3 minute read 21 Feb 2020
How does Digital Audit raise the bar in the audit industry?

How does Digital Audit raise the bar in the audit industry?

Authors

Paul Eelen

EY Belgium Assurance Markets Leader and EY WEM Market Segment Leader AM&M

Passionate about entrepreneurship, growth and how companies innovate and adapt in disrupting times. Father of 3 sons. Interested in golf and classic cars.

Filip Simpelaere

EY Belgium Assurance Digital Leader

Enthusiastic about digital transformation in audit and in business in general. Passionate about football, craft beers and literature. Proud father of a son and a daughter.

3 minute read 21 Feb 2020

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Digital audit is raising the bar in the audit industry, with greater emphasis on risk identification and business insight.

Auditors increasingly use data analytics and other digital solutions to reinforce and even replace traditional auditing methods. At EY, every audit involves data analytics. In fact, Digital Audit is becoming our only methodology. The result: more precise risk analysis, improved insights and thus higher quality.

As companies’ digitization generates more and more data, the role of the audit professional is required to evolve. This growing volume of information needs to be used effectively to deliver high-quality audits and allow auditors to put greater emphasis on risk identification and business insight. The sheer volume and untapped potential of data generated by new technologies drives the need for the ongoing digitization of the audit.

Connected data-driven audit

For EY, a connected data-driven audit is the only way to proceed and we see it is raising the bar already in the audit industry. Like with the 20th century special effects in the movie Jaws that do not hold up to today’s standards, so too are traditional auditing methods falling out of use quickly and surely. Clients now expect state-of-the-art audit solutions.

EY invested significantly in a digital audit by centralizing, standardizing and automating procedures. Empowered by our EY Canvas platform, every EY auditor in the world now uses the same analytics solutions and is intensively trained to interpret the outcome of these analyses.

The EY Digital Audit is a worldwide audit methodology embedded in the International Standards of Auditing (ISA). The worldwide connectivity enhances transparency and a smooth communication. For example, whenever we observe a particular risk for a client, we modify our auditing strategy and procedures, if necessary, and immediately forward these changes to all local teams.
 

Thanks to the EY digital audit clients enjoy a reduction in total cost of ownership. 

Deeper insights

Imagine you could scan every shipping container at the harbor instead of randomly selecting a sample. The quality of your risk analysis increases significantly. A digital audit functions in a similar way: you analyze all the data at once. Hence, we are able to delve down to the level of individual transactions line by line, analyzing them in the context of the whole, supporting a deeper understanding.

This allows for a more efficient and controlled risk observation and a focus on trends and patterns of activity that would not have been visible with a statistical sampling approach. It helps our auditors aim for the areas of greater risk and interest. At the same time, clients enjoy a reduction in total cost of ownership; they need to spend less time in supplying and researching numbers thanks to automation and standardization. The new way of auditing creates value through digital customer experience.

How to make the most of the EY Digital Audit?

We believe digital audits may leverage clients’ investments in processes and systems. To fully benefit, clients must make efforts to provide auditors with more financial and operational data, gain a deeper knowledge of the general ledger to improve reporting processes, broaden the type of data that is available in digital format, and encourage the company’s finance and IT teams to share information and systems access with the audit team. CFOs, Chief Technology Officers (CTO) and boards of directors are key players in this. Clients can be virtually certain the detailed information they provide is safeguarded at all times. Data security and integrity have the highest priority at EY.

Imagine you could scan every shipping container at the harbor instead of randomly selecting a sample. The quality of your risk analysis increases significantly. The EY digital audit functions in a similar way.

What is next?

Digital audit is abolishing repetitive tasks and allows us to better understand our clients. The future brings many more possibilities. Step by step, the potential of real-time auditing is revealed. The PSD2 regulations can grant auditors access to banking information. They no longer need to check bank statements because every cash movement is automatically scanned and linked to a transaction in the accounts. AI are used to read contracts and find patterns in data. The next step would be predictive analysis.

However, audit is certainly not becoming a machine-led industry. An auditor’s judgement, experience and sector knowledge remain essential and it is the auditor’s deep understanding of the audit process that allows technology to be seamlessly integrated into the areas where it will make the greatest impact. Instead of replacing the role of the auditor, automation is enhancing it, equipping audit professionals with more reliable and detailed insight from which to apply their professional skepticism, add value and provide high-quality audits.

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Summary

Digital audit allows auditors to put greater emphasis on risk identification and business insight. It is raising the bar in the audit industry. However, audit is certainly not becoming a machine-led industry. An auditor’s judgement, experience and sector knowledge remain essential. In fact, automation is enhancing the role of the auditor, equipping audit professionals with more reliable and detailed insight from which to apply their professional skepticism, add value and provide high-quality audits.

About this article

Authors

Paul Eelen

EY Belgium Assurance Markets Leader and EY WEM Market Segment Leader AM&M

Passionate about entrepreneurship, growth and how companies innovate and adapt in disrupting times. Father of 3 sons. Interested in golf and classic cars.

Filip Simpelaere

EY Belgium Assurance Digital Leader

Enthusiastic about digital transformation in audit and in business in general. Passionate about football, craft beers and literature. Proud father of a son and a daughter.