Auditors need to be equipped with the latest available technological tools to execute high quality audits, right-leaning think-tank Centre for Economic Policy Research (CEPR) has said in a new report.
"The business in present times is becoming larger and more complex. It is becoming difficult for the auditor to really access the complete data and study the systems to achieve the in-depth examination and subsequent analysis," CEPR said.
"The limited tools to access and analyse the data and study the systems to bring out effective reports is becoming a big challenge and these limitations are across both the large and small enterprise," it added.
According to the report, a rapid increase in the volume of data requires auditors to be equipped with the latest available technological tools to analyse a much higher volume of data in their audits than previously required.
Vijay Gupta, a former central council member of the ICAI, said, "The globalised businesses of the clients that the audit firms serve, calls for the latest audit techniques and processes that needs to get deployed by such audit firms, the absence of which becomes a handicap in apt deliverance of their duties."
He said there is a need for better IT infrastructure to create more robust audit framework.
The audit industry has been facing multiple challenges in the current macro-economic environment and these are further getting aggravated by a prevailing negative narrative around the audit profession in the country.
There has been a spate of actions taken against auditors in the recent times, including against PwC in the Satyam scam case, and against Deloitte and BSR with regard to the IL&FS fraud.
Also, in the 2013 case of NSEL, auditors were arrested by the Economic Offences Wing (EOW) Mumbai, but were realised on bail later.
According to CEPR, latest advances in technology promise significant benefits for the audit profession, with a number of key drivers signalling the need for technological change in audit.
Such drivers include the rapid increase in volume of data, changes in business models, shift towards automation and the demand for a proactive and forward-looking approach to audit. These developments require auditors to be technologically sound to enable them to execute high quality audits, the CEPR report said.
"An effective IT infrastructure at the auditor's end has become a must now to carry out error free audits and build confidence from overall governance perspective," said Pavan Kumar Vijay, founder of Corporate Professional, a corporate and legal advisory firm.
He said the volume of transactions and data in businesses has increased dramatically since 2016 and is expected to keep increasing in the future, which underlines that the use of advanced technologies and data analytics promises a transformation in the audit and build confidence.
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