Automating the Auditing of a Framework by Robotic Process Automation
It’s no secret that auditing often entails performing repetitive tasks. It can be more than a little tedious for auditors to perform simple tasks repeatedly.
So, audit firms are choosing to automate tasks that don’t demand judgment or skill. After all, large firms don’t wish for auditors to waste time on menial jobs. They’d rather have skilled staff working on strategic and other management decisions.
Auditors can automate simple auditing tasks with Robotic Process Automation (RPA). This software can take care of repetitive tasks on behalf of an auditor. It allows auditors to focus better on the challenges of an audit. But, not everyone is aware of the advantages of automation in auditing. Let’s examine how RPA is changing the auditing profession.
RPA enables process improvement in many ways. It follows and supports a multi-step approach for various auditing procedures. Firms expect RPA to replace manual tasks for auditors.
These firms wish to reduce auditor time spent on well-defined, mundane tasks. But, that’s not it. You could even use RPA to support expert decisions. You could do this by using RPA to perform audit tasks that need expert knowledge. But, you’d have to break down these tasks into bits automation software can understand.
This approach is time-consuming and often a little costly. But, it could prove worth it if a firm uses similar audit procedures across different clients. They’d also be able to use fewer staff members and save on wages. Experts estimate that the auditing profession could cut down around 45% of workforce tasks with the help of automation.
Not every firm is familiar with using automated processes. After all, these processes haven’t been around for very long.
Even if firms encounter problems, there are solutions at hand. Audit firms could first train their auditors to use the RPA software. But, they would need to use guidewire automated testing to ensure their RPA is working well.
This solution is pretty useful for auditing firms in the insurance sector. Companies in this sector use guidewire testing for new implementations and upgrades alike. Guidewire testing firms also impart knowledge about best practices in the industry.
Once a firm is confident with using RPA, it could use it to take a multi-step approach to audit. This approach includes adding a layer of consistency across data fields. Audit firms could also use RPA to perform audit testing on financial statements.
The auditor must determine which identified misstatements are material. They can use their findings to decide the approach they’ll take with their audit procedures.
Auditors spend a lot of time on manual activities each time they undertake an audit. Testing controls and verifying opening balances are some of the tasks they perform. Auditors also cast accounts to verify the arithmetic accuracy of reported figures. All these processes can take weeks, even months, if performed for large companies.
But, these tasks don’t demand auditor judgment. Auditors (external and internal) would be better off spending time on complex processes. For instance, auditors can perform quality assurance reviews instead of performing repetitive tasks.
These complex processes are greater tests of auditor expertise and judgment. Auditors can use their time on value-adding activities instead. They would also have more time to interact with their client’s thanks to automation.
The increased amount of time spent with clients will improve communication. Improvement in touch will allow auditors to identify high-risk areas during their audit. It would also allow auditors to express a reasonable opinion of clients. After all, ineffective communication is among the leading causes of auditing inefficiency.
Also, automation can perform audit tasks over 90% faster than manual processes can. This significant increase in time saved allows audit firms to save on costs.
Auditors can take on more clients annually if they save time on each audit. But, they need to consider which automation software suits their needs the best. For now, it seems like RPA is the best option available to most auditing firms. This software can work anytime to produce rapid results.
Auditing involves some of the most complex procedures of any accounting specialization. Auditors need to exercise professional skepticism while auditing the figures of their clients. In doing so, they allow the users of the financial statements to understand these clients. Expressing an opinion on financial statements comes with a few challenges. This is especially true for large companies.
Companies hire internal audit firms to test their controls and suggest ways to reduce misstatements in their figures. Internal auditors perform various procedures to gain assurance over these controls and figures. Among these processes is sampling. Statistical sampling is an integral part of internal and external audits. This method starts with picking a sample of transactions or account balances.
The auditor then tests the sample for arithmetic accuracy and completeness. Auditors would earlier test only samples in a certain population. This limitation was because they didn’t have the resources to test every transaction.
But, RPA makes it possible for them to test an entire population. This feature of RPA not only saves time but adds value to the auditing process. Auditors are in a good position to draw conclusions based on full population testing.
Also, auditors can use statistical sampling more with RPA than they could before. This increase in frequency would allow them to spot anomalies in accounting figures.
Many audit firms are even opting to use a continuous auditing model with RPA. The use of this model enables them to get frequent insights into a business’s operations. These insights can help them improve the quality of their auditing services.
Another way in which RPA adds value to auditing is by increasing traceability. It’s not always easy for an auditor to trace the root cause of an accounting misstatement. This is no longer the case thanks to the implementation of RPA.
Conclusion: robotic process automation
The future for RPA in the automation of auditing frameworks looks bright. Auditing firms are likely to welcome the automation of certain tasks. Firms are eager to improve the efficiency of the auditing profession in the age of e-commerce. But, that doesn’t mean that more traditional sectors can’t take advantage of RPA in auditing.
The adaptability of RPA allows auditing firms to use it across different industries. But, testing automation software often enough is of paramount importance.