**5. Discussion and contribution**

The aim of this study was to investigate the impacts of audit digitalization and in this section the findings are discussed.

#### **5.1 Current state of audit digitalization in audit in South Africa**

Although the focus of the initial data collection for this study was focused on the impacts big data, AI and blockchain technology had on the audit industry, none of these technologies is actively used for auditing services by South African audit teams and departments that formed part of this study. The data indicates that 100% of the sampled participants are using technology as part of their audit processes, and 84% of these organizations have formally initiated their audit digitalization journeys. Of the 84% of organizations, 50% have made significant progress. These participants have successfully implemented end-to-end automated audits. These are referred to as 'click-a-button' audits, 'on-demand' audits, 'audit-as-a-service' engagements, and real-time auditing.

All participating organizations are currently using some form of data analytics during the execution of the audit process. This is achieved with a wide range of tools and techniques implemented to best suit this audit test. These analytical capabilities in use ranged from basic data analysis in Microsoft Excel to advanced functions built-in Microsoft Azure. The 84% of organizations that have moved past mere data analytics have implemented RPA to codify all audit steps required for a specific audit test. This combination allows for end-to-end audit automation with the robot logging onto multiple systems, extracting all required information for a specific audit test, and executing the audit test based on the predefined audit procedure. This is possible for all data-driven audit tests. The organizations that have made the most progress on their digitalization journeys (16%) were in a proof-of-concept state with an AI solution to address a wide range of audit tests that were of a predictive nature.

Most participants (75%) indicated that they expect that AI, specifically expert systems and neural networks, and blockchain technology, will fundamentally impact the audit industry.

#### **5.2 Digitalization and the audit process**

The standard audit process can be followed for all different audit types and consists of three main steps, namely: audit planning, audit execution and audit reporting. All participants that have moved towards audit automation indicated that the biggest impact was experienced in the audit execution phase, which also resulted in the most benefits gained. The impacts were described as a complete redesign of the process as the execution of the audit tests were no longer completed by human auditors. This led to significant time saving, shorter lead times between audits, faster audit execution and wider audit coverage. These outcomes allow auditors to spend more time on exception investigation, root cause analysis, opinion-forming, judgment and client engagement, which results in richer and better quality audit reports and improved client relationships.

An industry view was obtained regarding the potential shift of an auditor's role within the audit team from being a classic auditor to a consultant within an organization. Although diverse opinions were obtained, all participants indicated that the role of an auditor would remain due to the need for opinion-forming and judgment, and 50% of the participants highlighted the potential lack of independence, and objectivity should auditors assume a consultative position in an organization.

With the advances in audit automation already evidenced in the South African market, industry views were obtained on the impact and need for interim- and

year-end financial reviews. All participants agreed that the need for these reviews would remain. However, the nature of these audit engagements will change. Instances already exist where these reviews have been automated, where the execution of these reviews is no longer completed by human auditors. The change in the approach has impacted the audit frequency from bi-annual to monthly, it changed the auditor from human to electronic (or robot), and this can impact the audit department responsible for the review between internal audit and external audit depending on who developed the robot.
