How Robotic Process Automation Is Transforming Accounting and Auditing


In Temporary

Expertise continues to vary society at a speedy tempo, and accounting and auditing are certainly not immune. New applied sciences are more and more in a position to mimic human exercise, taking over repetitive duties extra rapidly and precisely than individuals can. The authors present an summary of the methods by which robotic course of automation might change how the career operates, with a specific deal with the world of income audits.

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Auditing has traditionally integrated many computer-dependent instruments and processes, which have been typically interlinked by many handbook steps and keystrokes. A brand new set of overlay software program has emerged, nevertheless, that mixes these disparate actions right into a single easy automated course of. Robotic course of automation (RPA) makes use of these new software program instruments, similar to these supplied by Blue Prism or UiPath, to rework a nonetheless considerably handmade audit course of right into a extra assembly-line audit course of. RPA represents a dramatic and disruptive change in present audit follow that guarantees to permit auditors to function at a a lot increased degree. Leslie Willcocks, a professor on the London Faculty of Economics, has outlined RPA as “a sort of software program that mimics the exercise of a human being in finishing up a activity inside a course of. It will probably do repetitive stuff extra rapidly, precisely, and tirelessly than people, liberating them to do different duties” (Xavier Luher, “The Subsequent Acronym You Must Know About: RPA (Robotic Course of Automation),” McKinsey & Firm, December 2016, https://mck.co/2LmMmUF). RPA may also help automate repetitive duties, such because the copying and pasting of data. For accountants, RPA represents the chance to enhance audit high quality; certainly, RPA is already demonstrating its capability to enhance enterprise processes and companies supplied by public accounting corporations (“A Holistic Strategy to Insurance coverage Automation,” Accenture white paper, 2016, https://accntu.re/2GLBkEQ; “Robotic Course of Automation (RPA): A Primer for Inside Audit Professionals,” PricewaterhouseCoopers, October 2017, https://pwc.to/2KTBnB8). Though some concern that RPA heralds the substitute of individuals with robots, it’s higher understood as altering the position of human staff, liberating their time up for extra significant work.

RPA in Public Accounting Follow

RPA has already garnered curiosity from public accounting corporations, significantly with respect to taxation, advisory, and assurance companies. For instance, a good portion of tax actions, such because the calculation of book-tax variations and the preparation of tax returns, has been efficiently automated by RPA software program robots (D. A. Wooden, L.A. Cooper, D.Okay. Holderness, and T. Sorensen, “Robotic Course of Automation in Public Accounting,” working paper, 2018). RPA can also be supplied to purchasers as an advisory product and repair. Whereas RPA software program has been extensively carried out for tax and advisory actions, RPA for auditing companies stays in its early phases because of the extremely regulated nature of audit companies for public corporations (Wooden et al. 2018). However, you will need to talk about RPA functions to audit companies. As proven in Exhibit 1, income audits might be automated by software program robots that carry out rules-based capabilities to execute reconciliations, analytical procedures, and dual-purpose procedures (e.g., inner management exams and exams of particulars). Income is mostly a high-risk space in audit engagements, and automating the duties that don’t require auditor judgment has the potential to enhance audit high quality by reallocating the work of auditors to analyzing the variations generated by the RPA software program.

Exhibit 1

RPA Steps for the Audit of Income

RPA for Reconciliation and Analytical Procedures

Within the audit of income, RPA can help auditors by logging right into a shopper’s safe file switch protocol (FTP) website to retrieve associated audit proof, together with the listings for present and prior yr gross sales and the trial steadiness. RPA can then calculate the whole gross sales per the itemizing and evaluate it to the whole per the trial steadiness. Assuming the quantities reconcile, RPA can subsequently calculate whether or not the whole income quantity from the present and prior yr listings is materially completely different, and generate an alert if the distinction exceeds the materiality threshold.

RPA for Twin-Function Audit Assessments

RPA might be programmed to calculate whether or not the worth and amount are completely different throughout gross sales invoices, gross sales orders, and delivery paperwork, and to generate alerts for gross sales transactions that include variations in worth and amount. By automating these procedures, auditors can reallocate their time to extra value-added actions, which is able to inherently enhance audit high quality. By leveraging RPA software program, auditors can get hold of a greater understanding of the shopper’s enterprise operations and subsequently be capable to extra exactly assess the chance of fabric misstatement.

