The role of automation in transforming audit

IN the dynamic realm of modern business, where technological strides occur at breakneck speeds, certified public accountant (CPA) firms in the Philippines are faced with the challenge of adapting to the changes brought about by automation and artificial intelligence (AI). While many industries have embraced these innovations to streamline operations and enhance productivity, the accounting profession, especially medium and small-sized CPA firms, which account for most firms in the Philippines, lags in comparison.

As the demands of clients evolve and expectations rise, traditional tools such as MS Office applications, particularly MS Excel, no longer suffice for the rigors of audit. While many firms have long relied upon these tools, they now find them ill-equipped to contend with the complexities and demands inherent in contemporary audit, especially when juxtaposed with the sophisticated technologies wielded by clients. The indomitable spirit of human perseverance and tenacity pales in comparison to the relentless efficiency of automation, where robots tirelessly analyze and process vast volumes of transactions generated by automated client tools. Consequently, professionals find themselves grappling with mounting demands, requiring them to dedicate increasing hours each year simply to navigate the intricate intricacies imposed by automation.

In this situation, where challenges often arise due to automation, paradoxically, automation itself emerges as the solution provider. To provide context, automation tools are software or technologies that perform tasks with minimal human intervention. According to a survey by ShareFile, 96 percent of accountants in various industries believe that automation is crucial for the accounting profession, as it enhances efficiency and reduces errors. Embracing automation is not just a strategic move; it represents the ultimate recourse for breaking free from the relentless cycle of laborious transaction processing, not just for accountants but for auditors as well.

Now that we’ve established the undeniable imperative of automation, the question looms: where do firms begin? To successfully incorporate automation into their workflow, audit firms should start by mapping out their processes and identifying opportunities for automation in the engagement processes. Given that audits adhere to standardized procedures, it becomes relatively straightforward to identify common practices across a multitude of engagements. By pinpointing these areas, firms can set clear goals for improvement and focus their efforts on finding automation tools that will prove useful to the specific task. Zapier emerges as one of the automation tools particularly well-suited for beginners, offering a userfriendly interface and intuitive functionalities.

Challenges to adapting to automation

Additionally, among the greatest obstacles to embracing automation lies the resistance entrenched within the employees. Some individuals may find it difficult to adapt to new technologies and prefer to stick to the status quo. However, it is essential to create a culture that embraces and supports change.

Training and support are crucial for enabling employees to adapt to the fast-changing technological environment of the workplace. Implementing changes gradually and applying the Kaizen methodology, which emphasizes incremental improvement, can help employees slowly ease into the changes and gain the mindset that change is constant and necessary in the workplace.

Once the automation systems are in place, it is essential to establish consistent monitoring efforts. Regular tweaks and updates are necessary to ensure that the automation systems run smoothly and efficiently. This ongoing maintenance helps prevent errors from accumulating and damaging the audit processes in the long run.

Automation not only improves workflow and efficiency but also has several other benefits for audit firms and the accounting industry as a whole. By embracing automation, firms can:

1. Increase productivity. Automation streamlines repetitive and time-consuming tasks, allowing auditors to focus on higher-value activities and provide more value to clients.

2. Enhance accuracy. Manual processes are prone to human error, but automation reduces the risk of mistakes, leading to more accurate and reliable audit results.

3. Improve compliance. Automation tools can help audit firms stay compliant with regulatory requirements by ensuring consistent and standardized processes.

4. Facilitate collaboration. Automation enables real-time collaboration and data sharing among team members, even cross-disciple collaboration, which significantly revolutionizes communication and increases overall efficiency.

As automation evolves, the audit industry can expect even more advancements in the coming years. AI-powered tools, machine learning algorithms, and robotic process automation (RPA) are slowly but surely revolutionizing the way audits are conducted. These technologies have the potential to further streamline processes, improve data analysis capabilities, and enhance audit quality.

Incorporating automation into the audit workflow is crucial for audit firms to keep up with client expectations and industry trends. By identifying automation opportunities, setting goals, overcoming resistance to change, and consistently monitoring and maintaining automation systems, firms can improve workflow efficiency, accuracy, and overall productivity. These technologies have a significant potential to alleviate the burdens of long working hours often associated with our industry, which might beckon a fresh wave of talented individuals to join the ranks of accounting professionals, thereby augmenting the value we bring to businesses and the broader economy. As the audit industry continues to evolve, embracing automation will be key to staying competitive and delivering high-quality audit services.

Manuel Guilius A. Pamorca, CPA, CLSSGB, is a QARD manager of Paguio, Dumayas & Associates, CPAs (PrimeGlobal Philippines) and a 2024 member of the Media Affairs Committee of the Association of CPAs in Public Practice (ACPAPP). His opinion does not REflECT IN ANY WAY THOSE OF THESE institutions.