1. Intelligent Process Automation in Audit
Abigail Zhang
Continuous Auditing & Reporting Lab
Rutgers Business School
43rd WCARS
11/03/18
Introduction of myself(2nd year PhD student, start RPA projects in audit since more than 1 year ago) and my current work. Proposing the next step of process automation, IPA.
Thanks to Miklos, Kogan, Andrea, Arion and Mauricio
Set the tone: work-in-process, hope to get feedback, but ask questions after the presentation.

2. Overview Introduction “Auditor-in-the-loop” IPA ecosystem
Audit workflow driven by IPA
Implementation framework
Ongoing and future research

3. Introduction … … … … … … RPA PPA IPA Audit workflow/process
Pre-defined Process Automation (PPA): the patterns of the process are pre-defined by human.
Task 1a
Task 2a
Task 3a …
Activities
Activities
Activities
Task 1b
Task 2b
Task 3b …
Initial state
Robotic Process Automation (RPA): run application software in the same way that a person works with that software.
Activities
Activities
Activities
Task 1c
Task 2c
Task 3c …
Activities
Activities
Activities … … …
Intelligent Process Automation (IPA): the patterns of the process can be learned and predicted by AI, and then recommended to human.
Audit automation is not a new concept. Start from 1980s, what’s new is we have alternative ways to achieve automation.
Audit workflow (example of audit planning to substantive testing)
Start from an initial state and decide the first task to take, and based on the results of the first task, decide the second task, and so on. And within each task, there are activities. Example: in audit planning initial state: client raw data. Task 1: data cleaning, initial testing, substantive further testing
Currently the workflow/process automation are predefined, meaning, …. And I call it PPA. And recently we have a new technique, RPA, to facilitate PPA. Our current work.
Limitations: each and every situation. Can we make it more flexible? In terms of both inter-tasks, and intra-tasks.
Patterns of the inter-tasks and intra-tasks
PPA: every possible situation needs to be considered, structured data
Outside IPA: inter-task patterns are learned
Inside IPA: intra-task patterns are learned
Process Automation
RPA
Objective:
Establish a framework and build a prototype of IPA in audit, and evaluate their efficiency of effectiveness.
PPA
IPA

4. Artificial intelligence
IPA Ecosystem in Audit
IPA Ecosystem
Artificial intelligence
Machine learning
Computer vision
Virtual agent
NLP/
NLG
Others
RPA
Cognitive computing
Other technologies
Data analytics
Drones
Smart contracts
Blockchain
IoT
What tools can auditors utilize? IPA ecosystem. Different parts are orchestrated to achieve this intelligent and flexible process automation.

5. The “Auditor-in-the-Loop” IPA Ecosystem
IPA automate different types of audit tasks in different degrees. Orchestrated by the smart workflow.

6. The Audit Workflow Driven by IPA
Smart workflow
Smart workflow
Smart workflow

7. Framework of Implementing IPA in Audit
1. Process understanding
2. Process redesign
3. Process modularization
6. IPA prototype testing and modification
5. Process orchestration
4. Process automation
HP example.
PPA/RPA
Algorithm training and testing

8. Potential Application of IPA in Audit-Inventory testing
AI and cognitive technologies
Human
Think
Drones, NLP, IoT, etc.
PPA/RPA
In inventory testing.
Based on the counted number, machine learning predict.
Unlike RPA, which can only execute pre-programed procedures, IPA can “sense,” “think” and “act.” The data and information “sensed” by …will be forwarded to the thinking part. In thinking, when the AI and cc are not able to deal with certain tasks, it will forward them to a human and learn from what the human does. Then the thinking part will give order to the acting part, where the RPA will … If necessary, the sensing part will again obtain data from what’s been executed from acting, closing the loop and starting the circle again.
Feel Do

9. Ongoing and Future Research
Ongoing research
RPA component of the IPA ecosystem
Prototypes in audits
Impacts on audits
Future (not too far) research
IPA in audits
Impacts
Especially small and medium sized audit firms.

10. “If we knew what it was we were doing, it would not be called research, would it?”
-Albert Einstein
Thank you!