Future of Internal Audit (2021 onwards) – Detailed Analysis

Future of Internal Audit: Ever increasing demand of stakeholders, change of technology and risks are driving the Accounting Professionals throughout the globe. Changes are constant in every profession and it applies to Internal Audit profession also. The aspects of evolution and implementation of ideas and technological invention continue to convert commerce and business all over the world.

Future of Internal Audit

In such scenarios, Internal Auditors are destined to seek avenues for upgrading processes and will be frontiers for obtaining information, knowledge to implement innovation for their respective entity and stakeholders. Like finance and accounting, internal audit has changed over the decades, focusing other than financial assurance to position of Consultant, providing indepth advice insights into from cyber security to statutory conformity and HR.

The above Exhibit depicts some of the shaft, capacity, and mechanism that are at the disposal and more and more used by internal auditors in the future.

Internal audit is an matured profession but has continuously transforming itself over decades to become update and contribute value. At present, technology is the buzzword which enable transformation as how we survive, perform and communicate with fellow citizen. A current survey by Forrester revealed that by next two years, robots will wipe off 6% of all career in the US and elsewhere. Hence, now there is urgency for the internal audit profession to transform itself and continuously to be pertinent.

Here on, the internal auditors will have to respond to evolution in technology in the area of internal audit for the future.

Audit Analytics:

Audit analytics defines the analysis of whole sets of data to pinpoint discrepancies and a way forward for additional examination as well as to generate audit evidence. This means to review of total populations of data, compared to traditional method of only analysis a selected sample of the data. Audit Analytics boosted the quality of the internal audit. Audit analytics will make way for predictive analytics which leads to forcasting based on data. As a result, Audit Analytics (a) will pinpoint and bridge control gaps, (b) will reveal misappropriation of fund and bypassing of control. These will create accretion of value in the organisation.

Artificial Intelligence (AI):

Similar to any algorithmand data-oriented process, Artificial Intelligence contribute to internal audit making sure of correctness and authenticity. AI can can operate smoothly only when it is scrutinizing valid data and against appropriate criteria. The present spheres of AI is limited in its application in the areas of Internal Audit. However, along with machine learning, internal auditors can apply, pinpoint, and derive crucial data from any type of report/record. Cognitive technology can Plough through massive data and operate computerized interpretaion of this data in a method that is otherwise unworkable for internal auditors at present time. In such zones, internal audit can contribute a productive effect. In the interest of directors and stakeholders , internal audit can pinpint on the several phases in the Artificial Intelligence (AI) life cycle.

Automation:

A report from PWC depicts that 45% of manpower tasks can be operated automatically, which could sqeeze cost of manpower around $2 trillion. RPA (Robotic Process Automation) can contribute through better yield and enlarge its risk coverage under the ambit of internal auditors.

To put in brief, AI, automation, and analytics have the capacity to disbalance how internal audits are operated. In addition, these following innovations will add value in the way Internal Auditors will operate in future.

Blockchain:

Blockchain is a special type of assimilation of set of information held in a computer. These set of information are arranged in blocks and chained in bunches. When new set of information (data) arrives, these are kept in another new block. Blockchain technology makes it impossiable to alter, illegal access to data (hacking) or deceive the system.

A blockchain is primarily a digital ledger of deals that is replicated and spread out throughout digital systems on the blockchain. Every block in the chain consists a series of deals (transactions), and when a fresh deal happens on the blockchain, that is entered to every participant’s ledger. Distributed Ledger Technology (DLT), more commonly known as the blockchain technology, is a decentralised database run by several entities compared to traditional “centralized” system so far dependent upon a reliable third-party.

Future of Internal Audit
Future of Internal Audit

The Internal Auditors must be conversant to with actual information and concepts on the blockchain technology. The Internal Auditors must be capable to implement the automated transactions based on the blockchain technology.

Moreover, the internal auditors must be participating at the blueprint stages of the blockchain-based implementation to get full grip of the system from the very start. It will help the system to be constructed in an unambiguous way.

To contribute additional value by Internal Auditor to the entities, the internal auditors must analyse and appraise on regular basis the internal audit system of blockchainbased applications.

Digital Hubs:

Digital Hubs are unique platforms where internal auditors can operate “live” (real time) from a distant online, making use of information and systematic computational analysis of statistics for ultimate purpose of for the discovery, interpretation, and communication of meaningful trends in data. This method of working by internal audit group who are stationed in Headquarter of any organization and also in different parts of globe have definite positive effect on these executives. Such tendency of working from remote place “live” (real time) throughout the globe definitely will expand to internal audit fraternity like offshoring industry. This is the future of Internal Audit.

Internet of Things (IOT):

Recently, IOT has been toast of the spheres in Transportation, Healthcare and smart homes. The expanded application of IOT made dynamic revolution for companies as to how gaze at data, customers and geography. With the arrival of IOT, in this new scenario, it is on Internal Auditors to be flexible and suitable to need or adjust or modify their way of working

Crypto currency:

Called as Stablecoins, this is an addition in the list of FUTURE of Internal Audit. Crypto currency will be joining shortly in the list of conventional currencies in the developed countries. In India, RBI has not recognized Crypto currency so far. However, there is severe pressure on RBI to legalise Crypto currency on the positive changes happening around the world in favour of Crypto currency. In this changed scenario, the Internal Auditors will have to adjust and modify themselves in the method of working in the areas of Treasury Operation as soon as Banks, Financial Institutions will commence operations on Crypto currency.

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