What does the EY Digital Audit change for auditors and for CFOs?

Advanced audit analytics have not only become indispensable to a high-quality audit, they also bring more added value to the CFO.

We are truly living in a transformative age. The world has seen massive digitization in the last couple of decades, and today more than ever, a wide variety of technologies and applications are literally at our fingertips. Companies too are adapting at an unprecedented pace to meet new demands and changing expectations. New technologies have created a data-rich environment providing an opportunity for the audit profession to undergo a rapid transformation, leveraging to an increasing extent from this growing amount of data.

Advanced data analytics & the EY Digital Audit

The untapped potential of data generated by new technologies drives the need for the continuous digitalization of the audit. At EY, we have invested heavily in the EY Digital Audit through which we are increasingly centralizing, standardizing and automating our audit process. In fact, the EY Digital Audit is our only remaining audit methodology. The EY Digital Audit also means: better connecting our teams with each other and with the finance teams of our clients, and going full gear with advanced audit analytics.

Automation and Artificial Intelligence

Audits require a constant gathering of substantive evidence. Therefore, we are continuously looking for ways to make the lives of our auditors more simple and at the same time more efficient. For example, by automating the remaining repetitive tasks using RPA (Robotic Process Automation). “Smart Confirmations”, for instance, is the automatic sending and coding (or QR coding) of client and bank confirmations. This replaces the traditional folding of confirmation letters. And there is many more to come. Step by step, the potential of real-time auditing is revealed. The PSD2 regulation also allows auditors access to bank account records so that they will no longer need to check individual bank statements, because every cash movement is automatically scanned and connected to an accounting transaction. Finally, artificial intelligence is increasingly used to read contracts and find patterns in data, and it sets the scene for predictive analytics in the near future.

The changing role of the CFO

An audit based on data analytics techniques does require a different effort from a company’s CFO. Firstly, the CFO needs to be able to provide the auditors with more and better financial and operational data. Secondly, CFO’s need to gain a broader knowledge of the general ledger to enhance their own reporting processes. Thirdly, they need to increase the availability of different types of data in a digital format. And lastly, finance and IT teams should be encouraged to share information and system access with the audit team.

Better responding to a CFO’s needs

At the same time, the EY Digital Audit creates a higher added value because of the digital customer experience. The data provide our clients with new and more valuable insights: they simply show where the internal control environment needs adjustments in order to become more effective, but also where and how processes can be simplified. The EY Digital Audit also offers our clients the advantage of having to spend less time on delivering audit information, thereby reducing the total cost of ownership. Finally, we believe that the EY Digital Audit can help our clients to make better use of their investments in processes and IT systems.

The advantages of the digital audit summarized

• Our clients spend less time on delivering audit information, thereby reducing the total cost of ownership
• Our clients can make better use of their investments in processes and IT systems
• No more random sampling and no more extrapolation, but a targeted control of all transactions and an identification of all exceptions
• New and valuable insights from the analysis of an entire population of transactions
• Automation of repetitive tasks frees up time for the auditor to focus on those areas that carry the higher risk
• It offers a more efficient and controlled risk analysis, providing better audit quality

This does not mean that audit services are or will be led by robots. The professional judgment, experience and sector knowledge of the auditor remains essential, and these are the exact elements that fuel a smooth integration of advanced technology in those areas where technology can make the biggest difference. Instead of replacing the role of the auditor, digitalization changes and strengthens it. The data are providing audit professionals with more reliable and detailed insights so that they can more effectively apply their professional skills resulting in more added value and higher quality audits.