SOX

13 Audit Software Future Trends to Prepare for in 2021 & Beyond

Daniel Kim |
13 Audit Software Future Trends to Prepare for in 2021 & Beyond

An effective audit management software enables internal auditors to plan and execute audit engagements seamlessly. The capability to dynamically manage team members, effortlessly generate status reports and automatically analyze big data sets is a significant advantage to any audit team leader. In this article, we will explore ways audit management software can shape internal audit future trends.

What Is the Future of Audit?

Internal audit future trends will be marked by innovation and driven by technology. The most common technology across internal audit functions is audit management software. As we look to audit future trends, audit management software may be the catalyst for many of the advances made in internal audit. 

Efficient resource planning ensures engagements are completed within deadlines while embracing best-in-class project management techniques. Coordination with stakeholders becomes easier through reducing inefficient communication/document-sharing channels such as emails and shared folders. Both the auditor and the auditee are on the same page about the status of testing and outstanding issues. The transparency dramatically reduces the time spent on clarifying outstanding issues. Further, the automatic report generation feature makes it simple to generate recommendation reports using pre-defined templates.

In addition to the features mentioned above, more dominant internal audit future trends motivate auditors to adopt audit software.

1. SaaS Model of Deployment

As per Gartner’s Market Guide for audit management solutions, only 35% of the software vendors utilize a SaaS model for deployment currently. However, by 2020 the SaaS model of deployment was predicted by Gartner to grow faster than the on-premises solution. The cloud-based software deployment model is becoming more relevant as audit teams are more frequently working remotely and using mobile devices to conduct audits. IDG Communications predicts that the demand for SaaS enterprise applications is accelerating and exceeding the demand for on-premises applications by five times (during the five-year forecast period through 2018, SaaS revenue was forecast to grow at 17.6% CAGR, while on-premise revenue growth is only forecast at 3.1%). Since the pandemic in 2020, the rise of SaaS applications has outpaced predictions due to more people working from home full time. The increase was also due in part to the ease of deployment compared to applications requiring installation and support by local IT teams who also spend less time in the office. SaaS applications are also better suited for the rapidly changing requirement within internal audit. As software updates are made and new product features are added to address the needs of auditors in the field, updates are pushed out to SaaS applications routinely without the need to upgrade each user physically. Having the entire team in the office for this type of administrative task is a luxury we are not likely to see any time again soon.

2. Visual, Non-cluttered Interfaces

Microsoft Office, specifically Word and Excel, is the most popular software used by auditors to plan and execute audits. However, spreadsheets can cause more harm than good while performing critical tasks in the organization. The biggest problems arise from the limited ability to view live statuses and review previous versions of a task. Audit software includes a visually graphic dashboards to give a quick snapshot of the current status of testing. Further, the latest web applications are designed with an elegant, non-cluttered interface. They are easy to navigate across pages, in contrast to the endless tabs present in an audit test spreadsheet. AuditBoard is one such connected platform that is built using visual dashboards and simple interfaces. Especially as the next generation of auditors is coming on board, they are more accustomed to mobile applications with simple, clean layouts. 

3. Value-added Offerings and Data Analytics

The latest audit software solutions efficiently perform standard audit tasks such as scoping, planning, resource allocation, testing templates, and reporting. But, in addition to these tasks, they also perform functions such as data analysis, trend forecasting, evaluating key performance indicators, etc. These features greatly enhance the quality of reports and also help management with decision-making. Gartner predicts that by 2020 at least 60% of audit management software will embed data analysis capabilities in their software compared to 25% right now. Embedding advanced functions like data analytics, artificial intelligence, machine learning, and more can advance internal auditing capabilities well beyond the basics. 

4. Supports Agile Auditing

Agile audit has demonstrated that a nimble, risk-based approach to audit planning and execution is essential for internal auditors to respond to risks that matter most to management. While no special software is required, technology-enabled agile auditing makes adoption much easier and more likely to stick. Audit software will support the growing number of internal audit functions transitioning to agile audit techniques such as quarterly risk assessments, risk prioritization, risk-based execution, timeboxing, effort scoring, and use of scrum boards. IT teams have existing expertise in these areas that internal audit can leverage.  

5. Facilitates Combined Assurance

Internal Audit is one piece of the governance and assurance coverage deployed by an organization. While audit is an independent function, we still work toward the same objectives as the rest of the organization. Internal auditors should align their audit planning, risk assessments, and reporting with the other assurance stakeholders to work as team players. Audit software should facilitate the exchange of information with teams such as Enterprise Risk Management (ERM), SOX, and IT Security. Like agile technology, in some cases, the audit management software can support the trend by connecting to other applications like GRC platforms. In this way, the audit team can take advantage of all that audit management software offers while still maintaining a partnership with the other assurance teams. The benefits to the organization are substantial. From a top-down perspective, the siloed functions are realigned into a seamless assurance function, all working toward one goal within the board’s governance objective.

