In a series of articles, we are looking at how we believe internal audit (IA) will change in the next five years. We have previously examined the importance of the team, and looking forward, we will be exploring the widening remit of IA, one that will encapsulate increased transparency around environmental, social and governance (ESG) issues. There will also be imaginative uses of technology, together with a regulatory reset that will push greater responsibilities on to the board.
But here, we will focus on the exponential growth in data, how it is being analysed and used within the context of IA.
Within five years, data analytics and artificial intelligence-driven technology will have more than delivered on their promise of real insight in real time. Not only will IA be in place to provide assurance over the robustness of the tools used, but it will allow for continuous auditing.
In the next five years, IA will see:
- More continuous auditing tools
- Increased robotic processes
- Wider use of predictive analytics
- Greater need for assurance over quality of an exponentially widening data pool
- Further enhancements to IA skillsets (and ability to widen the IA talent pool)
Looking at this last point first, the next five years will see a considerable broadening of IA's skills. In-house teams will need to equip themselves with the skills necessary to analyse the data, will providing at the same time the assurance over data robustness.
IA will be able to access data from multiple sources, much of which will be ‘live’ and therefore able to contribute towards continuous audit reports. Auditors will be able to take advantage of a growing array of APIs (application protocol interfaces) which will be able to feed into bespoke applications to create highly detailed reports.
This alone will represent a fundamental change for auditors and could feel like moving from the Stone Age to the Age of Enlightenment.
Cloud-based applications will mean that IA will be able to produce reports and access key data on the go, which will play an important empowering role as the workplace adopts and adapts to hybrid and flexible working patterns. This in turn will enable IA teams to recruit from a far wider talent pool, as data will be accessible no matter the geographic location.
Rise of robotic process automation
The use of robotic process automation (RPA) will remove much of the manual data collection work, allowing IA increased time to provide value-added analysis – however, it will be key for auditors to ensure that there is appropriate governance and oversight of the robots – what data there are collecting, the reliability of the data and how it is being used. This will be transformative, requiring high levels of skills and greater experience, but it will push IA further forward.
Whole data sets are already being analysed for outliers and unusual transactions – the auditor’s skills will be tested to a much greater degree as the sheer volume of data grows exponentially. Granularity can be a double-edged sword. Yes, there will be whole data populations to review, but there will still be a need to see the wood from the trees. An ability to know where to drill into the data will become an increasingly important skill for the internal auditor.
Finally, predictive analytics will become increasingly important, and as data collection methods improve, predictions will become more reliable. This will allow auditors to provide reports that are far more forward looking than today, allowing them to look beyond today and ahead to tomorrow.
Source: BDO United Kingdom