Future of Audit – A Journey Towards Automation

1. Optimising the Available Time

The highly valued benefit of automation is optimization of available time. Automation can free up the capacity for teams by reducing manual efforts and focusing that saved time on high value decision making activities or learning something which really adds value to the overall performance of an employee. Having time to think about something, can help you in planning audits, and think about improving the processes.

2. Improved Output Quality

One benefit of the automation is its capacity to cover 100% of the population. Hence, improving the reliance over audit procedures performed. Also automation helps in reducing manual errors, thereby improving accuracy. Further, if there are any mistakes, it can be easily detected by automation solutions. Overall, it leads to accurate audit results and thereby, increasing trust of various stakeholders.

3. Efficiency and Cost Reduction

Automation helps in completing the process in less time as compared to the time taken to complete the task manually. Direct benefit of the same is gaining efficiency in completing the task. Further, since lot of time is saved, it also results in reducing cost. Cost savings for automation should always be measured from long term perspective and not from short term, reason being obvious initial cost involved in implementing the automation.

4. Better Questions

Since automation gives us accurate analytics and results, it encourages auditors to ask better questions to clients and thereby gaining more in-depth knowledge of business and transactions taking place. It also does a value addition to audit firm’s business value in a way that client acknowledges the efforts put on by audit teams to conclude the audit.

1. Excel Macro

For any formatting, monotonous calculations, analytical procedures etc. that we perform, we can easily create an excel macro. Excel Macro has the lot of unexplored potential to automate many of the excel processes which we otherwise perform manually. It all depends upon how far one is able to think for its usage. Primarily, it’s not easy to code or setup a Macro, but there are lot many courses available on various online education portals where you can learn the implementation. Moreover, you can also hire someone on contract basis to work on the Macro.

Some of the use cases of developing automation through macros are:

• a. Formatting the data
• b. Comparing the data among multiple files

2. Advanced Excel Macro (Use of VBA)

Introspect on what all audit procedures you generally perform and answer this question. Do you take third party data from any website to do some independent recalculations? Or, do you send bulk emails for confirmation purpose and you spend lot of time in sending initial e-mails, tracking them and sending follow-ups? So did you ever think that you are probably spending lot of time and manual effort in carrying out such similar procedures? Yes, we do have solution for all such things. Excel Macro can do any such logical steps as well. Advanced coding of excel Macro is not easy, but resources to deliver the services using excel Macro can surely be hired on contract basis.

One more use case for the Advanced Excel Macro, can you recall a process wherein you pull out some data independently from various sources to confirm the valuation or any other percentages for recalculation. Think how time taking it is to pull out individual information and then try to recalculate, but now all those things can also be automated.

Can you imagine one thing from this? With the help of excel macros and its usability in numerous areas, you can increase the testing upto 100%. That means, more reliance on the data, more reliance on the testing procedures and resultantly more reliance on the overall result of the financial statement communicated to various stake holders. All these things at no extra effort, rather we will still end up saving lot of time.

3. Mail Merge

How many of us send several confirmations or e-mails during our audit? Do you end up creating one confirmation at a time? That is not required if use Mail Merge feature With the help of this feature you can create as many different letters you want in just one go, the whole process would not take more than 15 minutes to create and print the letters into PDF or physical print. This is really an interesting feature with lot of other unexplored used cases, but the whole purpose is to give you a highlight of its possibilities so that you can explore more.

4. Visualisation Tools

These tools help in audit planning and decision making. With the data received from client, you can input it in the visualisation tool to come up with various visualisation charts showing trends, that can help you to channelise the audit procedures in the required areas The capability of this tool in strategy and decision making is simply beyond par. Using this tool is not that difficult exercise; one can easily learn this tool from available online education portals.

Some of the areas wherein we can use this is:

• a. Analysis of financial statement line: YoY analysis, Sub-Category analysis, JE analysis, etc.
• b. Budget to Actual Analysis
• c. Audit Tasks analysis

5. Python Script

What is python script? It is a reusable set of code which is in the form of instructions that interprets the act to be done over computer system. Now since we know that python script is a code, we all might have doubts that how can this code help us in doing audit? This is the technology that will define the real future of audit. With the use of python and advance python script we can automate the tick marks, tie-outs and file references. Moreover, in day-to-day audit we use lots of attributes for control testing, good news is, and all of that can also be automated.

