Assurance Innovation at PwC

Gary Rapsey: My role is to look at how the digital revolution will affect our profession, challenging the way we do things today and looking at the potential for technologies to augment what we do. I’m particularly interested in fusing the best capabilities of people and technology to drive enhanced quality, higher efficiency and more insight.

GR: The events of the past year have shortened the horizon for the development and adoption of new things - whether it be tech or ways of working.

For me in my role, I’ve experienced the challenges of innovating and creating new things in an entirely virtual environment - I’ve missed some of the collaboration that is better done face to face. There’s no substitute for spontaneous interactions.

GR: Things change fast! The pace and scale of change over the last year could not have been predicted.

Technology has a huge role to play in how we develop in the future. Our business has been resilient in part because we have invested significantly in technology and our people could move seamlessly to working from home.

Our people are incredibly resilient and have stepped up to the challenges - it’s emphasised to me more than ever the importance of culture, leadership and teamwork.

When you’re thinking about where you work, you need to think about the work you’re doing. Virtual working is good for activities that need personal focus, but it’s hard, for me at least, to be creative in a virtual world. There’s a need for balance to provide both hyper-productivity and hyper-collaboration.

GR: Cash.ai is now called AI Audit for Cash.

Business should not be limited by what’s humanly possible, and neither should the audit. The audit of the future will require a combination of human and machine intelligence to unlock its full value. Advances in AI and process automation are moving us towards that future, fundamentally transforming the way audit work is performed and documented. We believe it is possible to develop an AI-enabled audit and our objective was to develop the first application using AI to automate, in essence, the complete audit of cash. We wanted to deliver:

• Improvements to quality through consistent, efficient and accurate execution of audit testing and documentation
• More time for our people to focus on the things they do best, like understanding risk and working with our stakeholders on matters identified
• A better experience for our stakeholders and people supported by an enhanced user experience and simplified processes.

GR: Expert auditors from across our network, working with Silicon Valley data scientists and UI/UX designers from London came together to build AI Audit for Cash.

AI Audit for Cash has been the first stage of developing an AI-enabled audit that can perform activities previously carried out by auditors with extraordinary speed and accuracy. We chose cash because it’s relevant to most audits, regardless of size or sector, and it comprises a large number of manual, time-consuming and standardised activities. We challenged ourselves to automate not just elements of the audit of cash, but the whole end-to-end process.

We worked with a number of countries to understand local requirements and to get their feedback during the development process, such as Sweden, Canada, US, Germany.

In the UK, AI Audit for Cash was used on a significant proportion of clients’ audits of cash over this last busy season (January to March), and we’re planning to run pilots over the next 12 months in other countries.

GR: Feedback from our people has been extremely positive - they like:

• • the structure and the clear guidance it provides
  • the user interface and the visibility over the actions required
  • the transparency it gives reviewers in knowing how conclusions have been reached
  • the speed at which it performs the more repetitive tasks accurately, eliminating opportunity for manual error.

We’ve learnt that if the usability and design of the product isn’t intuitive and enjoyable, people simply won’t use it.

In terms of ROI, the results of our initial pilots significantly exceeded our expectations. It has supported our continued focus on quality through the consistent application of our methodology, and improved the experience for our people.

GR: Our primary focus is to make sure tech helps deliver high quality audits. A by-product of that tech is to provide insights, both for our auditors and for the companies we audit, such as anomalies or deviations from what we would expect.

What really interests me is the interaction, or fusion, of people and technology. I see huge potential in combining the expertise of our people with technology that can do certain tasks better than people can.

This isn’t about human replacement, it’s about human augmentation. In the future, as this relationship between people and tech develops, our people will need to develop new skills and be trained differently.

Humans will go up the value chain, they have huge wisdom. Augmenting them with intelligent analytical tools makes their job easier and makes them more effective. We’re seeing people gravitating towards wanting this power much faster than we thought.

GR: Audits rely more and more on data, so there’s an obvious interrelationship between auditors and data analysts. Auditors are increasingly performing data analysis as part of their work.

In the future, we’d like to see technology do more of the data analysis and auditors bring their critical thinking, understanding and interpretation.

GR: AI clearly has a lot more potential, it’s still in its infancy - we see the part it has to play increasing over the coming years as it becomes more advanced.

Blockchain will have a massive implication, not just for clients and supply chains, but also for the audit. Where we have a secure and trusted blockchain, as auditors, there is an opportunity for that to provide evidence of the existence of assets and occurrence of transactions. The rate and scale of adoption is the driving force behind how quickly this will have an impact.

PwC has already done some exciting work in this area looking at the audit of cryptocurrency. We brought together our leading Assurance professionals, software developers and blockchain experts to develop assurance solutions to support this complex, emerging area.

GR: I believe the audit of the future will involve people doing what they do best, such as applying judgement and dealing with ambiguity, and machines will do what they do best, such as processing, reviewing and testing huge quantities of data.

As for the scope of audit, the gap between what an audit delivers and what stakeholders expect is wide, and the challenges facing auditors are significant. We believe audits should continue to have relevance for businesses and society. There is an opportunity for the audit of the future to be broader, deeper and more forward looking. Stakeholders are already looking for assurance beyond financial information, such as climate.

GR: Virtual Reality and simulation will likely play a significant role in how we train our people in the future. As in all areas of business, auditors will need to continue to upskill themselves in new tech - not just in how to use it in their day-to-day roles, but also to understand the impact it is having on how companies do business.

However, it’s not just about technology. Auditors will need to understand new business models, risks, changing regulation, and have deep expertise in new areas where assurance is needed, such as ESG reporting.