business How has Technology Improved the Audit Process? July 19, 2016 Trusting a firm to complete your business’ audit depends on that firm’s use of advanced, reliable technology—Is it time for you to reconsider your auditor? To reduce the risk of asset loss and help ensure that financial statements are reliable, accurate, and complete, auditors must ensure that a business has effective internal controls. This area of financial reporting has been made significantly easier in recent years due to the prevalence of technology in the internal control process. The use of advanced technology has become an indispensable part of a reliable audit. Important technological advancements Internally, it helps for auditors to use a software program to store and manipulate client data. This software allows the engagement team to have a central location for tracking, reporting, reviewing and archiving client data. This coupled with data analysis software and access to powerful information systems has been instrumental in improving the audit process. IDEA Data Analysis Software (IDEA) In particular, we utilize IDEA software, which allows auditors to stay ahead of the curve when it comes to technology and the audit process. With IDEA software, auditors can: Quickly and efficiently analyze unlimited amounts of data; Review all client data in detail instead of sampling items, allowing additional time to identify trends and abnormalities within client records. Analyze both financial audits and special client projects. Picture this: A manufacturing client is trying to determine the best way to analyze his inventory movement. With IDEA, the auditor can import multiple years of the client’s inventory records and quickly provide an analysis of slow moving items and a complete review of the data. This saves the client hours of time and provides a complete analysis of the entire population. How technology has changed auditing These new and advanced software developments have helped automate many functions of the audit process, allowing auditors to spend less time on paperwork and more time lending their knowledge to other high-risk areas of the businesses they are assessing. IDEA software and other advances in audit technology have been instrumental in: Providing higher levels of assurance to organizations. Being able to use sophisticated software to identify risks, test controls, and analyze data allows an advanced “set of eyes,” so to speak, to examine the data and pinpoint any lacking or suspicious areas of financial statements. Improving security and reducing fraud. Advanced audit firms make use of password protected documents that are only accessible to the audit team members. Security is always top of mind when auditors exchange data with clients, making it crucial for audit teams to utilize a secure portal where they can easily and safely share data and documents. Reducing errors and paperwork. Nothing gets “lost in the shuffle” with a firm that makes use of advanced documentation software. Saving time. With technology, an audit department is better equipped to complete its audit plan in a timely manner (something many firms run into issues with). Managing risk more effectively. This is a key benefit of a high dependence on technology in the audit process. Firms who capitalize on data analysis technology are able to gain insights beyond the reach of the business’ (whom they are auditing) internal team. Allowing for a continuous auditing and monitoring process. Data analysis technology has opened opportunities for auditors to comprehensively test and analyze (on an automated basis) entire populations of financial and operational transactions and other data. How businesses can benefit from a technologically advanced firm Many firms are not making use of available technology, which has provided a wide range of drawbacks for these firms. Using manual procedures for specific, highly unique audit functions simply does not cut it anymore. The “peace of mind” once offered by manual procedures can be achieved much more efficiently and effectively through advanced data analysis software and continued advances in audit technology. We are constantly monitoring available technologies and reviewing our internal procedures to ensure we are providing valuable information to our clients and making the most of the audit process. Questions about KLR’s use of technology in the audit process? Contact us today.