Obviously one time cost is involved but the long term benefit can cover all that cost. For sure it will be difficult for you to guess about its cost-benefit analysis, but what if I say that a task that use to take around 20-30 hours, can now be completed within 2-3 hours. That means we will be saving 90% of the time, and saving time means saving cost and also more reliance on the audit results because with automation we eye to cover 100% of the population.

6. Excel Models / Analyzers

Just like Excel Macro, even other excel models can also be used for analytical procedures. Excel Model basically is a spreadsheet that helps us in making quantitative estimates, forecasts etc. Further, audit of estimates is one of the most important tasks and generally most of the fraud risk areas are from estimates. With the help of excel model we are just required to input the data and some quantitative and qualitative inputs. Within seconds we will have the estimates ready in front of us. Excel Models will help in taking important decisions related to audit.

7. Audit Techniques to Concise Large Sets of Readable Data

This is the audit technique which might not come under budget of many, but considering the capabilities of Artificial Intelligence (AI) and its smart learning capabilities, the use of AI cannot be denied in future. How many times is the auditor required to read various contracts, agreements which could consist of hundreds of pages or more. Reading each and every word, tying out the relevant particulars from various other files is a time consuming process. Often it is seen as one of the most monotonous and time consuming job. Just imagine if one has to read hundreds of such agreements and work on it. Can these numbers be somehow reduced? The answer is yes, audit in future will come down to use of technology at its best. Only the decision making parameters which are subjective in nature will be required to be taken care of. That is what is seen as the future of audit.

8. Checklists

Completing an audit successfully is not the end; rather it is just a beginning of another cumbersome process that most of the auditors have to go through. Everyone knows about long checklists that the audit team has to fill in order to complete the final documentation. It is at the top in the to-do-list of auditors, and in a way it is important to comply with the various standards and regulations. But one thing we all can relate is the ambiguities on applicability or non-applicability of series of questions in an audit. Now in medium size firms, it is a tedious job to fill that checklist manually, but what if automation can help in reducing that load. What if only the applicable questions related to the particular audit is shown in the system? Does that help in reducing the time and efforts? Certainly, because filling that checklist is one task and reviewing is another. With the help of intelligent checklists, a team will be able to reduce much of their time spent; in a way it will help everyone to stay compliant.

9. Software Tools for Automating Monotonous Yet Logical Calculations

With the help of such tools you can automate many monotonous yet logical calculations. It basically works around excel files, even the most complicated logical steps (including testing and calculations). One can automate lot of processes starting from sample selections to reconciliations and from formatting the file to applying multiple formulas and filters. Tasks which ideally use to take days and hours to finish can now be completed in few minutes and that too with utmost accuracy. Learners can seek certification courses available online.

Some of the areas wherein we can use this are:

• a. Reconciliations
• b. Recalculations
• c. Variance Analysis

10. Tools to Convert Readable Data Files to Usable Formats

Have you ever faced a situation wherein you got a readable PDF or text file as a support from client and you felt it is too big to convert into excel, and you spent hours extracting the data to excel. There are cost effective solutions that convert the long PDF and text files to excel, and are easy to use. Using such tools, you can convert long pdf and text files to excel and they provide results quickly. Use of such automation tools can also be learned by taking few courses available easily online.

11. RPA Tool

You would have observed that most of the tools discussed above are usable when there are logical steps involved and which are quite straight forward. But what about areas or processes which are subjective in nature and requires decision making because lots of qualitative and intuitive factors are involved. You are a big firm and you have money to invest which can give you benefits in long run, Robotic Process Automation (RPA) is definitely the future which one should look for. RPA tools have the ability to get into the systems and perform audit functions and make decisions on the basis of factors involved. Here the article describes the process, at a very basic level. However, its actual capabilities can be extrapolated only after researching your requirement and need for implementing the tool.