Audit and technology - ACCA Global

1 Audit and technologyAbout ACCA ACCA (the Association of Chartered Certified Accountants) is the Global body for professional accountants, offering business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management. ACCA supports its 219,000 members and 527,000 students (including affiliates) in 179 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. ACCA works through a network of 110 offices and centres and 7,571 Approved Employers worldwide, and 328 approved learning providers who provide high standards of learning and development. Through its public interest remit, ACCA promotes appropriate regulation of accounting and conducts relevant research to ensure accountancy continues to grow in reputation and has introduced major innovations to its flagship qualification to ensure its members and future members continue to be the most valued, up to date and sought-after accountancy professionals globally.

2 Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. More information is here: Chartered Accountants Australia and New Zealand Chartered Accountants Australia and New Zealand (CA ANZ) is a professional body comprised of over 120,000 diverse, talented and financially astute members who utilise their skills every day to make a difference for businesses the world over. Members are known for their professional integrity, principled judgment, financial discipline and a forward-looking approach to business which contributes to the prosperity of our nations. We focus on the education and lifelong learning of our members, and engage in advocacy and thought leadership in areas of public interest that impact the economy and domestic and international markets.

3 We are a member of the International Federation of Accountants, and are connected globally through the 800,000-strong Global Accounting Alliance and Chartered Accountants Worldwide which brings together leading Institutes in Australia, England and Wales, Ireland, New Zealand, Scotland and South Africa to support and promote over 320,000 Chartered Accountants in more than 180 countries. More information is here: The Association of Chartered Certified Accountants June 2019 ACCA and CA ANZ created a strategic alliance in June 2016, forming one of the largest accounting alliances in the world. It represents 800,000 current and next generation accounting professionals across 180 countries and provides a full range of accounting qualifications to students and business.

4 Together, ACCA and CA ANZ represent the voice of members and students, sharing a commitment to uphold the highest ethical, professional and technical and technologyAbout this reportThis report provides an overview of some of the various technologies that currently affect or are likely to affect the Audit profession in the near future and what this means for auditors as people. The report is supported by existing research, panel discussions held in Greece, Czech Republic and Slovakia and by interviews of leading practitioners. ACKNOWLEDGEMENTSACCA and CA ANZ would like to thank Mick James, the Audit and technology event panellists held in Greece, Czech Republic and Slovakia and the interviewees for their valuable input on this is transforming the accountancy profession, and has the potential to revolutionise Audit .

5 Robotic process automation, data analytics, artificial intelligence, machine learning, distributed ledger name but a few: a seemingly endless list of transformational technologies at varying stages of evolution is already having, and will continue to have, an indelible impact on the Audit process. technology of course is never the panacea to resolving all the current challenges in audits, or conversely seizing all of its future opportunities. Like all transformational stories, technology in the Audit story is the enabler; an enabler to renew processes that improve quality and increase efficiency. It is also a catalyst that will help shift the focus of the Audit process from a retrospective view to one which is prospective, enabling much deeper insights to clients and an enriched narrative on corporate performance and its sustainability for the future.

6 Yet it is the nexus of emerging technology with human endeavour, skill and judgement where real future value from auditing will be unlocked. In the face of exploding technologies, Audit remains at its heart a very human activity. That said, digital developments could have profound implications for how auditors conduct their activities, as well as potentially raising new ethical and moral considerations. This report assesses the technologies having most impact on the Audit profession as we know it today. Drawing on existing research and exploring the views of leading practitioners, it provides an understanding of how the changing business environment is shaping technological change in auditing. It also provides a unique summary of how different technologies could be expected to impact its future.

7 We hope it also provides insights for both businesses and auditors themselves on how they may adapt most effectively in the face of this significant McGhee Executive Director Governance, ACCAS imon Grant Group Executive, Advocacy and professional Standing, CA ANZC ontentsExecutive summary 61. What is driving technological change in Audit ? 72. Which technologies are changing Audit ? 93. What does this mean for auditors as people? 164. Conclusion and key messages 19 References 20 The latest advances in technology promise significant benefits for the Audit profession, with a number of key drivers signalling the need for technological change in Audit .

8 Such drivers include the rapid increase in volume of data, changes in business models, the shift towards automation and the demand for a proactive and forward-looking approach to Audit . These developments require auditors to be technologically sound to enable them to continue servicing businesses and to execute high quality technologies include distributed ledger technology (DLT), data analytics, robotic process automation (RPA), drones technology , artificial intelligence (AI) and machine learning (ML), natural language processing (NLP), and deep learning (DL). Reference is also made to smart contracts and cloud research found auditors needing to understand the various technologies used by businesses, and adapt to the changes in their business models.

9 Data analytics was found to be the most mature of the technologies currently used by most firms, while machine learning is still not at the stage where it is embedded in everyday practice. ACCA and CA ANZ also explored what this means for auditors as people, with the human relationship between business and auditor emphasised, because this remains central to auditing. In sum, the auditors of the future should be technologically sound with excellent project management skills and able to adapt to conclusions are supported by panel discussions held in Greece, the Czech Republic, and Slovakia, with panellists representing Audit practice, Audit regulators and the business side, along with technology experts. The report is also supported by interviews with Audit practitioners and technology experts in the Audit this report, ACCA and CA ANZ provide an overview of the various technologies that currently affect or are likely to affect the Audit profession in the near future.

10 Executive summarysome very basic underlying technology kitchens, bicycles and a smartphone app but puts them together in a way that radically changes the way users order food: aggregating restaurants at the user end and allowing new players to enter the market at the other, or service it in different ways ( dark kitchens ). Auditors must be able to adapt to the changes in business models of their clients. Juraj Sekera, Finance Director, Vertiv SlovakiaSuch technological changes in businesses and their business models require the attention of auditors of any size including small and medium-sized practices (SMPs). For example, start-up businesses now tend to have business models based on advanced technologies. Complex Audit challenges could therefore come from smaller businesses too.