By Ian Lavis, Praxity
It would be easy to think the role of the auditor is already doomed. We are told that machines will be able to the job of an auditor better, faster, and more efficiently, but is automation really all conquering?
One of the most ardent supporters of new technology in accounting, PwC’s Head of Audit Strategy and Transformation, Gilly Lord, says while machines are going to dominate much of the data processing and analysis, the role of the auditor is by no means defunct.
In a keynote speech at the Praxity Global Conference 2016 in Scotland, Gilly told delegates the auditor’s role will drastically change but will remain essential in terms of overseeing and providing intuition and ethical judgment.
Machines have no ethics
One of the biggest issues in auditing is the rise of artificial intelligence, where computer systems are able to perform tasks normally requiring human intelligence.
“Current artificial intelligence is impressive but in fact it’s quite simple,” Gilly said. “It lacks the ability to make decisions outside its programmed activities. It lacks the intuitive capabilities of the human brain. It also lacks ethical judgement. I think we (auditors) will still have a role even if it’s just in terms of oversight and judgement.”
That may not give much confidence to auditors considering leaving the profession because of automation, but Gilly told delegates it’s all about adapting to change. “Our role is going to change from checking the data to checking the algorithms, and checking that the artificial intelligence is instructed correctly.” She said the auditors of the future will need a mix of IT an engineering skills, as well as human intuition.
The role of humans
The big question is how can accounting firms be more agile to balance the relationship between man and machine to offer clients better services?
Gaining competitive advantage will be about using technology to find problems in data and investing in people to check the technology, report on problems and resolve issues in the right way, Gilly said, adding: “Maybe the ultimate role of humans will be to give assurance that those artificial intelligence running the world are going to behave in an ethical manner.”
Just how fast these changes come into effect remains open to question. Accounting students are not currently trained in statistics and data management, and auditing standards need to keep up with technological advances. This is set to become a hot subject of debate in coming years. It would seem auditors can rest easy for the near future at least.
How technology is changing auditing
The use of advanced data analytics and artificial intelligence offers huge potential benefits, including the ability to:
1. Spot patterns and anomalies in large amounts of data.
2. Understand how to spot the same anomalies in future.
3. Analyse millions of transactions in an instant.
4. Provide greater insight for management.
5. Extend the scope of corporate reporting – making it more accessible to a bigger range of stakeholders.
6. Provide natural language recognition to read and understand key concepts in documents.