For many people, the terms artificial intelligence or AI may conjure futuristic applications or scary visions of a robot-controlled tomorrow. The reality, of course, is very different. Right now, according to our 2020 AI Predictions survey, most business leaders are scaling back their AI ambitions. Where they're focused and where they’ll see the most immediate value, is in what we call boring AI—putting automation technologies to work in more repetitive areas of business. Managing risk and automating routine tasks are their top priorities.
"Where they're focused—and where they’ll see the most value—is putting AI to work in mundane areas of their business."
At PwC, we’re similarly focused on increasing automation in our audits. Why does that matter? Enhanced quality audits help our clients strengthen trust with stakeholders across the financial reporting ecosystem—investors, consumers, the public and regulators.
Here are five ways AI and automation are helping to build trust and enhance audit quality:
We’ve all encountered situations where inefficient processes cause unnecessary bottlenecks. Now, auditors have the ability to mitigate these challenges by building custom automations, or bots, that can handle time-consuming (but necessary) audit tasks. In one case, a tech-trained auditor created a bot that automated the process of reconciling insurance claims in Excel spreadsheets full of pivot tables. The bot accomplishes the same reconciliation in a fraction of the time and reduces the potential for human error. This is a prime example of how PwC’s citizen-led upskilling movement is giving our employees the tools and knowledge to improve their day-to-day work and enhance quality.
AI is being dispatched to automatically read and test audit documents, by comparing reported cash balances to bank reconciliations, bank confirmation letters and obtaining foreign exchange and bank credit-rating information from third-party sources. Wherever auditors might have had to manually review and verify information in a repeatable manner is an area where traditional work can be augmented by technology. When properly deployed, a reduction of manual processes reduces the risk of accidental human errors.
While most companies keep their data in ERP systems, they haven't always been able to give auditors access to every relevant transaction. Now, though, auditors can automatically plug in to a company’s data, including unstructured data found in contracts and other documents. This enables them to paint a clearer picture, so they can focus on risk areas and create a responsive audit plan.
The same cognitive technology that can analyze data to reveal risks and guide the audit plan can also expose unusual transactions that can then be dealt with earlier in the audit process. This offers an opportunity to achieve more targeted testing of the financial statements being audited. That’s just one more way technology—and the people who know how to use it—are bolstering audit quality.
Instead of viewing data in spreadsheets or other static formats, auditors can use responsive visualization tools to see the data means. Data visualization tools take the output from automated processes and offer the opportunity to explore trends or drill down with a click into anything that seems unusual. A company’s finance leaders can stay on top of audit progress using similar tools that make it easy to gauge where things are at.
Essential in any company’s relationship with its stakeholders is trust. Ensuring high-quality, accurate financial-statement audits may not be the first thing we think of as a way to build trust, but it is absolutely essential—and tech-enabled audits performed by digitally savvy auditors are already laying the necessary foundation.