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News from Members The prospects of digitizing the financial audit, the next frontier

The prospects of digitizing the financial audit, the next frontier

by PKF Finconta June 6, 2019

Author: Florentina Șușnea, Managing Partner, PKF Finconta

The advance of wireless technologies has enabled many devices to be connected to the internet. Mobile or not, smart or not, we see more and more devices that are wirelessly connected. The Internet of Things (IoT) allows interconnection of devices and gives users and manufacturers real-time data about the operating parameters. For example, a production machine equipped with sensors can be connected to a mobile device and remotely controlled.

If we translate these schematic principles of communication between devices into the field of accounting, we will see the potential of added value the technological progress carries in this direction.

IoT changes the way the information circulates

The Internet of Things (IoT) will change the way information flows, from resource planning and procurement, to billing, and all other basic functions in the accounting system. These changes will entail changing the way the audit control is performed. The reporting, monitoring and management of financial data and transactions will still be needed. But the practice of auditing will not be the same. The audit will be to a certain extent digital and in the future there will be no need for frequent interactions to obtain the necessary information from the client.

With the help of the Internet of Things, the auditor will have real-time access to transaction data and visibility to existing operations, thus enhancing the need for ongoing auditing processes. This technology will also allow for a wider and more comprehensive risk assessment, which will help speed up the evaluation and resolution of problems. It will also provide real-time management capabilities that will allow companies and auditors to respond immediately in case of problems.

Auditors' competencies are changing

Under these circumstances, the auditor's competences will not only focus on analyzing the financial statements but will approach the IT field, because in the future, professionals in both areas will form the audit team. This collaboration will result in a good informational flow, operational efficiency for the team and relevant consultancy for the correct setting of the IoT compatible client infrastructure. Both the auditor and the IT professional will specialize in data, the boundary between the two professions will be thinner, and their analytical skills will help increase business profitability.

IoT will allow real-time auditing

The pace with which IoT gains ground is important, even if it is a simple application of interconnected devices and systems. The audit and accounting industry is in sync with the main technological advances and deployments, such as cloud-based accounting solutions and services. But now the IoT changes the future of many professions.

IoT integration will allow accountants and auditors to help their customers through data connectivity. IoT along with the different accounting, payroll, human resources, inventory management processes will classify the data and ease the auditor's work to determine the right process of problem solving, revenue flow, and generate a high value for customers.

Bringing it all together

With real-time updates from IoT devices, analyzing vital and relevant information will provide companies with new ways to improve business planning and resource allocation, but will help streamline operational processes, minimize spending, and resolve problems faster. In auditing and accounting, the analysis of real-time data collected will allow accurate risk assessment, better identification of root causes and prevention of amplification of their negative impact. 

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About PKF Finconta

For more than 24 years, PKF Finconta is one of the 10 leading professional services companies in Romania. Since 2006, we are a member of PKF International Limited. PKF International is a leading international business advisory organization. The company grew consistently over the years, forming a Group of four companies: PKF Finconta, PKF FincontaConsultanta, PKF Finconta HR and Finconta Consulting SPRL, members of national professional organizations CECCAR, CAFR, CCFR, and UNPIR. We provide a wide range of business advisory and related specialist services. We have seven core areas of expertise and within these areas, we tailor our services to your business and your needs: audit, corporate finance, tax, bookkeeping and accounting advisory services, transfer pricing, payroll and personnel administration, and insolvency.

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