The Evolving Role of Auditors
As the auditing landscape continues to evolve, it’s essential for auditors to stay ahead of the curve and adapt to the changing demands of the industry. In this newsletter, we’ll explore the present and future of auditing, highlighting the key trends, skills, and technologies that will shape the profession. Whether you’re a seasoned auditor or just starting your career, this newsletter will provide you with valuable insights to help you navigate the future of auditing.
Economic Instability
We have witnessed economic instability at global scale with out of the roof inflation, interest rates that have led to debt defaults, entities closing and collapsing due to harsh operational environment resulting from both micro and macro factors.
Cybersecurity has also become a real threat to the assets of most companies and data protection has also joined in the queue as a key concern for most entities with the related penalties incase of defaults being the last nail on the corporate coffin.
Local Challenges
Bringing it closer home, the change in the tax landscape by the government of the day in an attempt to expand the tax base has created treacherous galleys that threaten any entity that doesn’t plan their taxes properly. The change in the weather climate which has resulted to extreme flooding in major parts of the country has also seen interruptions to business. The near normal countrywide power losses that have been on the increase have not made it any easier especially for entities that do not have alternative power sources.
Emerging Technologies
The above is enough evidence that the risks assessment procedures conducted by auditors can never be the same again since the subject is on the move. And the icing on the cake are the emerging technologies such as artificial intelligence (AI) and machine learning (ML). These have generated new risks that need to be addressed. The Global risks report 2024 by World Economic Forum(WEF) has listed misinformation and disinformation from AI as top risk in terms of severity followed by extreme weather, societal polarization in the second and third position respectively.
In response to these risks, the internal auditors have three ways to address them: seeing AI as a tool and not a barrier to enhance efficiency in audit, use of data analytics and adoption of Environment, social and Governance (ESG) auditing and reporting.
Artificial Intelligence (AI) can be used a tool in the following ways: to develop analytical algorithms to analyze complex data making audits more efficient thus freeing time for interpretation and stakeholder management. AI can also process large volumes of data to generate patterns that can indicate fraud or error and to make the deal even sweater, this is real time and can be used to address any potential fraud or error in time and prevent losses to the entity. This will make audits more beneficial to the entity since they will be continuous as opposed to waiting for a point in time in the future when the damage has already been done.
Natural Language processing which is basically part of Artificial intelligence that can translate, respond to spoken text, summarize large volumes of text is also at the disposal of auditors. They have been used to create voice-operated GPS systems, text to speech dictation software, customer service chat box among others. For auditors, these can be used to review contracts and agreements to assess compliance with policies and regulations among other uses.
