How have data-aggregation and technological tools impacted company audits?
The rapid pace of technological change and disruptive technologies— such as robotic process automation, industrial internet of things (IIOT), artificial intelligence (AI), blockchain and others—will continue to push audit firms to think about how to utilize technology to produce a higher- quality audit.
In the meantime, we see technology being utilized by our clients to assist with real-time inventory reporting and job profitability monitoring, to name just two, which is providing audit teams with better data to analyze. In addition, with the use of IIOT, companies are monitoring inventory production and key performance indicators, which can reduce profit leakage, lost capacity and machine downtime, and provide other benefits. As a result, we can bring ideas to our clients and act as a trusted adviser.
Let’s not forget about the use of drones in inventory observation. Ever try to count cows roaming on a dairy farm? Or large equipment on a five-acre rental yard? Audit firms can use drones to assist with observation to cover more samples and a larger space. At times, drones can achieve a more accurate reading by scanning bar codes and comparing them with inventory records in real time.
How will AI transform the audit?
By utilizing AI in audits, audit teams will be able to analyze full populations of data, identify outliers or exceptions within populations, and provide better information for predictive analytics. By using machine learning (a form of AI), for example, audit teams will be able to analyze larger populations of contracts— such as leases or revenue—in a shorter time frame and with more accurate results. Audit teams will then be able to focus their time on the outliers of the population. Ultimately, the evolution of AI will lead to a higher-quality audit.
What is technology’s biggest benefit for audit teams?
Title: Partner, Private Equity Services
Company: Wipfli LLP
Expertise: With extensive experience in purchase accounting and leveraged recapitalizations, Owens focuses on annual financial statement audits and reviews for private equity-owned and closely held businesses. Wipfli is a top 20 CPA firm focused on middle-market growth, compliance and deal flow.
Besides the obvious benefit of being able to work on engagements from anywhere in the world, the days of lugging heavy paper files to and from clients are long gone. Advancements in technology have truly helped with speed and knowledge transfer from the deal team to the audit team.
The sharing of real-time data and conversations among audit, legal and insurance departments, and internal management and investors has been the biggest eye-opener. Teams now have the data and tools to deliver answers instantly.
This article originally appeared in the September/October 2019 issue of Middle Market Growth. Find it in the MMG archive.