Internal audit performed today will not be same as in 10 years to come it will be transformed. Before we get obsolete to the new internal audit framework it’s time we train ourselves to take on the new challenge. We need to identify the risk we will face which will impact the way we perform our audits in future, but before we start let’s look today internal audit picture-
What is internal audit?
Internal audit is to provide independence assurance that an organization’s risk management, governance and internal control processes are operational effectively.
Internal Audit traditionally can be broadly divided in a 4 sub part-
1) Compliance:
Compliance audits test past events and transaction to determine whether previous action is in compliance with the policies and procedures, laws and regulation. This test takes into account the various checks which is mandated by the laws. For example: Sarbanes-Oxley (Sox), Indian Companies Act and other legal requirements.
2) Assurance:
Assurance services provide independent and professional opinion that reduces information risk, it’s a continuous monitoring services. By regular analyzing and reviewing controls, the audit officer is able to provide a level of assurance that supports the stakeholder confidence on business process and transaction.
3) Performance improvement:
Internal audit continuous review of business process for effectiveness and efficiency can lead to improve the business. Many of the control reports auditors collect can be compared to benchmarks or best practices. With these insights it helps auditor to recommend performance improvement to management on basis of the audit reports.
4) Risk Identification:
Risk identification is identifying and understanding today the risk which is likely to impact the business process. Risk Identification is a future-oriented approach which not only identifies it but also recommends the steps to mitigate or control the risk.
So all these are the basic traditional way how the internal audit functions but in all these function we don’t focus much on the change part of it. Today the rate at what things are been transformed is rapid, the life cycle of any new technology is barely few years now. Look around at the things how it has moved on for example the manufacture sector there is so much of automation in the process for effectiveness and efficiency.
Not just manufacture sector which has gone under change almost all the sector we see manual task have been already replaced or in process of replacement. The way Uber and Ola replaced the traditional taxi, Flipkart and Snapdeal changed the way we do shopping now. There is no one immune to this rapid change of technology if we don’t act now we can be extinct. Compare the 90’s when computer technology came in India, and how we used it our sector today. The revolution technology like the email, Mobile phone, the Wi-Fi, 4G and the list goes on and on has helped us to be more effective and efficient in our work.
The biggest treat the consultancy industry face today is artificial intelligence which I believe will take over 1000’s of job in these sectors in years to come and that will be just the beginning.
So what is artificial intelligence?
Artificial Intelligence (AI) is usually defined as the science of making computers do things that require intelligence when done by humans. AI is not a supreme costly technology which is available to few, it’s there in reach of everyone who has a smartphone has Siri of iPhone, Cortana for android, Google navigation tools, and etc are all the example of artificial intelligence we used in our daily activities.
So the question now is how can be fought with this artificial intelligence?
My answer would be just like we do in audit anticipate in what ways it will impact your business and mitigates ways to use the technology in helping you. We can’t stop it but we can grow with it. Same way we did in 90 with the use of computer now this time we have to do it with AI.
This era is of artificial intelligence and its time we gear up to change our traditional ways of performing audit and to include AI as a business partner.
The author can also be reached at avinash_sunchu@hotmail.com
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