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Increasing the role of robotic process automation in external audit will improve overall efficiencies

By Taher Singaporewala and Madan Mohan

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Published: Wed 24 Nov 2021, 5:05 PM

The technology landscape has evolved rapidly in the past decade, and auditors must keep up with the changes to enhance the effectiveness and efficiency of external auditing practice. While there have been many advances in the audit field, numerous simple, repetitive, and manual tasks still take up a disproportionate share of auditors’ time. The transformation has just begun, and drastic changes are needed to move forward.

A key technology that auditors can use is robotic process automation (RPA). Robotic process automation is the use of software and machine learning to perform various simple manual tasks without human interaction. It is used to automate tasks that are structured, rule-based and repetitive. With RPA, software users create software robots, or “bots” that can learn, mimic, and then execute rules-based business processes. RPA uses these robots as a virtual workforce, and they can even be assigned IDs and logins, and can interact with systems and applications in the same way as humans. They are able to perform predefined tasks such as preparing invoices, inventory management, payroll functions, sending email alerts and reminders.

There are many repetitive and time-consuming tasks in external audit which can be automated to enhance the value of an auditor’s time. These include collecting and compiling of basic audit information, extraction of data from source documents, audit data standardisation, audit confirmations, execution of automated audit tests, reconciling financial information and procedure.

By automating these repetitive, high-volume tasks, auditors can focus on the things they do best, enjoy more and add more value with: strategising, innovating, collaborating, and creating. Enterprises also benefit through greater productivity, improved client service, and more. Further, by giving auditors more time to conduct complex testing on accounting anomalies, the effectiveness of an audit improves drastically.

That said, the fundamentals of an audit in terms of the need for human judgment and professional scepticism has and will remain unchanged. RPA is most effective when used to create efficient processes that allow human resources to be deployed to higher-value activities. RPA should assist and improve human work rather than hinder it or make its execution more complicated. An auditor should therefore, consider the risks to the business, including governance and legal, when implementing RPA. The real-world benefit of new technologies is that they enable us to obtain corroborating evidence more easily, quickly, accurately, and comprehensively than ever before.

Through the application of RPA to perform routine tasks in the preparation and execution of our audit procedures, we the auditors at MBG corporate services use the benefits of a reliable, standardised process flow as a basis for the audit. This increases efficiency, strengthens our focus and creates valuable insights for our clients. By implementing RPA and other new, emerging technologies such as artificial intelligence, cloud technologies, big data analytics and machine learning, an audit based on increasingly more thorough and detailed analysis of data, provides more detailed audit evidence, greater transparency, more depth to audit procedures, and deeper understanding of a company’s risks and controls. Over the years, the audit function has gradually shifted to computer based, paperless modes. And as the next step in advancement, MBG is adopting robotic process automation to deliver the best results for our clients by providing key insights with even better on-time delivery and widening the scope of firm’s assurance services. The future is here!

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— Taher Singaporewala is associate partner – audit and assurance and Madan Mohan is director — technology advisory, MBG Corporate Services

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