After revolutionizing tax and accounting over the course of decades, technology finally looks poised to reshape the third major service of the traditional accounting practice: the audit. Machine learning, data analytics, ever-more-powerful and mobile computers, and new tools like blockchain will do more than just change the way auditors do their job -- increasingly, they'll change what that job is. To get a glimpse of what the audit (and auditor) of the future will look like, Accounting Today convened a virtual roundtable of experts in the field. Sharing their thoughts on the future of auditing here are: Mark Baer, managing partner of the audit services group at Top 10 Firm Crowe Horwath; Frank Casal, vice chair of audit at Big Four firm KPMG; Cindy Fornelli, the executive director of the Center for Audit Quality; Joel Shamon, the national audit leader at Top Five Firm RSM US; and Jimmy Thompson, an audit partner at Texas-based MaloneBailey. Which trends -- whether technological, regulatory, economic or otherwise -- should auditors be paying the most attention to over the next five years? Casal: Audit professionals' work is fundamentally about "trust."
This article introduces deep learning technology--an emerging form of artificial intelligence that can be trained to recognize patterns in vast volumes of data that would be impossible for humans to process. This still evolving technology represents a way to utilize big data to create supplementary audit evidence that improves the effectiveness and efficiency of audit automation and decision making. The authors also discuss the application of these techniques to audit procedures. In the current business environment, the development of data-intensive technologies (e.g., ERP systems, sensors, cloud storage, remote communication tools) facilitates the production and maintenance of large amounts of data, which necessitates a new data environment and serves as a motivator for audit automation. Leading accounting firms have leveraged deep learning, a cutting-edge use of artificial intelligence, to conduct audit tasks.
I have worked for a couple of decades with professional services firms that perform financial audits, but I have never done one--nor have I ever wanted to do one, to be honest. I'm not good with work that involves structured processes, details, and rigorous checking, and audits always seemed heavily infused with those kinds of tasks. Now, however, I am becoming quite interested in audits for two reasons. First, they are beginning to employ substantial amounts of analytics. Secondly, there is increasing talk about employing cognitive technologies to help with audits.
Deloitte's award-winning artificial intelligence platform continues to innovate financial statement audits by using advanced machine learning and natural language processing to extract key information from large volumes of audit evidence. FEI Daily spoke with Will Bible, an audit partner at Deloitte & Touche LLP, on innovating financial statement audits with artificial intelligence and how it will impact the world of finance, accounting and auditing. Will is presenting at this year's Current Financial Reporting Issues Conference, November 14-15, 2016 in New York City on the topic. Will Bible: To achieve automation and ubiquitous data analytics, you need data standardization. There's been a lot of progress on digitizing information, and automating processes around that digitized information.
Audit sampling is selecting a group of items such as invoices for investigation to draw inferences about an account balance. Ratio analysis involves comparisons between two financial statement accounts such as current ratios and gross profit percentage. Reasonable tests involve using financial and nonfinancial data to estimate an account balance. An example would be multiplying items sold by price to determine expected revenue. However, there are audit engagement risks with current auditing techniques.