Automation and the transformation of the audit process : A qualitative research on the impact of automation on the audit process

Abstract: Technology is advancing at a rapid pace impacting many industries including accounting and auditing industries. Technological development has enabled implementation of automated accounting systems that make it possible for firms to shift from traditional accounting to automated accounting. This change in record keeping has a direct influence on audit firms. As record keepings changes, it puts pressure on audit firms to implement systems that cater for the change in their clients’ systems. This promotes automated auditing where the use of tools such as data analytics and AI are of importance. There is prior research related to accounting system, automated accounting, automated auditing and the impact of technological development on various industries and professions. However, the impacts of automation on the audit process remain unexplored, especially in Swedish audit firms. As there is only a little literature on the subject, in spite of considerable amount of discussion inside and outside academia about how automation impacts the audit process, the subject is seen as current and interesting. Therefore, the main purpose of this research is to discover how automation impacts the audit process in Swedish audit firms. The research question for this thesis is “How does automation impact the audit process?” The audit process is seen as being closely related to audit quality, audit efficiency and competence and skills of auditors. Thus, as sub-purpose, this research also aims to find out how the mentioned aspects are impacted by automation. In this thesis a qualitative approach was taken. Semi-structured interviews were performed with various auditors in order to explore the subject in question. Empirical findings of this thesis suggest that the execution stage of an audit process will be impacted the most by automation. The shift can already be seen but in the future the emphasis will be even more on testing internal controls than substantive procedures. It was also discovered that audit quality and audit efficiency are expected to increase because automation is believed to decrease the amount of human errors and speed up the audit process as well as help auditors draw better conclusions. Competence and skills of auditors were found to be as important in the future as they are nowadays, but the findings suggest that a higher level of IT knowledge and skills are desired in the future as more technology will be integrated in auditing. This research offers theoretical, practical and social contributions. This research extends the existing knowledge on the subject in question. It also helps accounting and auditing firms to understand the impact of automation in the field as well as gives them an opportunity to prepare in advance for changes that may occur. Additionally, the findings of this research can give educational institutions an indication in which way the curriculum in universities should be adjusted. On a national level the findings can be used to encourage continuous learning.  Furthermore, this research can be used as a point of departure for future research.