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Internal audit departments that harness artificial intelligence and robotics processing are providing better results and are seen as more valuable to their companies, according to the findings of PricewaterhouseCoopers LLP’s annual State of the Internal Audit Profession report.
PwC surveyed 2,500 chief finance officers, audit committee members, and audit professionals worldwide. The report found that 14 percent of internal audit operations were ahead of the pack in the use of cutting edge technologies—going beyond analytic and collaboration tools. Nearly half are adopting these new technologies to their work but at a slower pace. And roughly a third still have a basic or limited use of technology.
Among the early adopters, 75 percent of the survey participants found that the work of internal auditors was providing significant value to the organization, and its work was seen as relevant, especially as a company rolls out new technology elsewhere in the organization, according to the report.
These early adopters have found a way to leverage that technology, understand how to use it, and how to assess risks associated with that technology, report co-author Mark Kristall told Bloomberg Tax.
Automated tasks or help from AI frees up auditors to focus on other work—like better understanding the risk landscape of the company, said Kristall, PwC partner for internal audit, compliance and risk management in Boston. “That adds enormous value back to the company.”
Survey participants’ views of the relevance of internal auditing dropped off significantly among the other two groups identified in the report—54 percent for companies slowly adapting to new technology and just 34 percent for the group that’s not embraced technology change.
That comes as internal audit operations have generally fallen short of expectations in recent years. The number of participants in 2017 who reported that internal audit contributes significant value was 44 percent overall—down from 54 percent in 2016.
As companies try to keep pace with changing technology, they also must make sure that auditors have the right skills to make most of those new tools either through hiring or training, participants said.
Kristall said STEM—science, technology, engineering, and math—“is becoming a more important skill set to have within the internal audit profession than it ever has before.”
Internal auditors have more freedom to test new technologies than external auditors, who are constrained by regulations, said Jay Thibodeau, Rae Anderson professor of accounting at Bentley University in Waltham, Mass.
“You’d like to think that every organization is in the same place from an automation perspective,” Thibodeau told Bloomberg Tax. “There’s big differences.”
He said the largest CPA firms are investing heavily in such tools as are some internal audit departments. But those involved with advanced technology projects aren’t sharing details, in part because businesses see it as giving them a competitive advantage.
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