2. PARADIGM2020
“ Gathering knowledge and information about the nature of
business risks that face the organization, how those risks are
managed, and to what extent they impact the organization’s
business processes and strategic goals is an inherent
competency for most internal audit functions ”
- Internal Auditor magazine, October 2002
3. GROWING ACCOUNTING COMPLEXITIES
Complexity
Timelines
1950s 1980s 1990s 2000s
Basic
Double
Entry
Basic
Computational
Devices
Birth
of PC
Accounting
Software
Spreadsheet
Analysis
ERP
ERP2
E Comm.
Mobile
Computing
Cloud
Computing
BIG Data
SOX Etc.
WWW
XBRL
Data complexities have
grown exponentially in the
last decade
SCM, CRM
2010
4. EVOLVING STAKEHOLDER’S EXPECTATIONS
• Greater transparency
⁻ proactive sharing of audit finds
• Deeper insights on company performance
⁻ more than just compliance; beyond the numbers
• Make sense of complexities
⁻ encompass emerging enterprise risks, provide perspective on management-
generated information
• Create Value
⁻ partner in creating a sustainability strategy which addresses the concerns
of the stakeholders and adds social, environmental and economic value
5. .. A CHALLENGE FOR AUDITING STANDARDS …. CHANGING ENVIRONMENT
• The existing standards need to be more technology inclusive
• The standards are more prescriptive in nature
• The existing standards provide limited guidance in realm of data analytics
• The existing standards do not fully encompass the non-financial risk and
opportunities that affects the company’s ability to create long-term value
• The current standards lack specific guidelines on preparation or verification
of sustainability reports
The existing auditing practices seldom look beyond organizational
boundaries and into the need for sustainable value creation
6. PARADIGM2020
It may be clichéd that auditing requires a paradigm shift but
its imperative to keep up with the changes in the ecosystem ..
Technology
SocietyEnvironment
7. WAY AHEAD >>>
Social, Environmental & Economic sustainability
• Evaluating the competitive environment, regulatory framework
• Assisting in creation of non-financial data streams capturing the
societal and environmental impact
• Assessing the impact of social and environmental risks on the
corporate reputation and brand
• Helping in creation of sustainable strategy and providing assurance
Competitive
Advantage
Regulatory
Compliance
Reputation
Risk
Societal &
Environmental
Impact
8. Biggest challenge: Auditors need to adapt to the changing
dynamics
WAY AHEAD >>>
Use of greater technology enablers
• Greater application of evolving data sciences
• Audit Data Analytics
• Intelligent audit applications that function within
company’s data centers
• Cloud computing – Remote audit teams (specialist)
• Big Data: Ability to mine massive real time data and
look for anomalies
Business Intelligence
Data
Modelling
Pattern
Recognition
Data Mining
9. WAY AHEAD >>>
Continuous Auditing and Assurance
• Continuous monitoring of high risk processes
• Automation of controls and audit procedures
• Near real-time highlighting of potential problems
• Automated feedback mechanism for management
• Increased scope of audit activities
• Reduced potential for fraud
Embedded
Audit Module
Continuous
Auditing
Continuous
Monitoring
10. WAY AHEAD >>>
Use of Big Data
• Big Data will reshape how we view business and consequently the
audit function
• Ability to mine real time data and look for anomalies
• Regulators are increasingly turning to big data analytics to identify
insider trading and frauds
90% of the data in the world today has been created in the last
two years alone
11. WAY AHEAD >>>
Audit Standards should evolve
• Standards should encourage greater use of
technology
• Encompass corporate sustainability Auditing
Standards
Sustaina-
bility
Technology
Technology and focus on sustainable value creation is continuously
reshaping how we look at information and business as a whole, its
time to rethink what auditor of the future would shape up to !
