Auditing in the 21st Century – How to embrace technology

Written by Todd de Quincey

There is an ever increasing amount of pressure being placed on auditors to increase fee recovery, reduce fees, manage excessively busy audit seasons, cover skills shortages and so on.

So with all of these pressures how can auditors maintain the quality of their audits, but deliver the necessary efficiencies? Living in the 21st century, turning to technology is a logical solution and something which many firms are yet to adopt to a high level.

The old joke of “How do you do an audit… just copy last year’s file” to me is a good representation of the attitude of many auditors in practice when it comes to the adoption of new technology or methods of auditing. However in order to deliver the efficiencies being pressured on the industry, auditors need to embrace technology.

The question is then, how? How can auditors better use technology to create efficiencies in their audits and maintain, or even improve the quality of their audits? In this article I will share some of my favourite technology solutions when auditing to increase efficiencies, whilst not risk jeopardising audit quality.

Double up and increase productivity

Dual monitors are proven to increase productivity, with many firms investing in large dual monitors for staff in their offices. However, as an auditor going from a large dual monitor setup in the office to a small single laptop screen in the field is like going back to paper based auditing – you feel like you are back in the Stone Age again.

However arriving at the clients with a 19 inch desk monitor is hardly a professional looking image or a convenient solution. Fortunately there are more portable solutions.

My recommendations for a portable second monitor solution are either:
 

  1. Lenvo ThinkVision 14 inch, USB powered portable monitor, retailing for less than AU$200; or

  2. Convert your iPad into a second monitor through paid apps such as Splashtop or AirDisplay.

Although you will not have as much screen real estate as back in the office, both solutions are affordable and provide that much needed extra space on a portable scale.

Are USB sticks dated technology?

In a word, yes! Whilst they were fantastic technology in the early 2000s, USB sticks are becoming a thing of the past in my opinion, with there being more modern, efficient and secure methods of transferring data – namely cloud based file transfer services.

Today there are an abundant number of cloud solutions to assist professionals with secure data transfer such as Dropbox, Google Drive, Hightail (formerly YouSendIt) and so forth. If you are not familiar with these companies, they all offer secure online data transfer services at very fair prices. So they are definitely worth checking out.

If you are worried about the security of the cloud, it can be reassuring to know that most cloud companies employ security of the same standard of that of banks, meaning that the sensitive payroll information which the client provides you is often far safer to be transferred through the cloud than on USB sticks which can be lost or stolen!

Get Excel savvy!

As accountants we all use Excel on a daily basis, however very few of us truly know how to use it to its full potential. I am constantly shocked when I meet auditors (baby boomer or Gen Y alike) who do not how to do a simple VLOOKUP formula or pivot table. As a hammer is to a builder, Excel is the tool of the trade for auditors in the 21st century.

Excel can assist auditors by saving time completing routine functions or identifying erroneous or fraudulent transactions, trends and data. So investing time and money in training staff on how to use Excel is fundamental to creating efficiencies and quality in the audit process. In addition to formal training, there is also an endless number of free tutorials and guides online at your fingertips.

As a practitioner some of the more common formulas and functions which I used on a regular basis during audits included:

  • IF
  • VLOOKUP
  • HLOOKUP
  • FREQUENCY
  • COUNTBLANK
  • COUNTIF
  • COUNT
  • SUM
  • SUMIF
  • CONCATENATE
  • LEFT
  • RIGHT
  • MID
  • DAYS
  • WEEKDAYS
  • WORKDAY
  • AVERAGE
  • AVERAGEIF
  • Pivot tables
  • Filters
  • ROUND
  • Charts
  • Hyperlinks
  • Sort
  • Importing text files into Excel
  • Locking cells, sheets and workbooks

In isolation, some of the above formulas and functions do not deliver very useful results, so knowing how to use them in combination is where you can drive the greatest efficiencies in your audits.

If you don’t use the above formulas and functions on a regular basis during your audits, then organise some training today!

A picture speaks a thousand words

A question often raised by auditors is whether electronic audit evidence is sufficient and appropriate to meet the Auditing Standards. To clarify, I am specifically referring to scanned images, photos and other media obtained by the auditor directly from source documents. The issue of audit evidence obtained directly from electronic sources is a discussion for another day.

In my opinion, the answer is a resounding yes! A picture of a motor vehicle showing the registration number or a scan of the supplier invoice is far more compelling audit evidence than the one line comment on file by the junior stating “sighted the motor vehicle”. Albeit, a photo of every motor vehicle purchased in a year might be a bit of overkill. 

So grab your smart phone or portable scanner and start collecting audit evidence the smart way.

If you are in need of a portable scanning solution, in my experience the Cannon series of portable scanners are excellent. Whilst a little pricey, especially if you are buying one for every team member, they pay huge dividends in time saved in the long term. Just make sure you buy one with multi-page scanning abilities and service it regularly.

Do it once and do it right!

One of the key advantages of auditing in an electronic system, such as Auditflow, is the ability to do something once and then use it as a template across a number of files. For the avoidance of doubt, I am strongly against blindly copying workpapers from client A to client B. However a well planned and executed firm or industry based template saves time on individual engagements, creates consistency across files and can increase the quality of documentation, if done correctly.

So invest the time upfront, get your templates right and reap the rewards.

Get mobile

No I don’t mean getting your 30 minutes of daily exercise – although that is good for you too. I am referring to having mobile access to the internet when you need it. To take advantage of many of the tips shared above it will be necessary to have internet access on your laptop when and where you need it. Let’s face it, not having on demand internet access is a sign of not keeping with the times.

The easiest solution for mobile internet access is to purchase a mobile broadband dongle which can be purchased on a monthly plan or as a pre-paid device from any Telco.

However if you don’t want to purchase a separate device, consider tethering your smart phone or tablet to your laptop to share the devices internet access. Tethering provides you with the needed access, with no additional cost – but be aware of those excess data charges!

In closing

Technology can be one of our strongest allies in creating efficiencies in our working and personal lives, as well as providing a professional and modern impression to clients. So jump online, get tech savvy and embrace the 21st century in which we live in.

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