Three-Step Strategy to RPA-Based mostly Audits

RPA is a type of course of enchancment utilizing know-how; when utilized to auditing, RPA is anticipated to not solely substitute handbook and mundane audit duties, but additionally to encourage the re-engineering of audit processes. When deciding whether or not RPA is an effective match, public accounting corporations can check with the RPA implementation roadmap prompt by Okay. Moffit, A.M. Rozario, and M.A. Vasarhelyi (“Robotic Course of Automation for Auditing,” Journal of Rising Applied sciences in Accounting, forthcoming). In keeping with the roadmap, RPA implementation consists of three predominant phases: 1) course of understanding, 2) audit knowledge standardization (ADS), and three) execution of automated audit exams (i.e., audit apps).

Course of understanding.

Theoretically, a lot of audit processes could also be a very good match for RPA. The audit processes that will profit probably the most from RPA are people who include outlined audit duties which might be repetitive and time consuming and that don’t require audit judgment. Public accounting corporations might establish an audit course of the place RPA can add worth by contemplating knowledgeable information, similar to that of income audit leaders, and calculating the precise hours spent performing audit duties. Moreover, an important issue to justify automation is the variety of occasions a agency must carry out a specific perform, which is principally depending on the variety of related audits being finished.

As soon as a agency determines course of is an effective candidate for RPA implementation, the following step in understanding the method is to divide audit duties into small audit modules that may be interpreted by software program applications. For instance, the duty of importing or exporting knowledge is intuitive to a human consumer, however for a software program program, the duty must be divided right into a collection of small steps:

Defining the listing from which the file is to be importedImporting the fileSaving the imported fileDefining the listing into which to export the saved file.

Audit knowledge standardization (ADS).

To run as meant, RPA audit functions want consistency throughout knowledge fields. Audit-related knowledge might come from completely different sources, such because the shopper’s ERP programs or third-party asset managers; thus, knowledge subject names in several audit-related reviews that include the identical info could also be completely different. If that’s the case, RPA software program will be unable to execute the meant audit take a look at. Consequently, the second stage in RPA implementation is for public accounting corporations to create an audit knowledge normal for every course of that shall be changed by RPA.

ADS is changing into extra related as public accounting corporations contemplate the usage of know-how in monetary assertion audits. An ADS template incorporates the audit-related knowledge that’s essential to execute audit exams. Related knowledge subject names and codecs might be designed by the agency to make sure the RPA audit software achieves its meant targets.

Execution of RPA-based audit exams.

The ultimate step within the RPA audit implementation framework is to program the software program to routinely execute audit exams and deploy it on real-world audit engagements. There are quite a few RPA software program instruments that public accounting corporations can leverage; BluePrism (https://www.blueprism.com/) and UiPath (https://www.uipath.com/) are among the many most well-known instruments in the marketplace. The benefit of adopting ready-to-use RPA software program instruments is that they require little to no further programming. However, programming languages similar to Python and R can help within the deployment of RPA-based audit duties, although they require further programming abilities. Python and R, nevertheless, have already got libraries which might be very helpful for RPA capabilities.

When utilized to auditing, RPA is anticipated to not solely substitute handbook and mundane audit duties, but additionally to encourage the re-engineering of audit processes.

Programming audit exams as rules-based capabilities would allow the automated execution of audit exams. As soon as audit exams are programmed, an auditor can merely click on a button for the RPA-based audit exams to import and browse knowledge, carry out rules-based audit exams, and export the outcomes of audit exams into an audit workpaper.

Whereas RPA has the potential to automate most components of audit processes, it’s preferable for public accounting corporations to start out small. Concentrating on low-risk course of areas that don’t require audit judgment ought to enhance the success charges of RPA tasks at corporations. Beginning small may enhance confidence amongst RPA software program customers.

The deployment of RPA audit exams on audit engagements is important in measuring the success of RPA-based audits. Parallel audit testing consisting of present (handbook) audit exams and RPA-based audit exams also needs to be carried out as a approach to validate RPA audit instruments. Furthermore, for RPA to thrive in audit engagements, corporations ought to leverage the help of their IT departments. Establishing an RPA help hotline may also help auditors acquire extra confidence with these instruments, and ongoing communication between the audit engagement group and IT help may assist make sure that RPA audit instruments are fine-tuned to satisfy specified audit targets.

What’s Subsequent?

The joy round RPA is effectively based, and the accounting career is quickly embracing this know-how. RPA-based audit procedures have the potential to enhance audit effectivity and effectiveness. Extra so than ever, change within the audit career is slowly however steadily taking place, and professionals ought to be able to embrace RPA know-how and benefit from the fruits of its labor.

Andrea M. Rozario, CPA is a PhD candidate at Rutgers Enterprise Faculty, Newark, N.J.

Miklos A. Vasarhelyi, PhD is the KPMG Distinguished Professor of Accounting Info Techniques and the director of the Rutgers Accounting Analysis Middle and Steady Auditing & Reporting Lab, within the division of accounting and knowledge programs at Rutgers Enterprise Faculty, Newark, N.J.



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