How technology is changing the audit experience

For many businesses, the word “audit” still conjures up thoughts of long information requests, endless spreadsheets and weeks of disruption.

And while an audit will always require collaboration between your business and your auditor, advances in technology are helping to make the process faster, more focused and more insightful than ever before as Steven Burgess, Audit Partner explains.

Better technology. Better insight.

Few topics in audit generate as much excitement (and misunderstanding) as artificial intelligence. But while AI continues to grab the headlines, the most significant technological developments in auditing over recent years have arguably come from data analytics.

And it’s this combined approach of using both that’s leading to positive change.

Modern audit platforms now allow auditors to analyse entire populations of transactions in a way that would have been impractical using traditional sampling techniques alone.

Used appropriately, that means technology can assist with tasks such as identifying unusual transactions and highlighting anomalies and relationships that warrant further investigation – which in turn improves audit efficiency.

AI capabilities can assist with summarising lengthy documentation and helping auditors navigate large volumes of information.

And so, combined, these capabilities mean audit teams can devote more time to exercising professional scepticism, assessing risk and challenging management’s explanations where necessary.

So, what’s the downside?

AI is only as reliable as the data it is given and the way it is used.

Generative AI tools can produce inaccurate, incomplete or misleading outputs, so all AI-generated content must be critically assessed and corroborated with appropriate audit evidence.

AI can support audit procedures, but its outputs do not in themselves constitute sufficient appropriate audit evidence, nor can AI assume responsibility for the auditor’s opinion.

Why professional judgement still matters

Some of the modern platforms increasingly incorporate artificial intelligence and machine learning capabilities to assist with information gathering, summarisation and pattern recognition. However, these technologies support rather than replace the auditor’s professional judgement.

For example, an advanced data analytics tool may identify unusual journal entries, trends and relationships across large transaction populations in seconds, but determining whether those entries indicate fraud, error or legitimate business activity remains a matter of professional, human judgement.

Modern tools do not replace the need for professional scepticism, independent judgement and robust audit evidence. Regardless of the technology employed, the auditor remains responsible for the opinion expressed and for maintaining the trust placed in the profession.

What does this mean for your business?

You’ll still receive information requests. You’ll still need to answer questions. And you’ll still need evidence for your audit.

But technology allows us to focus requests more effectively, identify unusual transactions earlier and reduce unnecessary manual testing. Meaning as auditors we can spend more time understanding your business and providing deeper insight.

For your business, that can mean a more focused audit, fewer unnecessary queries and more valuable conversations about risk, controls and opportunities for improvement.

Auditing AI use

Perhaps the most significant change AI will bring to audit is not how we as auditors use the technology, but how we audit the organisations that do.

As businesses increasingly rely on AI to support financial reporting, transaction processing and operational decision-making, auditors need to understand the governance, controls and risks surrounding those systems.

The challenge extends beyond just using AI effectively, to also obtaining sufficient appropriate audit evidence over AI-enabled processes, systems, outputs and decisions.

And, as the use of AI raises important governance questions, businesses must understand where data is processed, ensure confidential client information is appropriately safeguarded and establish clear policies governing when and how AI tools may be used.

Because regulators are unlikely to accept efficiency gains if they come at the expense of audit quality or confidentiality.

The future of audit

Technology is changing how audits are delivered and will continue to do so in the future, but it isn’t changing what businesses need from their auditors.

Organisations still need independent judgement, practical insight and people who understand the risks facing their business.

The most effective audits combine modern technology with experienced professionals, helping businesses gain greater confidence in their financial reporting while making the audit process more efficient and less disruptive.

And the best audit firms don’t simply use technology because it’s available. They use it to improve audit quality, reduce disruption and allow experienced auditors to focus their expertise where it adds the greatest value.

We’re here to help

Whether you’re preparing for your next audit or simply want to understand how technology is changing the audit process, our experienced audit team can help.

To discuss your audit requirements or learn more about our approach, get in contact with Steven or one of the team by calling 0330 058 6559 or email us hello@scruttonbland.co.uk