundamentals remain unchanged, including:
- Core competency as an auditor
- Automated tools will help, but they cannot replace judgement.
- The independence of the audit function
- Agility, the need of the hour, should be applied where it makes sense and is required.
- The right questions are still the magic tools for an initial audit assessment.
The future audit is neither process driven, nor technology driven, but it will be a calibrated combination of both, as per the business and its processes.
Editor’s note: For further insights on this topic, read Gopikrishna Butaka’s recent Journal article, “The Evolution of Audit in the Wake of the Pandemic,” ISACA Journal, volume 1, 2022. ISACA Journal Turns 50 This Year! Celebrate with us—and don’t forget you can still receive the print copy by visiting your preference center and opting in!
