By Rob Starr, Big4.com Content Manager.
Deloitte’s commitment to excellent quality in the auditing profession has been recognized with International Accounting Bulletin’s prestigious “Audit Innovation of the Year” award. The award was presented in London recently at the International Accounting Bulletin Forum & Awards. Jon Raphael is Chief Innovation Officer, Deloitte & Touche LLP, and he answered some questions on how the audit is evolving.
What can you say about the concept of the evolving audit? How is it employing advanced technologies, artificial intelligence and analytic capabilities?
The traditional audit must evolve – at the pace our clients are evolving – and rapidly to address the growing demands of capital markets and today’s investors to provide a high quality audit with more meaningful insights that go beyond the historical financial statements. In an increasingly complex and challenging global business environment, more is expected from the audit profession to help businesses identify risks and make more informed and timely decisions.
Technology-driven audit innovation — advanced technologies, such as artificial intelligence, automation, and data analytics — enables auditors to deliver a seamless, high quality audit by reducing manually intensive processes while empowering auditors with leading edge, innovative tools for their toolbox. This, in turn, allows auditors to focus on the areas that matter most, including emergent risks and matters that require higher levels of professional judgement.
At Deloitte, we’re investing hundreds of millions of dollars in quality, innovative tools and new methods that define the very edge of audit innovation. Our next-generation applications allow us to streamline and automate the audit process and transform the audit delivery model.
What can you say about Argus?
Argus is Deloitte’s next generation document review tool that enables rapid document interrogation and analysis by leveraging cognitive technologies. It employs advanced machine learning techniques and natural language processing to quickly process, highlight and extract information, such as key terms and clauses, from electronic documents.
Our audit teams are using Argus to upload multiple document formats to conduct more consistent and effective reviews with core workflow automation, natural language processing and artificial intelligence; scan and analyze entire populations of documents to identify potential risks, trends, and anomalies; visualize the results, and compare documents against base templates to identify variations more easily.
What about Disclosure Analytics?
Deloitte’s Disclosure Analytics is a web-based application that provides convenient online access to SEC filing disclosures, enabling our professionals to quickly and easily find company disclosures and accounting policies to conduct thorough custom peer comparisons. The application allows our auditors to search real-life disclosure concepts via a comprehensive database, including information from more than 10,000 companies and more than 2 million individual disclosures and accounting policies, to provide instant current trend results and research.
With an extensive database of information at their fingertips, our auditors are able to search on key words and company names and receive relevant information within seconds. Disclosure Analytics enables instantaneous peer comparisons as well as updates on emerging disclosures and industry trends, contributing to better, more informed disclosures by our clients. And we are currently experimenting with integrations of text analytics and SEC comment letters.
Can you supply an overview of Deloitte Optix as it relates to data analytics?
Deloitte Optix is a big data, in-memory tool that applies analytical techniques to large datasets to uncover trends, patterns, anomalies, and unusual items. This tool gives our auditors the ability to analyze journal entry populations in real time and identify transactions with characteristics of audit interest within seconds, and also allows the audit team to iterate analytic analysis across the population by rerunning the data as more information and precision is derived from the tool.
Specifically, Deloitte Optix helps our auditors effectively perform audit tests on entire populations of data to identify hidden risks and focus on items of audit interest; streamline journal entry data review by using in-memory data processing; and test large volumes of data to uncover unusual trends and patterns, or anomalies in big data that can be transformed into compelling stories and key insights about our client’s accounting functions, business operations and internal control processes that just would not be possible without technology.
What are the other takeaways from this announcement?
Delivering audits of the highest quality is and will always be our No.1 priority, and a destination that has no end. We are building a culture of innovation and quality and are constantly seeking to improve upon our best work. Our approach to innovation extends far beyond a set of cutting-edge tools or technology. It’s about our professionals, our thinking, and our culture – we are fully committed to continuous improvement and delivering an enriched audit experience.
Our goal is simple and clear: a high quality audit that is transparent, customized, and integrated, all to deliver insights that inform intelligent, real-time decisions. It’s what we call The Deloitte Audit, fueled by innovation.
What’s in the future?
The audit of the future is insightful, intelligent and informative, able to evolve to keep pace with the capital markets. The greater emphasis on new technologies and improved connectivity and communication are bringing the audit closer to real time and increased transparency.
Deloitte is committed to continued audit innovation. More next gen audit applications will be available in the near future, further improving quality and effectiveness while providing our professionals with access to proprietary, leading-edge technologies.
And, it’s an exciting time to be an auditor or to be coming into the audit profession. The changing scope and impact of the audit profession will have a profound effect on the auditors of tomorrow. The increased use of technology will require and empower new professionals to be “big picture thinkers” with an expanded analytics oriented skill set, a broad business acumen, and deep industry and cross-functional expertise.
We are working closely with major universities to raise audit education to a higher level and to develop the next generation of auditors: critical thinkers who are rigorously schooled in accounting fundamentals, are able to see the big picture, and have hands-on experience in key technology areas such as data science, analytics, and visualization. The public auditing profession is an amazing place to build core competencies in analytics and industry, and it is only getting better with our new tools. And there is lots more to come – we are constantly upgrading and developing new apps, which is exciting to our professionals to experience change at this unprecedented pace.