Innovating the audit
We continue to innovate and leverage technology to deliver high-quality audits. We have significantly expanded our use of data analytics and technologies such as robotic process automation to help us audit more effectively. To drive improvements in audit quality, we’re also taking fresh approaches to how we execute audits by enhancing the process our teams use to perform their risk assessments and simplifying our audit approach.
Our suite of data analytics
We are embedding our EY Helix suite of data analytical tools in our audit process to analyze larger volumes of data and deepen our understanding of the companies we audit. By analyzing a complete population of transactions, our professionals can better identify and evaluate items that may not have been assessed using the traditional approach of selecting a sample of transactions. Our data analytic tools are built for use in our audits, regardless of size.
In addition to the analytic tools listed in the graphic below, we are developing sector-specific tools for audits of automotive companies, consumer products companies and insurers.
Our analyzers accommodate a range of data types
An example of how we are using data analytics:
We are now able to use an analytic tool to analyze the correlation between revenue journal entries and cash collections. For a company in the retail industry, this means we can now analyze that correlation for all of the retail locations in the scope of the audit. This analysis provides additional evidence about the existence of revenue. Analyzing larger populations of data presents a fuller picture of the business activities than using a traditional sampling approach.
Our global audit tool
All US audit teams on public company audits use EY Canvas to apply our audit methodology, better identify and respond to risk, manage their day-to-day audit work and customize their audit approach. EY Canvas enables our auditors to monitor the progress of their audits in real time. Because it is a global tool, EY Canvas allows US teams on multinational audits to better coordinate and supervise the work of auditors overseas.
EY Canvas also allows us to communicate with the companies we audit and more easily track our requests for more information and the responses we receive.
Other audit technology
We are testing the use of robotic process automation to perform repetitive tasks such as sending out and tracking confirmations of accounts receivable, investment accounts and other balances. We are exploring the use of specially equipped drones to improve the accuracy and frequency of inventory counts. And we are exploring the use of machine learning (i.e., enabling computers to act without being explicitly programmed) to help us identify certain key terms in contracts such as leases so we can group contracts by characteristics and analyze them more effectively.
We are also developing capabilities to allow our professionals to audit blockchain systems, which use distributed ledger technology to process transactions and store them in secure, sequential blocks.
“We want to take the robot out of the human, extending how powerful our people can be. We have made our people more efficient and more effective simultaneously through innovation and leveraging technology to deliver high-quality audits. We’ve also allowed them the space to ask and answer better questions.”
Global Chief Innovation Officer
Enhancing our audit approach
Through our root cause process, we continue to identify the factors that lead to best-in-class audits as well as those that contribute to audit deficiencies. We are leveraging that information to drive further improvements in audit quality across our practice.
For example, to monitor timely executive involvement, a key element in a quality audit, we are using statistical benchmarks to identify in-process audits with lower levels of executive involvement and determine whether any additional actions are required.
We’ve also developed a new approach for our teams to use to gain an understanding of and document the flow of data in key business processes and the related internal controls over financial reporting. By simplifying the process we use to perform these procedures, we’re promoting greater team collaboration and more effective risk assessments.
“At EY, we are committed to continuous improvement. Whether through innovating the audit by leveraging technology or taking fresh approaches to how we assess audit risks, we are always looking for ways to improve audit quality and deliver the highest-quality audits. Investors deserve nothing less.”
Vice Chair of Professional Practice