Audit data analytics: An optimistic outlook
In the second of a series of three articles on the use of audit data analytics (ADA), I summarise five opportunities that might emerge for the audit profession.
1. Audit as an attractive career option
Although previously noted as a challenge, increased automation in the audit process might see some of the more routine and repetitive tasks and processes being performed mechanically.
This could free up some of the auditor’s time to focus on more complex and risky areas of the audit meaning that the auditor will need to rely on their professional judgement and professional scepticism when considering these more complex areas. This in turn might increase the perceived value of the audit process and enhance the attractiveness of audit as a career option.
2. Development of outcomes-based standards
The developments in technology might render the current auditing standards out of date and highlight the need for an alternative approach to the standard-setting process. There might be a case for a move towards more outcome/objective-based auditing standards to ensure that the standards remain relevant and flexible and do not lag behind technological developments and changes in the business environment.
3. Value is added to the audit
ADA might present an opportunity for more valuable and informed engagement and dialogue with those charged with governance (TCWG) of entities where the auditors have applied ADA techniques.
One of the key features in many of the standard ADA tools is that they employ data visualisation techniques which provide greater insight into the data being analysed by placing it in a visual context. Thus, the analysis may make use of graphs, plots, information graphics etc which can help to make the communication of key messages much easier.
The use of such visuals help enable patterns, trends, correlations and anomalies to be identified earlier and more easily. Additionally, as well as helping the auditor execute the ADA, visualisation techniques may also be useful in communicating insights arising from the ADA work to the audit committee and TCWG.
4. The chance for auditors to acquire new skills
The training and skillset required by auditors to effectively incorporate the use of data analysis techniques within the audit process is an area which will also need to be considered.
Audit teams of the future might also need to be composed of individuals from more diverse backgrounds with a broader range of skills and experience creating greater diversity within audit teams and providing opportunities for auditors to acquire new skills.
5. New types of engagements might be required
The new technology may provide opportunities for the profession to offer new assurance services to their clients, for example, over some of the qualitative and non-financial information that companies produce, such as sustainability reports.
This article looked at five opportunities arising from the use of ADA. The first article in this series considered five challenges that the use of ADA might present for auditors. While the third and final article in our series will consider how the audit regulators and standard setters have responded to the increased application of data analysis technology in the audit process.