Page 239 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
- Connectivity
- Data Collection
- Analytics
Applications of IoT:
- Connected Cars & Manufacturing Equipment
- Smart Home Security (e.g., doorbell and outdoor cameras for remote viewing)
- Predictive Maintenance (e.g., data predicting equipment malfunctions)
- Smart Inventory (e.g., refrigerators auto-ordering eggs)
- Cooking Assistance (e.g., ovens scanning QR/bar codes for optimal cooking settings)
- Customer Behavior Research (noting potential privacy and security implications)
- Impact on Business:
- Altered strategic objectives.
- Transformation of business models.
- Changes in risk profile due to new regulations and laws.
Audit Implications of IoT
- Change in Audit Approach: Auditors might shift from manual controls to evaluating new automated systems.
- Skill Requirements: Upskilling might be needed for auditors to assess automated control designs and
operations.
- New Transaction Pathways: Introduction of tools, like mobile payment processing, necessitate fresh audit
considerations regarding transactions, processes, and controls.
Risks Associated with IoT
- Device Hijacking
- Data Siphoning
- Denial of Service Attacks
- Data Breaches
- Device Theft

AI (Artificial Intelligence)
AI (Artificial Intelligence) Overview
- Definition: AI allows machines or systems to think and learn using data-driven algorithms.
- Mechanism: Decisions arise from complex algorithms based on patterns or behaviours acquired over time.

Applications of AI:
- Transport & Automation: Self-driving cars and manufacturing robots.
- Digital Assistants & Services: Siri, Amazon Alexa for tasks like device control and customer service chatbots.
- Optimization & Prediction: Robots optimizing cleaning routes, AI predicting best travel booking prices
from historical data.

Implications for Auditors
- Algorithmic & System Review: Auditors should inspect AI's logical flow, checking for unintended biases,
effectiveness, and security vulnerabilities.
- Understanding AI's Impact: It's essential to discern AI's influence on transaction flows, management's
analytics/reports, and its role in decision-making processes.
- Oversight & Risk Management: As management might lean more on AI, auditors need to understand shifts
in risk attention and possible changes in the audit approach.

Risks Associated with AI
- Security & Data Concerns: Increased data sources heighten security vulnerabilities and demand explicit
consent for data usage.

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