27. May 2021

A matter of digitization

New auditing – a continual improvement process

Audits are an essential part of management systems. In addition to determining whether products, systems and processes comply with the requirements, audits are an important tool for identifying potential for future developments and strengths. Thus, audits are also a central tool of the continual improvement process (CIP), which companies consistently go through. Audits should therefore not only be carried out to ensure compliance with the rules – the benefits of audits lie in much more far-reaching effects, such as uncovering internal excellence, transferring this to other business processes and approaching the operational purpose. This may be achieved in internal as well as in external audits, in classic on-site audits or in digitalized audits.

However, since the current circumstances and the measures taken to contain the COVID-19 pandemic generally do not allow business processes to be carried out as usual, the audit procedure has had to be adapted; this resulted in an increased shift to remote audits.

Where do we stand today in terms of remote audits? Where is the journey heading? And can we already speak of Artificial Intelligence in auditing?

Audits with added value

Our society is currently undergoing a dynamic and complex transformation: new priorities set by Generation Y (such as searching for meaningful activities, the so-called purpose, integrity and personalization), international economic competition, constant availability of information and a changed safety need are affecting the “world of auditing”. This requires a general willingness for change and agility, but also early recognition and presentation of nonconformities as well as strengths and opportunities. The integration of all these requirements is essential in order to be able to contribute to a successful future direction of organizations by means of audits. However, an audit should not stop at reviewing formal criteria, but should also verify, validate and scrutinize. It should always represent the clear added value for companies and be aligned with the company’s objectives and direction.

qualityaustria audits are oriented towards added value and benefits for our customers. In this context, competence of our specifically trained auditors has the highest priority. The performance and effectiveness of the audited management system is of central importance.

Digitization – Opportunity or risk?

Digitization had already arrived in audits to some extent before the outbreak of COVID-19. On the one hand, in the audit itself, where documentation has been done using tablets, notebooks or apps, and photo and video evidence from the production site, instead of “pen & paper”. On the other hand, more and more audits have been conducted „remotely” using different tools. ISO 19011, for example, already allowed the possibility of conducting remote audits in 2011.

Due to contact restrictions that still apply in many places, remote audits, in which the auditor and the client company are in contact via video, audio or data exchange, have experienced an enormous growth spurt; nevertheless, it is important to have a look at the next few years to examine the influence and potential even in phases not characterized by a pandemic, and in which all parties involved are free to choose between different remote types.

Some industries, such as IRIS in the railway sector, have developed their own regulations that specify when and how, and under which circumstances remote audits can be carried out, and define what preparations and risk assessments will be necessary.

The term “audit” comes from the Latin word “audit”, meaning he, she or it hears. In other words – auditors shall hear what companies have to say. However, this significant aspect of remote audits often proves to be a technical obstacle due to connection failure, and the general dependency of the network infrastructure. Another challenge often emerges in initial audit situations, in which trust between auditor and client still has to be built up, because ultimately, the ‘field of vision’ the auditor gets to see is determined by the company. The quality of the digital audits also stands or falls, inter alia, with the willingness of all persons involved to engage in the respective situation.

Read the article on your frequently asked questions & our answers to find out more about which audits may be carried out remotely, and what benefits or possible risks might arise from remote audits.

Did you already see our qualityaustria video?

"Remote-Audits!" (German only)

Watch Video here

Artificial Intelligence in audits

When we turn to the topic of Artificial Intelligence (AI) in auditing, we tend to think of machine learning instead of robots or avatars that master all of our tasks. The analysis and evaluation of very large amounts of data using bots, for example, is already being used successfully in many accountings.

Where data is a dime a dozen, the use of AI is suitable for generating and structuring data, so that patterns can be found and clustered.  Here, the likelihood of error is much lower than if this was done by human hand. We have not yet arrived in the field of AI in system audits – but will it stay that way?

Future prospect

Just as companies in general are subject to a continual improvement process, this also applies to various audit forms. These are continuously and also disruptively developed and expanded to include digital components. As we all know – the only constant in life is change!

In the future, it will probably no longer be a question of whether digital tools or Artificial Intelligence are used in audits, but to what extent they are used! With digitization, new forms of quality are emerging all the time, which must be weighted up depending on the field of application and area of use. The focus of all audits is still on individual benefits and effectiveness for organizations, in order to be able to position the audit as a sustainable investment in the future.  Suspense continues!

Author

Network partner

Mr. Wolfgang Pölz, MSc, MBA

Network partner, Product Expert International Railway Industry Standard (IRIS) and ISO/TS 22163

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