by Craig Nicholson, Atomatik Chief of Strategy
Internal audit is often referred to as the third line of defense. As automation enters a maturity phase, the opportunities to integrate advanced technologies into internal audit functions are plentiful. Large and small internal audit departments have already begun adopting automation, expanding their use of traditional analytics to include predictive models, robotic process automation (RPA), and cognitive intelligence (CI).
This shift is leading to improvements in quality, reduction in risks, time savings, and increased risk intelligence. With the rapid advancement of automation technologies and successful early adopters, internal audit must recognize and prioritize automation opportunities and take necessary steps to prepare for a well-considered and gradual implementation.
Robotic process automation (RPA) has become an effective means to automate labor-intensive and repetitive tasks across various business functions, such as finance, accounting, legal, HR, commercial loan operations, and now increasingly in internal audit.
Many internal audit processes involve manual and repetitive tasks like validating the removal of system access for terminated users or change management testing. These consume significant time and remain consistent year after year. Internal audit departments are realizing that RPA tools like Atomatik can significantly enhance efficiency and improve audit coverage.
While automation is known for offering significant cost savings through increased efficiency, there are cases within internal audit where it might not be the best fit due to factors like data privacy requirements or insufficient business value. Nonetheless, introducing digital workers in appropriate ways can have a positive impact on multiple internal audit departments.
The Real Value of RPA in Internal Audit
Our findings reveal that internal audit can leverage their understanding of RPA to identify opportunities for incorporating automation-driven controls into business processes or applying RPA to their audit procedures in the following manners:
1. Sampling Risk
During audits, data samples are usually chosen due to the impracticality of manually testing large datasets in their entirety. By automating testing, internal audits can broaden audit coverage by analyzing entire data populations instead of samples, providing management with greater confidence in the effectiveness of controls.
2. Audit Frequency
Internal audit departments often follow a risk-based approach, and certain business areas may not undergo annual audits, sometimes occurring only every two or three years due to time constraints.
RPA holds the potential to enable organizations to enhance testing frequency, potentially transitioning to a continuous auditing model for timelier insights.
3. Annual Risk Assessment
Many internal audit departments still follow the traditional method of conducting an annual risk assessment before creating the annual audit plan. This process involves collecting data from various audit areas and assigning risk-based scores, which can be time-consuming.
RPA can automate progress tracking against the annual audit plan and monitor key risk indicators (KRIs) considered during the annual risk assessment. As agile auditing gains traction, RPA can support the creation of a continuous monitoring/auditing program.
4. Audit Committee Reporting
A significant portion of audit management's time is spent on reporting. Audit reports are sent to the chief audit executive (CAE) and the audit committee, traditionally being lengthy and time intensive.
Automation tools like Atomatik can aid internal audit leadership by automating reporting and dashboard activities, including populating templates for the audit committee and management reports.
In summary, internal audit functions are exploring the potential benefits of RPA deployment across the organization and its role in enhancing efficiency and effectiveness within their operations. It's essential to have strong program leadership and robust governance throughout the journey toward automation success.
To learn more about how Atomatik can empower your internal audit department, schedule a call with our team.