Cognitive Audits

August 23, 2019

By Anthony Pugliese, CPA, CGMA, CITP
In my opinion the audit of the future will look and feel very different from what we see today—it will be heavily automated through the use of technologies like robotic process automation (RPA) and Blockchain, and it will be more “cognitive” in nature through the use of machine learning technologies.

Perhaps you’re already thinking ahead about what happens to the people involved in the audit—you, the accountants who provide audit services to your clients. After all, we’re only human, and can’t help but think about the impact of new and disruptive technologies on our own jobs and roles. I don’t believe the accountants are eliminated from the audit role; rather, I believe their roles and responsibilities evolve. But let me come back to that in a moment.

Computers of all sizes and capabilities—think smartphones and voice assistants, for example—permeate every aspect of our personal and professional lives. They don’t just help us through life and work challenges; they solve our problems, manage our schedules, tell us what to do and hopefully make our lives simpler … OK, maybe sometimes they seemingly add complexity. But I truly cannot imagine life today without my laptop, smartwatch, smartphone, connected car, smart thermostat and lights, wireless headphones, virtual assistant and so much more. Computers are everywhere. They can do virtually anything humans can do. And they’re getting smarter because they can learn. In other words, computers and technology are becoming increasingly cognitive.

Which brings to mind something Albert Einstein is credited with saying: “It has become appallingly obvious that our technology has exceeded our humanity.” I wonder what he would think about the pervasiveness of technology today. It’s ubiquitous. It’s efficient and smarter than many of us. It can look like us, talk like us and think almost like us. And it has the capacity to assume roles that we humans typically held. Accountants and auditors also are being sucked into these technological disruptions. In fact, they’re prime targets for squeezing greater accuracy, efficiency and profitability out of services such as auditing that have been somewhat commoditized over the last decade.

New technologies are breathing fresh opportunities into what were formerly traditional audit services. In a recent article on, Creating a Cognitive Audit, Babson College IT Professor and Deloitte Analytics Senior Adviser Tom Davenport and Jon Raphael, partner and chief innovation officer of the audit practice at Deloitte, shared their insights into the evolution toward a cognitive audit: “It’s likely that over the next several years, substantial portions of public and private company audits will be augmented by cognitive technologies. In fact, much of the audit profession is exploring, experimenting and moving forward with efforts to use various cognitive technologies in the audit.”

Although technologies like RPA, Blockchain and machine learning will be the enablers for a cognitive audit, the human component is not eliminated, according to the experts. Quite the opposite in fact. These technologies may bring automation and artificial intelligence to the audit process, but they also benefit the auditors in several ways. Auditors will be freed up to conduct important strategic work around risk areas related to the audit and auditors can challenge their own thought process and professional judgment through modeling of alternatives using advanced technologies. Cognitive audits will use machine learning and artificial intelligence to not only perform some tasks of the audit, but also learn as they go forward. This helps to improve audit quality and cement the place of your “cobot” audit partner as a valuable member of the audit team.

I would be remiss if I neglected to let you know that CalCPA takes the impact of technology on accountants very seriously. New and emerging technologies like these I’ve discussed here are a focus of our CalCPA Member Competency and Learning Team. On Sept. 20, in collaboration with the Center for Corporate Reporting and Governance at California State University, Fullerton, CalCPA will host the 18th Annual SEC “Hot Topics” Conference Webcast for our members. This learning event will include discussion about the audit of the future, as well as other technology topics (e.g., Blockchain, cryptocurrency, cybersecurity) and regulatory updates from the SEC, FASB and the PCAOB. 

I hope you get involved and participate in this important webcast to learn more! If he were alive today, Benjamin Franklin would likely encourage you to attend; he once said, “Tell me and I forget. Teach me and I remember. Involve me and I learn.” 

In my opinion, he’s right.

Share your thoughts with us.

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