it digital transformation is affected almost every area of business including many of which are under the board’s risk oversight per view. I’m David Shaw with directors and boards and here we’re going to be talking about areas where boards may not have considered the impact of digital transformation and that’s on the audit process. If you haven’t thought about your audit in terms of the advantages it can bring to your board. This session will be Illuminating. I’m joined by Sarah Lord, the chief auditor for RSM Sarah also serves on the firm’s board and that gives her a real insight into the competitive advantages that can come from a digitally transformed audit function Sarah. Let’s start with digital transformation itself. What does that mean for board members? David thanks. You thanks for having me here today when we talk about digital transformation. There’s so many things that it can mean to a company and I think of it from a board member perspective. It’s really about understanding what the company that you’re on the board for is doing with digital transformation and that could mean a lot of different things depending on the company. It could be that they’re transforming their business operations. It could be transforming their finances. They could be transforming how they interact with their with their clients and their investors. So do you want to understand is where ask those questions? Where are we as a company? Transforming digitally is it in the how we’re analyzing the data that we’re getting to run our business is it how we’re you know automating some of the activities that we’re doing either internally within how we run the business or in how we work with customers or what other things are we doing to digitally transform the business and then as a board member it’s stepping back and reflecting to say is that is that right is management looking at the right areas. Are we doing enough? And how does this fit into our strategic plan?
Well now let’s talk about the digital transformation of the audit process because that’s not something that I think is on the radar of some board members what’s happening there? Sure, just like in companies a lot is happening in the digital transformation of audits. So we’re looking both in how we interact with our clients and our clients’ data. So as our clients become more digitally enabled and we’re able to also visually enable our Audits and pull in information analyze larger sets of data use that for really identifying risks and saying where do we want to focus our procedures in the audit or also working through clients systems and data to be able to understand where we can do less work because maybe the client or maybe the system that is in place of the client has a lot of controls and enhancements that have been done through the client’s digital Journey. So, you know, in addition we look to automate our internal processes just like companies do so saying where do we have tasks that are being done by people that maybe aren’t that value added or aren’t that difficult to Think Through? They’re not A lot of professional judgment or professional skepticism and those are the important parts of an audit and where we can use digital transformation to automate those it enables us to have more time to be working on the high value the skepticism the Judgment Edition to the engagements. So let’s talk about the board level the benefits you talked about some of the risk assessment that can come out of this but what other kinds of things can boards look forward to from a digital transformation of their audit So I think what boards can really look forward to is being able to have the conversations with their auditor. And when what are you seeing? So as your digitally transforming your audit if you’re able to analyze more of our data, what are you learning from that and what things should we be thinking about it’s something that our board can go in and have maybe a higher level conversation with the auditor based on some of the analysis the auditor is able to do and then compare and contrast that to some of the analysis that the board is getting from management or from internal audit to see where are there consistency is where are there?
Maybe new things that one of those groups is bringing forward that you would want to dig into or maybe ask across the groups for their common understanding what questions should boards be asking especially in the audit Committee of their Auditors on this whole digital transformation. What do they need to know? Sure, you know I think that some of the things that boards would be asking their auditor are what are you doing for digital transformation when you’re looking at our data a big part of being able to use a manipulate data is the quality of the data. Is it is it good you can manipulate inaccurate data that doesn’t do a lot of good from an audit perspective. So as they’re working with management saying what are you learning are our systems that we have in process that the company refining that they’re implemented very well. Are you finding that the data that management is using and providing to us at the board? Is it solid is it accurate? Are you finding as you go as the Auditors you go in and do more with digital information? Are you finding that there’s anything that we should be worried about? And then also looking to understand, you know, does the digital work that’s being done. So that change any of the frequency of conversations is more work being done throughout the year that it would be good to have further conversations with the auditor to be able to have kind of real time insights.
In addition. You know, I think audit companies typically do meet with the others at least quarterly, but is that the right Cadence certainly changes happen? Now with everything that goes digital I worry about and I’m sure boards would worry about maybe the paper trail. Is there anything in the digital transformation here that a board the the audit committee especially needs to worry about with you know, pcaob or others. Sure, so the standard centers a pcaob and the SEC of the SCPA are all closely involved in what’s happening in the world and how we capture audit evidence and that paper Charlie that you talk about. You know, when I first started auditing we would be going through books of pages of invoices, but you think about the companies that you’re working with right. Now how many actually issue paper invoices to their customers a lot of that is already done digitally. And so when we think about the paper trail, it’s then getting into what are the systems that are creating the invoices. How are they being exchanged are there risks that? A system could be manipulated so we get into it’s not you know necessarily a paper trail anymore. It’s an electronic Trail and you know as we get into the advances that you know in moving into digital auditing then you start to talk about things like metadata as opposed to you know, this signature match a signature black from the bank, right? So it’s just a shifting in understanding how you look at the accuracy of the information. Excellent. Well, thank you very much for your time. Yeah, thank you for having me here. I really appreciate the opportunity. it