Changes brought about by digital audit

Nowadays, the rapid development of information technology has changed people's lives, but also the audit practice has an important impact. Digital Audit brings insights, depth and responsiveness to our audit work (EY, 2020). Digital audit is a change from the traditional manual audit, with the help of computer systems to process large amounts of data. With the continuous maturity of information technology, audit objects have been transformed from traditional account books to electronic data and information system, and various paper vouchers and invoices have been replaced by electronic vouchers. However, while digital audit provides convenience for people, it also brings certain audit risks. Combined with the risks of digital audit, this paper analyses the changes brought by digital audit industry.

1.1 Change of audit object

In digital audit, the traditional account book audit is transformed into data audit. The data can be either numerical or non-numerical. The data in numerical form mainly reflect the financial income and expenditure of enterprises and analyse the business data in the business activities of enterprises. Non-numerical data are mainly combined with reports and documents related to audit matters. Numerical data can provide audit clues and is an important basis for audit work. The non-numerical audit data mainly forms the audit thought and serves as the main supplement of the audit basis.

1.2 great changes have taken place in audit techniques and methods

In the audit work, many data analysis and processing technology began to be used. Under the background of digital audit, the basic electronic data was highly Shared. Auditors exported the electronic data of the audit unit and transformed it into the audit database to form the audit information system. Through the establishment of data analysis model, the data is analysed based on testing the information system. The process automation of audit robot can replace the repetitive and deterministic audit actions with clear definition and few exceptions to realize the saving of human cost and the focus of audit resources. Audit robot process automation technology can help auditors to carry out data collection, external data crawling, data comparison, system security parameter check, draft preparation and other transactional work.

1.3 further expansion of audit contents

The audit content mainly combines data audit and information system audit. With the expansion of information integration scope, various information systems begin to influence each other, and the audit content is further expanded. PwC lists eight emerging technologies that will affect the world, but more are on the way. The audit industry is in the era of technological change. The powerful and easy-to-use new technology makes it possible for enterprises to make leaps in productivity and market development while developing new products and services and exploring new markets.

2.1 Commercial Banks in the digital age

Driven by innovative technologies such as big data, blockchain, cloud computing and artificial intelligence, more and more commercial Banks are opening the door of digital transformation, and emerging fintech is gradually being applied to core banking businesses such as customer service, business acceptance, credit flow, operation management and risk decision-making. Digital transformation not only improves bank customer experience, optimizes bank operation efficiency and reduces bank operating costs, but also brings many challenges to bank risk control and internal audit.

2.2 Impact of digitization on internal audit

The development of science and technology forces the internal audit department to look at the risks brought by new technologies from the perspective of these and take appropriate control measures to reasonably manage these emerging risk points. The responsibility of the internal audit department should actively promote enterprise innovation. They must be able to quickly and comprehensively determine the full impact of technological advances, and around each firm's innovation theme, to fully grasp its impact on the firm's risk profile. More frequent cycles help internal audit functions contribute more flexibly and in real-time. (PwC, 2019) The internal audit department should be able to provide advice on how enterprises should explore and seek new technologies and propose suggestions on how to improve the level of scientific and technological innovation in their audit process.

2.3 Digitalization impacts financial services companies and their audits

Key technologies that financial services companies invest in include artificial intelligence (AI), blockchain, data analysis, the Internet of things and robotic process automation (RPA). In addition to these, a growing number of financial institutions are turning to the cloud to upgrade old systems, which is seen not only as a driver of efficiency but also as a driver of change. The benefits of cloud infrastructure for financial services include lower costs, better and more integrated security, improved scalability and flexibility - it is seen as a more efficient and cost-effective approach to big data and analytics. Automation is a particularly important component of digital transformation for financial services companies. Banking and insurance, in particular, are highly transaction-based industries that generate large amounts of data. Automatic processing of this data allows them to operate far more efficiently and make use of technologies, such as AI and data analytics, to retain and expand their customer base while managing their risks. (EY, 2020)

Conclusion

With the rapid development of information technology, network financial reports involve more complex content, so it is very important to improve the audit of electronic transactions. Auditors should not only master certain audit knowledge, but also have the ability of data analysis, learn computer network traffic courses, familiar with the operation of e-commerce. Enterprises can make full use of the help of external experts to train internal auditors and establish cooperative relations. The emergence of digital audit has changed the traditional way of audit and put forward higher requirements for the whole audit industry. With the cloud, Deloitte is seamlessly integrating its suite of digital products and solutions, connecting with clients in real-time globally, and expanding its ability to provide more value and deeper insights – to deliver a “Smarter Audit.” (Deloitte, 2017) As companies share data within the organization, data sharing is integral to the digital environment, leading to increased opportunity (for PwC) and responsibility to keep data secure and private within an ecosystem. (PWC, 2019)

Reference

Deloitte. (2017.10.26). Advancing The Digital Audit. Deloitte: https://www.forbes.com/sites/deloitte/2017/10/26/advancing-the-digital-audit/#13858be46d33

EY. (2020). EY Digital Audit: https://www.ey.com/en_gl/digital-audit

EY. (2020. 01.13). How digitalization impacts financial services companies and their audits.

https://www.ey.com/en_gl/assurance/how-digital-transformation-impacts-financial-services-companies-and-their-audits

PWC. (2019.06.24). Be bold and get moving: PwC on risk, digital transformation and embracing data. PWC: https://www.pwc.com/gx/en/news-room/analyst-citations/2019/tbr-risk-summit.html

PwC. (2019). Elevating internal audit’s role: The digitally fit function. https://www.pwc.com/us/2018internalauditstudy