6. Aligns to Alternate Staffing Models

In the modern work environment, alternate staffing models are used by internal audit. Different subject matter experts are brought in for specific engagements. Outside consultants or freelance auditors are used to supplement the staff when their skills are needed. Software companies must align with the customers they serve, not the other way around. On-premise software solutions also require installation on each user’s laptop. Modern audit management software is deployed as a SaaS solution. You can easily add new users to the team and grant them access to work on an audit without the worries of installations. 

7. Continuous Risk Assessment

One of the known issues with current risk assessments is that it is a point in time view of organizational risk. Auditors who have been through a risk assessment know the amount of time and energy it takes to complete the process is enormous. For some organizations, the risk assessment can take several directors more than two months to complete. Even in agile environments, the best we can do is often a quarterly assessment. Audit software will need to support continuous risk assessments. Data imports from tools used by other assurance providers like ERM, financial data, and other information sources can consolidate into the audit risk assessment. They have the information refreshing in real time allowing the system to update constantly. Next, within the assessment tool, audit directors can preset risk appetite thresholds. When the threshold is crossed, the system can notify the audit directors to take action. In an agile environment, the audit team could add the audit to the plan for immediate execution. 

8. Machine Learning and AI

The next evolution in audit planning will involve machine learning and artificial intelligence. The risk assessment, while partially subjective, includes factors such as financial materiality. For scoping purposes, an audit director could program the assessment with a set of rules that drive a decision algorithm. The algorithm could suggest an audit plan based on the rules for risk prioritization and scoping. Machine learning can then come into play as the audit director changes the plan based on business objectives. The system can become more intelligent and more accurate in future suggestions. Each of the audits will need a set of criteria for completion, such as whether a subject matter expert is needed, if prior experience in the area is helpful, or if a specific certification is requested. The next step will be to assign the team to the projects based on availability and skills by calculating a best-fit score. In this way, the audit planning process can be automated, supporting the transition to agile audit. 

9. Adopting Integrated Risk Management

Integrated Risk Management (IRM) is an approach that aligns internal audit and risk management efforts into a unified risk approach. By taking an integrated approach, the internal audit team can drive a deeper understanding of the risk and control environment and share information with the risk management team. Much like the combined assurance approach, IRM seeks to improve communication among the risk-based assurance teams. The audit future trend for IRM involves creating a unified risk register for the organization and combining reporting efforts across the risk functions.  

10. Automated Assurance

It is not uncommon for  auditors to perform routine tasks to the point of monotony. As the use of AI and bots becomes more commonplace, some assurance work is set for process automation. User access testing, segregation of duties testing, and a large amount of compliance work are often consistent and repeatable. Repetitiveness is the criterion for automation. Unfortunately, very few auditors pursue automation. The lack of technical expertise to create automation is the main roadblock for most auditors. Audit software that helps auditors create simple automation and bots may be the key to advancing this technical expertise. 

11. On-demand Reporting

Despite all the work auditors do, the only thing most people see is an occasional report. Now reporting technology has become more advanced with easy-to-use tools like Tableau and PowerBI. The ability to connect your audit software to reporting tools in the future will enable internal audit functions to provide management and the audit committee with real-time, on-demand information. Providing this level of on-demand reporting will lessen the amount of time spent crafting presentations for the audit committee. Management will spend their time in a more relevant and valuable conversation. 

12. Gamified Skill Acquisition

Game-based learning is now applied to internal audit in general and cybersecurity. The IIA recently published an article explaining the benefits of applying gamification to internal audit skill acquisition. Since many in the next generation of internal audit have exposure to games since birth, game-based learning is a natural extension of the digital learning experience. Just as Minecraft is designed to teach coding skills to children, audit games are built to teach the application of the standards, recognize cyber threats, and hopefully soon data analytics. 

13. Embedded Topical Training

Occasionally auditors walk into an unfamiliar area when an audit is already underway. Audit software that includes embedded training on topics relevant to the team would allow auditors to brush up on topics they need at that moment. Audit software that anticipates the training needs for the team and presents training on the right topics at the right time will prepare the team to handle the engagement with a more profound understanding. Training may include basic coverage of topics and any updates on auditing standards.

Conclusion

Internal audit future trends indicate a shift towards more transparent, coordinated, and data-driven audits. Auditors and management are aware of the increasing complexity of financial transactions and realize the need to adopt more systematic audit methods to identify irregularities. Aided by the recent advancements in SaaS applications, reporting tools, and artificial intelligence, the new generation of audit management software is sure to help auditors rise to this challenge. Learn how AuditBoard’s connected audit, risk, and compliance platform can help your organization take its audit efforts to the next level. 

Daniel Kim

Daniel Kim, CPA, is co-founder and co-CEO at AuditBoard. Formerly global head of audit for two multibillion-dollar public companies, Daniel leverages his 15+ years of audit, risk, compliance, and SOX program consulting with hundreds of pre-IPO and public companies to deliver modern solutions for today’s corporate audit needs.

You Might Like

Learn how AuditBoard's integrated suite of easy-to-use software (audit management software, SOX compliance software, risk management software, audit workflow software, and compliance management software) can empower your team.