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News from Members The digitally transformed audit function

The digitally transformed audit function

by PKF Finconta November 3, 2020

Author: Florentina Șușnea, Managing Partner, PKF Finconta

Communication as the exchange of messages and information between people is being reformulated. People no longer only connect between each other, but also with various types of smart devices. At the limit we could say that the latter connection sometimes seems stronger than the one with people. Platforms, software that facilitates collaboration, applications or portals give access to information according to preferences.

It is a challenge for companies to keep up with this rapid pace of change, but for the auditing function it is an opportunity to increase transparency, improve risk assessment, automate manual processes and, ultimately, improve audit quality.

Companies can benefit from a digitally transformed audit by taking the following steps:

  1. Gathering more in-depth accounting data that can be monitored through fraud prevention controls and improve their financial reporting processes. The complete analysis of the accounting register is not only useful for identifying patterns and deviations, but also for highlighting the processes that staff go through when recording financial transactions.
  2. Extending the purpose of using data in digital format to be included in the digital audit. Contracts, guarantees and provisions data for future events, bringing this digital information into the scope of audit applications helps to improve processes quality, and provides an improved basis on which auditors can carry out their analyses.
  3. Transferring information from the financial teams to the audit team. When information is shared securely and efficiently through a fully digital audit platform, the audit process will run more smoothly and the quality of the audit will be improved. The company's financial team will also avoid duplication of effort and save time in supporting the audit, as different people will not be required to provide the same information.
  4. Providing auditors with an increased volume of data. Because auditors can now use analytical tools to test entire data sets, in addition to relying on sampling techniques used in the past, they can use this abundance of information to identify significant or unusual patterns or trends, as well as opportunities and risks.

The challenges for implementing a digital audit are:

  • Lack of trust – Some organizations may be reluctant to share information with their auditors through an online platform. This may be due to a lack of familiarity with the audit platform, concerns about how the information will be used, or concerns about data security.
  • Inadequate data security – Greater connectivity in auditing can expose companies to data protection and security regulation issues. Companies should be careful about the data they share with their auditors and ensure that this data is processed and stored properly.
  • Outdated systems – Outdated IT systems can prevent a company from taking full advantage of a digitally connected audit. Some data relevant to the audit process may not be available in a structured format. It may still exist only in paper form and be stored in different locations.

Faster and more secure information collection is not only more convenient for companies to manage their operations, but it also facilitates the creation of an information-rich environment that provides in-depth knowledge relevant to the audit process.

Dynamic companies, those that mark increases in turnover and market share, want their auditor to use technology in performing the audit assignments. Such an approach saves time and effort, it gives additional quality to all deliverable, helps store relevant data, provides accurate updates of the progress of the audit process and allows the exchange of information. These are all the benefits of a digitally transformed audit function.

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