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HOW TECHNOLOGY CONTINUES TO REVOLUTIONIZE AUDITING:THE LATEST TOOLS AND THEIR IMPACT ON THE PROFESSION

JIM KAPLAN CIA CFEPRESIDENT AND FOUNDERAUDITNET®

AHIA 31st Annual Conference – August 26-29, 2012 – Philadelphia PA

www.ahia.org

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Agenda

Introduction

Historical Timeline Internet and Auditors

Technology’s Impact on Audit

Innovation in Audit Research

Evolution of Professional Networking

Latest Technology Tools for Auditors

Trends and the Future of Audit Technology

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Then and Now

Auditors and Technology

Early Adopters

Innovators (into the new from Latin

Interested in new methods & techniques

Risk takers

Forward thinking

Gen X & Y

Laggards

Wait and see

Cautious

Hangs back

Last group to try or adopt a new product

Dislike change

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Evolution of Web for Audit

Computers, Auditors and CAATTs

The Evolution of CAATTs 80’s Around Through With EDP/IT Auditors Mainframe

Audit Software 90’s Data extraction and analysis IT and non IT Auditors Windows

The Millenium Software for all phases (planning, fieldwork, GRC) Cloud computing

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Impact of Technology

Computers and networks provide most of the information needed for auditing

Auditors must use the computer as an auditing tool

Auditors must also use the computer for audit administration

Impact of New Technology on the Profession

Professional Standards 16 Global Technology Audit Guides have been

released since January 2009

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New Technologies and their Impact

Mobile computing

The Cloud or Internet based services SaaS (application based) PaaS (end to end SDLC) IaaS (servers, storage, network)

Social Media

Social Media Defined

The good the bad and the ugly

What is the primary risk?

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Technology as an Enabler

There is a wide array of specialized tools to support and enhance the entire spectrum of internal audit processes … for the most part (auditors) are not taking advantage of them

Not surprisingly, survey participants predict that

technology will affect internal audit roles and

responsibilities more than any other business

trend.PwC 2010 Study on the State of the internal audit profession

Audit Software

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Categories of Audit Software Technology

AutomatedIssues

Tracking

ElectronicWork Papers

RiskAssessment

ContinuousControls

Monitoring

Anti FraudSoftware

GRC

Audit Management

Software

Audit Resource

Scheduling

DataAnalytics

Data Analysis for Auditors

Although internal auditors have been doing data analysis for more than 25 years, it has only recently started to become standard practice.

By our nature, most accountants and auditors are inclined to stick with what has worked in the past, rather than reach outside our comfort zone for an alternative that could help us accomplish more.

Do you reach outside your comfort zone?

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Obstacles to Implementation

Lack of an audit methodology Skill set gap Department size Cost implication Complexity of the software Resistance in training auditors Failure of software to meet audit departments needs Failure to plan for use

Heard on the Street

Technology Initiatives considered having the most impact (2012 AICPA Top Technology Issues)

1.Information security2.Remote access3.Control and use of mobile devices4.Business process improvement with technology5.Data retention policies and structure6.Privacy policies and compliance7.Staff and management training8.Spreadsheet management9.Overall data proliferation and control10.Portals (vendor and client/customer)

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New Tools for Auditors

New Tools

Sept, 2008…. Any device, Any time, Any

where was born

Users not interested in security, they want to trust, not to be trusted

Any unprotected device connected to both the Internet & and company LAN poses a security risk

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Other Technology Tools for Auditors

Open Source Audit Software

Continuous Controls Monitoring

Regulatory Compliance

Business Intelligence Software

Audit Apps for iPhones/iPads

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Imagine the Possibilities

Access your computer from remote locations Collaborate using tools from the road Access audit programs, work papers and more

from your mobile device Join Webinars and Webcasts for training Conduct or participate in virtual meetings with

staff, clients etc.

Trends and their Impact

Mobile devices and wireless computing

Smart devices and malware

Cloud sourcing and computing – security, governance and compliance

Social media platform for communications

Continuous risk and control assessment

Reporting to the Board using SOTA technology

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Skill Set for Future Auditors

Multi-disciplinary less accountants more business oriented

Critical thinking skills

Strong communication skills

Audit Technology oriented

The Impact of Technology Observations

Not surprisingly, survey participants predict thattechnology will affect internal audit roles andresponsibilities more than any other businesstrend.High-performing internal audit functions maximizethe use of technology to enhance the efficiency,effectiveness, and quality of operations.

PwC 2012 Study on the State of the internal audit profession

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AuditNet® Survey - 2012 State of Technology Use by Auditors

Profile of Over 1,500 Responses• 45% 5 or less auditors• Technology tools used – mostly data analytics and

EWP • Technology tools least used – monitoring (continuous

audit and fraud), GRC, risk compliance• Only 17% feel that their auditors are technology

proficient• Technology training primarily OJT• 35% maintain an inventory of audit technology

tools• More than half (54%) rated their department at the

informal use level (ad hoc or none at all) for audit technology

• Less than 4% rated their department at the highest maturity level

AuditNet® 10 Point Action Plan for Integrating Technology in Audit

1. Conduct an inventory of audit technology tools2. Provide training for all staff in use of audit

technology3. Measure staff technology KSA4. Build a business case for audit technology5. Work with IT and Senior Management on cost6. Hire auditors with technology skills7. Find a technology champion and influencer8. Establish an audit technology assessment

benchmark and update annually9. Require the use of technology for all audit and

administrative tasks10. Develop a succession plan so that audit software

does not become shelfware

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AHIA Improvement Needs Top 527

Continuous Audit

IT Audit Performance

Data Analytics

Enterprise Risk Management

Clinical Processes

Future Predictions

Standards will mandate use of technology tools for audit

New generation of auditors must have the KSA to utilize technology

If auditors and audit departments do not adapt to new technology they risk outsourcing

Social networking will evolve to professional networking

Tools will become more intuitive Knowledge hubs for audit tool, techniques and

resources will consolidate and merge

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Audit Programs in the Queue AuditNet®

Auditor’s Guide to Cloud Computing - Security Considerations.xls

Cloud Matrix_Benefits & Risks.xls AuditNet® Guide to Social Networking AuditNet® Guide to Wireless Security Business Continuity Planning – A Diagnostic Tool Forensic Document Examination Guidelines for Validation Testing Data Analytics Enabled Audit Programs for Key Business

Processes AuditNet® is working to provide tools and resources to

keep pace with new technology!

Conclusion

I hope that I have provided you with some useful information that will stimulate your thought processes!

Any questions?

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Contact Information

Jim Kaplan CIA, CFE editor@auditnet.orghttp://www.auditnet.org