Audit automation is the next big thing in the finance sector. While most of them have already automated the foundational level automation in terms of data integration, they are speedily moving towards the other end of the spectrum, towards the likes of cognitive intelligence. They are trying their best to make the most out of the opportunity to automate internal auditing. In other words, audit automation.
Before we go deep into the topic, let us first see what internal audit means. Internal auditing is a service provided by an independent party to evaluate an organization's internal controls, corporate practices, operations, and methods. It aids in ensuring compliance with the various laws that apply to a company. It seeks to check the effectiveness of the functions and conformity of the employees with the rules. Amongst the many departments that undergo an audit, finance is one.
In this article, we shall first understand the audit process followed by the impact of finance automation on internal auditors.
Steps for Internal Audits
The internal audit process can be broken down into the following steps:
- Identify the department that needs to undergo the audit
- Carry out an initial audit
- Check the department’s response to the audit
- Create the final report with recommendations
- Review of the final report by audit and finance committee
- Follow up after a stipulated time (6-12 months)
While internal audits make the organization’s procedure dependant and improve productivity, manual internal audits can often be costly and questionable in terms of validity of the professional lack of the required aptitude and skills. Since internal audit plays a vital role in the functioning, the loopholes in the process can be covered by integrating RPA in the auditing process, making it easier for internal auditors to do their jobs.
Benefits of Finance Automation for Internal Auditors
1 . Cross-functional Operations
Finance automation allows all the data to be stored on the cloud, making it accessible to all the other departments at all times. Since all departments rely on each other to function smoothly and efficiently, the effectiveness of one affects the other. The auditing process needs to be comprehensive. It means that the auditor needs to take all the factors into consideration before creating the final report. Finance automation streamlines all the finance processes and gives the auditors an overview. Furthermore, with the integration of robotic process automation in auditing, the auditors' job becomes far easier.
2 . Expand Risk Coverage
Businesses run on capital and well-planned risks. To be able to assess risk, you need all your in one single place. Furthermore, you need several reports that study and recognize the patterns as to how the organization receives its payments, clears the dues, reimbursements, salary dues, and cash flow. In short, to carry out the auditing process, the internal auditor will need a brief overview and the intricate details of the finance departments and their operations. Finance automation makes all of this possible in real-time and the integration of rpa in auditing makes the process of risk assessment possible within the stipulated time frame for the internal auditor, empowering them to expand their risk coverage.
3 . Error-free Data
Finance is not one single department but rather a combination of several. Each process is carried out, maintained, and recorded by a sub-department under the umbrella of finance. It comes as no surprise that humans are prone to making mistakes. One single error can change the outcome of the audit report. A prerequisite of the auditing process is error-free, consistent, accurate, and reliable information. Your most experienced can make a mistake on their bad day, and this is where finance automation comes into the picture. It commits nearly zero error without compromising on speed and time.
Now, imagine the combination of finance automation with robotic process automation in the audit. The internal auditor is required to draw all the necessary data from several sources without missing out on any. To do this manually is not only difficult but time-consuming as well. But fret not because the integration of rpa in audit has made this easier. It combines all the information for the auditor from all the necessary sources and transforms it into a standardized form that is ready to use.
4 . Visibility of Business Insights
Internal auditors help businesses effectively address their compliance issues. In order to do this, they need continuous business insights. Now, to draw these business insights that explain the why and how on a more regular basis accurately and speedily by an employee is nearly impossible. It demands constant attention, evaluation, and tracking changes. Additionally, it will require organizations to deploy more talent to meet the challenges. An automated finance process combined with artificial intelligence and machine learning can streamline and consolidate this data on a centralized portal. The RPA integrated systems can further audit this and enable the internal auditor to do more by doing less. The auditor can effectively work on plans to overcome the compliance burden and guide the organization.
Finance automation has already changed the face of finance and its operations. It has not only made the job of a finance professional easy but has impacted other roles as well, including that of an auditor. An audit can be a tricky process and internal auditors can always refer to the manual on internal audit to identify the outline and scope of the audit function. It is also a time-consuming and tiring process. If the auditor spends too much time collecting data, ensuring that it is accurate and covers every important aspect, how will they fulfill other valuable responsibilities?
Auditors are responsible for consultancy and assurance services like strategies and roadmaps, policy adoption, budget management, risk identification, controls, performance monitoring, and a hundred more valuable functions. Audit automation allows internal auditors to monitor and manage known and possible risks. As a result, it enables them to devise effective coping strategies and continuously improve on the same. In short, audit automation allows internal auditors to do more by doing less.
FAQ’s (Frequently Asked Questions)
- How can automation help auditors?
Automation can execute audit tasks at a rapid pace around the clock. Internal Audit automation can result in significant cost savings by reducing time-consuming manual activities for auditors, enabling them to do their jobs faster and better.
- Can internal audit be automated?
It is, indeed. It is possible to automate processes of internal audit by integrating RPA and gain efficiencies by automating audit procedures so that the system can perform repetitive, tiring tasks.
- What is the role of automation in the future of audit?
The future of audit automation appears bright. It is beginning to play an important role by providing high-tech and forward-thinking tools to understand ledgers, reporting risk profiles for customers, and identifying potential fraudulent activities.
- What are the challenges faced by internal auditors?
A few challenges faced by internal auditors are faulty data records, having no access to some data, lack of resources to tackle issues, shortage of well-qualified staff, and difference in time between accounting and auditing.