Where are we today and what does tomorrow have in store?
Change is now a constant in our world. It’s here – and the pace of change is becoming increasingly faster. For auditors, there are all sorts of challenges right now, and in the short, medium and long term. Are you aware of what some of those challenges are and how new technologies might be able to assist?
Professions are changing
In Richard and Daniel Susskind’s book “The Future of the Professions” they examine how technology will transform the work of human experts1. An interesting read, and a good summary of the way most media and commentators are highlighting that fundamental shifts in the way we work, and how many of us will do meaningful work in the future.
Auditors are not immune to the way technology will transform their work. The decreasing cost of technology combined with the increasing cleverness of software applications and the accessibility of large swathes of data dictates that the transformation will likely manifest very soon. In the foreseeable future, auditors will move towards testing 100% of the data – in some cases, this may add up to multi-millions of transactions.
Examples of how technology is impacting other industries abound. Here are two examples of the evolution of IBM’s “Watson”:
The big shifts predicted here will likely also be in the foreseeable future for auditors and other financial professionals.
The sheer volume of data now available, combined with cheaper computing and processing power will drive changes to our working lives as we currently know them.
Just think about everything you know that generates data. Now include all the usual social media sites (FaceBook, LinkedIN, YouTube, Snapchat, Twitter), data from connected machines which includes the IoT (Internet of Things)… The pace of data growth is exponential.
Traditionally, audit has focused on financial transactional data, but now has access to emails, e-chat, social media, as well as access to data from third parties including stockbrokers, insurance brokers, banks, real estate valuations, actuarial certificates… and so on. With hindsight, it is speculated that the Enron disaster could have been prevented with better access to non-financial data, like the Enron emails that have now been made public.
An auditor needs to wade through all available data and decide what is important – then, Data for how to deal with it.
The above quote from Google’s Eric Schmidt applies to all businesses in our increasingly global economy. Again, the audit profession will also be impacted by these disrupters – big data and machine intelligence.
Big data is here – we’re just looking at the best way to investigate and slice and dice it. A massive amount of investment and work is also concurrently occurring on “Machine Intelligence” – throughout almost every industry. Machine intelligence will take on big data – it will “read” huge volumes of data very, very quickly and “learn” from it. People will be able to ask plain english questions and get answers instantaneously. Machines then learn from the questions and the answers get better… and better. Think of the way that Google has developed from a simple search engine to what it has become. That’s the future for big data combined with machine (“artificial”) intelligence.
The Big 4 – What are they doing?
The Big 4 are investing in technologies to exploit Big Data and Machine Intelligence. Lots of published material attests to the fact that they are spending huge amounts on research and technology and employing some of the finest minds in the fields of data and machine/artificial intelligence.
Future Changes – The Future of Audit
Will the traditional audit disappear in the future? This is almost without doubt. Most of the work of a traditional audit will be automated, and in fact, most likely improved with access to big data and ability for machines to systematically and without bias, test and interpret results.
Yes, there are lots of changes on the way, with debate about how soon some of the big disruptors will arrive, but have no doubt that they will be here and the impact on the traditional audit and the auditing profession will be profound.
Craig Waldon | CEO | CaseWare Australia and New Zealand
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