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CA Ravi Taori
12 DIGITAL AUDITING & ASSURANCE
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Case Study-- CA M
Digital Auditing: Digital auditing involves the use of technology, such as data analytics, artificial intelligence,
and robotics process automation (RPA), to conduct efficient and effective audits. This approach allows auditors
to analyze large sets of data for actionable insights and trends, improving the quality of audits.
Role of RPA: RPA uses computer-coded software to perform repetitive tasks in business processes, such as
payroll generation, order processing, and invoice processing. In auditing, RPA can automate classification for
risk assessment and prepare reports on automated controls configured on ERP.
Impact of Blockchain: Blockchain technology, which provides a shared, immutable, and encrypted ledger of
transactions, could revolutionize auditing. It allows auditors to access transaction history in almost real time,
reducing dependency on clients for information. The use of "smart contracts" embedded in a blockchain can
automate business processes, leading to more emphasis on "tests of controls" than "tests on details".
Cyber Risk Consideration: With advancements in technology, the risk of cyberattacks increases. These attacks
can affect an entity's reputation and result in the theft of sensitive information. Auditors should consider cyber
risk as part of the audit risk assessment activities, focusing on understanding the cyber risks affecting the entity
and the actions being taken to address these risks.
(CNO DAA.020) Digital Audit
What is a Digital Audit?
1. Integration: Technology is increasingly integral to daily business operations.
2. Assessment: Digital Audit assures the effectiveness of an organization's IT systems.
3A. Gaps and risks: Regular review of technology-related controls is essential to identify gaps and risks.
3B. Compliance: These reviews ensure continuous improvement and regulatory compliance.
3C. Trust: A strong controls and security position builds trust with stakeholders.
Key Features of a Digital Audit
(Shortcut: Adoption of Quality DOSES)
Adaptation: Digital audit encourages the auditee to embrace the latest technological advancements, providing
confidence to stay updated in a constantly evolving environment.
Quality: A digital audit improves the quality of opinion, leading to a more reliable audit report.
Decision-Making: Digital audit helps the auditee to make informed decisions.
Overview: The digital audit provides a comprehensive overview of end-to-end processes and how technologies
are utilized, controlled, and optimized against standards.
Strategy: The digital audit paves the way for a digital strategy and adoption of new technologies such as AI and
Robotics, usage of analytics and automation.
Efficiency: Digital Audit leads to savings in time, cost, and human effort, enabling processes to operate
autonomously 24x7, driving real-time transactions.
Standardization: Digital Audit allows for the standardization of processes and implementation of controls to
mitigate risk.
Advantages of Digital Audit (Actually it is advantages of auditing digitally)
(Shortcut -- Quality CARE)
Better Audit Quality: Technology's ability to evaluate large volumes of data quickly enhances audit quality by
identifying areas requiring more testing, reducing the risk of overlooked misstatements or issues.
Lower Costs Automation of previously manual processes reduces the time and cost of auditing.
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