Emerging technologies present numerous opportunities for businesses to become more efficient and obtain that all-important competitive advantage. However, the arrival of each new technology also presents some considerable challenges for those on audit committees. Robotic processes made possible with complex automation along with artificial intelligence have the potential to dramatically improve the quality and efficiency of financial reporting. The problem is tech innovation creates some risk for financial reporting audit committees must account for in their oversight role. Let’s take a look at the Emerging Technologies tool’s use in audits.
The Emerging Technologies Tool
The latest Center for Audit Quality tool has been appropriately dubbed Emerging Technologies. The purpose of this tool is to ameliorate the audit committees’ oversight of financial reporting impacted by the latest tech innovations. Tech advancements certainly have the potential to dramatically improve financial reporting and public company auditing. Though there is plenty of justified excitement around these opportunities, such opportunities also pose considerable risks.
The Emerging Technologies tool created by the Center for Audit Quality is applicable to the Committee of Sponsoring Organizations of the Treadway Commission internal control framework. Oversight of the latest technologies in financial reporting is essential for a thorough and accurate audit. The tool advises audit committees to obtain an understanding of the business’s emerging tech strategy as well as specific tech, risk identification, risk assessment and the control activities put in place to respond to the risks. This tool also helps create information along with communication protocols to obtain the information necessary to fulfill responsibilities. This is exactly what business owners and managers need to monitor emerging tech activities, perform effective audits and ultimately enjoy peace of mind.
Why Audit Committees Need the Emerging Technologies Tool
The Emerging Technologies tool even suggests audit committees inquire with auditors regarding whether the engagement team has the proper expertise to tackle risks created by tech. The tool helps auditors determine the firm’s experience level with emerging technologies, and whether emerging tech has a meaningful impact on the planned scope of the audit. Furthermore, audit committees will obtain value from this tool in that it helps the audit team determine if there are risks management has not identified. This tool even helps businesses determine the impact of emerging tech amidst the risk assessment.