Cangemi: Perspectives from FEI Committee on Finance & Technology
Michael P. Cangemi is a senior fellow at Rutgers and a founding advisory Board Member of the Rutgers Continuous Auditing and Reporting Lab. The opinions expressed in this article are solely those of the author.
Today’s CFOs and senior management expect more from internal audit and GRC functions. This was a common theme at the FEI (Financial Executives International) CFIT (Committee on Finance and Technology) meeting, held at PwC’s Emerging Tech Center in Tampa, Florida.
In a session on the Audit of the Future, PwC explained they are working to simplify the audit with better use of technology and to improve phasing and communications throughout the audit. They report that their clients want to get more insights into the business and are expanding their use of data analytics to uncover more insights.
PwC’s previous approach was to rely on sampling. However, for some clients they are looking at 100 percent of the populations and gleaning analytical insights from the data. This should already be the standard for internal audit, and those not taking this approach should be working with great urgency to adopt it as soon as possible.
Public accounts need to update standards and approaches
During the meetings, it was noted that public accountants have many issues that need to be addressed, such as the need to update their audit standards for new audit technology approaches.
There are many initiatives in the works, and progress is being made. For example, as I mentioned in a previous blog, RADAR, a project that includes the big 4 and other organizations, is working to create a framework for analytical data selection and data mining. The project focuses on a number of issues including addressing the shift from sampling to full population audits and how to select the higher risk portion of those populations.
Emerging technology trends
In a session titled Key Emerging Technology Trends That Will Matter Most to Business, PwC focused on new technology developments including the cloud, the Internet of Things (IoT), the role of social media and how these are quickly becoming “foundational technologies”. It was also noted that companies are accelerating the adoption of new technology versus waiting for the next new big breakthrough.
In addition to comfort with technology, the cost of new tech is becoming easier to rationalize. PwC’s example was of how a $100K investment for five Robotic Process Automation (RPA) applications, also known as bots, can save you exponentially more than your initial investment. Cloud SaaS systems are also very good value.
The presentation also covered other tech trends like analytics and artificial intelligence, Blockchain, drones, 3D printing, virtual reality and augmented reality; however, I would also add continuous monitoring as a key foundational technology that every organization needs to consider.
CFOs are interested in analytics but need audit
PwC reported that while CFOs are interested in analytics, most are not aware of the implementation issues. They often think “if they just had the analytics”. This is an opportunity for internal audit to take a leading role because they know about analytics tools and have the experience required for data, process and people readiness.
The business world is moving faster and relying more on technology. It was clear from these meetings that internal audit, GRC and compliance functions must move with this new pace to satisfy CFOs and senior management.
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About Michael P. Cangemi
Michael P. Cangemi is a senior fellow at Rutgers University and serves on the Rutgers Continuous Auditing and Reporting Lab Advisory Board. A former CFO and CEO, a prolific writer, active speaker and senior advisor to various companies, Mr. Cangemi now focuses on providing continuous auditing, continuous monitoring and analytics intelligence for GRC, Finance and Business Process Improvements. He also serves on FEI’s Committee on Finance & Technology (CFIT) and their GRC Sub Committee; the EDPACS Editorial Advisory Board; and the ISACA Governance Committee.
Connect: Michael P. Cangemi