These Four Steps Can Close Today’s Audit Technology Gap

Closing the Audit Technology Gap in Four Simple Steps

 

Audit Technology Gap

Audit Technology Gap

 

Gone are the days when the internal auditor’s role in an organization was narrowly defined as one that involved monitoring, assessing and analyzing various organizational risks and controls. Internal audit has morphed into a new outfit that plays a more demanding role. Internal auditing professionals are being relied upon more heavily than ever by organizations to help them manage changes, identify risks as they emerge, and stay on top of things. Many audit leaders are trying to move into leadership positions where they can impact the organization’s roadmap in a more tangible way, but are finding themselves held back by a technology performance gap. Here’s how to bridge that gap.

 

Survey Results

Survey Results

The State of Internal Audit

PricewaterhouseCoopers released its 2014 State of the Internal Audit report that showed, among other things, only 40% of chief executives felt that internal auditors were leveraging technology in a meaningful way to help the organization better achieve its objectives. Senior management took an even more unflattering view, with only 35% of respondents saying that internal auditors had incorporated technology effectively into the workplace. Many audit teams are still relying on outdated technologies and processes that tend to limit their ability to function at an optimal level so as to deliver greater value and valuable insights to the organizations.

The fact that technology is playing an increasingly important role in almost all facets of business cannot be argued. For instance, organizations are using novel technologies like Big Data to analyze massive swathes of customer data and incorporate those results into their marketing strategies, while cloud technologies are changing the way organizations run their core enterprise resource planning functions. So, in which ways can an audit team learn from what other businesses have done and incorporate the lessons into its own plan to help close the technology performance gap?

Data Crunching

Data Crunching

Before delving deeper into the ways and means that technology can change the internal audit, let’s first start by having a peek at the current state of technology usage by internal auditors. In the vast majority of cases, the use of technology in an internal audit is limited to the traditional processes of audit management and basic working paper documentation.

Around 57% of internal audit departments still rely on mainstream electronic work documentation using a combination of the ubiquitous Word and Excel programs by Microsoft, as well as email and operating system folders that are used for the managing, storing and sharing of files. These highly fragmented systems make it difficult for the internal auditors to work seamlessly and reap maximum benefits from technology. More importantly, internal auditors are not benefiting from the various ways that technology can help streamline the quality and overall efficiency of the audit process, particularly regarding the aspect of focusing on key risk indicators and controls.

Prepared

Prepared

Analyzing the Technology Readiness of Your Audit Team

A quick analysis of how your own internal audit department is leveraging technology can provide you with valuable insights regarding the extent to which your audit team may be suffering due to failure to use technology effectively. Here are some questions you need to ask yourself as you try to gauge how your audit team stacks up as far as technology uptake is concerned:

-    Is your team capable of updating and sharing information seamlessly from any location at any time?
–    Are your day-to-day pieces of the audit process and general workflow scattered over multiple shared drives, email, spreadsheets and other isolated technologies?
–    Do you have systems to completely validate all the data you analyze during the course of your work, and just how reliable is the integrity of your analytic tests?
–    Are you confident that your use of technology readily demonstrates to your audit committee and C-suite that you deserve a seat at the table?

The Starting Line

The Starting Line

Getting Started

If your audit team cannot answer all these questions in the affirmative, then it’s time for you to act. Admittedly, a complete transformation is unlikely to happen overnight. Nevertheless, here are some useful steps to get you started:

1. Start with Leadership: Change can only be effective when it starts from the top. Technology can only become a critical component of the internal audit if top management acknowledges the fact that this is an important step. The audit leaders need to openly and unequivocally declare that technology is important for internal audits.

2. Look Ahead: Try and make an assessment of what is really important for the audit team and how you expect to operate one year and three years from now. Technology is rapidly changing in the areas of mobile computing, Big Data and cloud-based technologies, such as software-as-a-service (SaaS). Internal audits can take advantage of the transformative shifts being presented by these technologies.

3. Take a Holistic Approach: Ideally, the software technology you use in your internal audit department should support all your key components and processes in a seamless, consistent, yet intuitive way. The software should not have a steep learning curve since this would create a barrier to quick implementation. Additionally, it should be affordable for the organization.

4. Integrate Data Analysis/Automated Testing: Data analysis has traditionally been treated as an ‘‘add-on’’ to the audit process; however, this should no longer be the case. Modern audit management software helps to fully integrate the internal audit process right from initial risk analysis and audit planning to continuous auditing, detailed control testing, exceptional management and quantified reports.

The Bottom Line

The Bottom Line

The Bottom Line

Internal auditing has a great opportunity to enhance its value to the organization. By harnessing the cutting edge technologies that help build value, advance relevance and promote executive alignment, the audit team can realize its full potential and earn itself a well-deserved seat at the executive and management table.

Hopefully, this article got you thinking about streamlining your tax business. Audit technology is critical to your sustained growth, and this tax season, so is time efficiency. Like most tax pros, you probably have business clients with employees and sub-contractors working with them.

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