DIGITAL AUDITING

BUILDING ‘SKILLED AND CAPABLE’ AUDITORS IN THE ERA OF DIGITAL AUDITING

Winnie Senoamadi, Researcher

Globally, we have successfully transitioned into the ‘digital age’ where we interact with the digital realm. These interactions require basic computer literacy that will allow one to be able to ‘search, find, evaluate, and compose clear information through typing, writing, tapping, and by using other mediums (e.g., multimedia videos, video calling, and messaging)’ on various digital platforms, as articulated by professor of information science, David Bawden.

Companies have since invested in digital literacy to improve their employees’ capabilities to use computers and related technology more ‘efficiently and effectively’. In the context of auditing and accounting, research has shown that digital technology and innovation improves the audit experience and quality (PwC, 2021).

Thus, it is critical to build a workforce with the necessary skills and capabilities to operate in a space of digital solutions for auditing.

Annually, audit and accounting firms assign their training budgets to training courses that feature the use of technology and innovation to improve their employee’s auditing and financial skills.

Distributed ledger technology (DLT), data analytics, robotic process automation (RPA), drone technology, artificial intelligence (AI) and machine learning (ML), natural language processing (NLP), and deep learning (DL) are examples of technologies that have infiltrated many sectors and have emerged as the next revolutionary development to impact accounting and auditing processes.

For auditing and accounting firms, technology has become a timesaving, cost-effective, dependable, precise, and secure tool. There is a number of reliable software packages that can be used for auditing and monitoring ease.

Previously, auditors would manually engage in auditing processes and keep large case by case files in their offices. However, technological advancements have provided auditors with digital solutions that allows them to create a centralised location for tracking, reporting, reviewing, and archiving client data (such as workflow creation and blockchain software) that produces reliable audits, reduces errors and headache-causing paperwork (KLR, 2016).

In this case, tasks can be automated after some programming and training. According to Bena (2019), task automation is advantageous because it frees up audit teams to focus on business, resulting in a happier audit team with improved talent retention and confidence that they are ‘skilled and capable’.

In addition, there are solutions specifically designed to provide quick and efficient analysis of financial audit data and specific client projects (such as IDEA Data Analysis Software).

However, safety and security are a major challenge on digital platforms. The transition to new technology can also bring with it new risks such as ensuring compliance with the most recent data protection regulations and ensuring that the organisation is safeguarded from unauthorised access. Experts in digital solutions are always improving security and reducing the risk of fraud.

As highlighted above, the benefits of digital auditing are crystal clear, and they show a continuous need to advocate for building skills and capabilities for effective digital auditing. Digital solutions continuously change and improve; therefore, company employees need to stay on top of their game and get upskilled on the necessary and relevant technologies to assist the organisation reach their business outcomes.

The secret to quality technology auditing, improved client satisfaction and happier audit teams is investing in the skills of your workforce as an auditing firm as this improves the performance of the audit team, as well as the delivery and quality of the audit (Bena, 2019).

According to the International Organization of Supreme Audit

Institutions (INTOSAI) Capacity Building Committee (2021), organisations must create an enabling environment for reskilling and upskilling staff so that the future-relevant and value-adding auditor can emerge in such spaces.

They highlight that in the public sector, the 'future-relevant and value adding auditor' is a critical thinker who is also digitally literate, resilient, and collaborative for public sector performance and ensuring ‘service delivery’ to society. A critical thinker will always have a questioning mind, a digitally literate auditor will always strive for continuous learning and development in digital solutions, while a resilient auditor will effectively embrace change and a collaborative auditor will function optimally in teams and adequately engage with other stakeholders.

The Pacific Association of Supreme Audit Institutions (PASAI) (2020), also identified competencies that may result from investing in your auditors (but not limited to):

• Capability to leverage new technologies

• Technology literacy

• Advanced data analytics capabilities (e.g., data extraction, performing data analytics)

• Capability to launch pilots to test and trial new tools and research methods

• Capability for technology assisted auditing

• Being able to audit more cost-effectively by utilising technology-assisted methods

• The ability to visualize and present information

• Capability for lifelong learning (PASAI, 2020)

Companies that do not use technology currently are still

living in the ‘dark ages’ which can compromise client data and audit quality tremendously. They need to embrace this era to stay competitive and deliver value to their stakeholders. It is understandable that the transition to technology is different for large-scale and small scale organisations. A technological adoption may be a huge and costly investment for small-scale organisations versus large-scale organisations.

Organisations must create an enabling environment for reskilling and upskilling staff so that the future-relevant and value-adding auditor can emerge in such spaces.

However, the benefits of digital solutions and a capable workforce are worth the investment. For example, companies such as Deloitte are investing in transformative audit and assurance technology that have improved the auditor's experience and relationships with clients, capital markets, and the broader ecosystem.

PwC envisions an audit future based on an innovative approach that combines digital knowledge and human ingenuity. The EY Digital Audit employs cutting-edge technology to deliver high-quality audits that benefit the public by increasing trust and confidence. All these companies recognise the importance of the human-machine interface in auditing.

Thus, the transformative agenda for 'future-relevant and value-adding auditors'. Auditors must be technologically savvy to continue serving businesses and performing high-quality audits.