Efforts to DX

Aug 30, 2021

From around the spring of 2020, a pandemic caused by COVID-19 has made it necessary to rapidly change the business model. Many companies are introducing remote work, using web conferencing, digitizing operations that handle paper documents and slips, introducing electronic approval, etc. as part of measures to prevent the spread of infection, and digital transformation of companies (DX) (* 1) initiatives are accelerating at a stretch. It goes without saying that it is essential to transform auditing operations in the auditing industry as companies digitize.

On the other hand, in the audit industry, the quality of audits is being scrutinized due to the constant number of cases of inappropriate accounting, the sophistication of fraudulent methods, the acceleration of digitization, and the increased risk of fraud due to economic fluctuations. There is a need to improve the ability to detect accounting fraud. In order to strengthen audit quality and avoid the responsibility of auditors, it has become necessary to refine audit theory, implement a huge and comprehensive audit procedure, and prepare a large amount of documents. In such a harsh audit environment, if the conventional method is used, the staff will be overwhelmed with a huge amount of work, and will spend time on the essential deep audit such as in-depth questions, on-site feeling, deep consideration, and investigation of questions. The situation is limited and may lead to quality deterioration.

We, HLB Meisei LLC, have transformed our internal structure to tackle DX, using Web communication tools, cloud-based data, digitizing records, automating data analysis, utilizing data auditing tools, etc. We are researching RPA tools and developing DX human resources.

I. Use of web communication tools
From April 2020, we introduced Microsoft Teams, a web communication tool, as part of the development of a remote audit system.
This will activate smooth communication inside and outside the corporation through web conferencing and chat, improve work efficiency by centrally managing files and information within each audit team, and browse and edit with the PC screen sharing function. We are trying to make it paperless.

II. Cloud data
As an audit corporation that handles important corporate financial data, we have been actively working to strengthen security. However, in order to respond to the intensification and sophistication of viruses and cyber attacks in recent years, we have determined that there is a limit to the security measures provided by the in-house file server. From April 2020, we have completely shifted the storage and sharing of internal data to a cloud storage service linked with Microsoft Teams. In addition to strengthening security, the cloud computing of data has created an environment in which staff can access data without restrictions on time and place, enabling remote audits and telecommuting. In addition, we have built a system to continue our business in the event of a disaster.

III. Digitization of records
In the past audit work, the management of a huge amount of paper documents has become the norm, but since several years ago, our corporation has contributed to the conservation of forest resources, the control of global warming, and the solution of environmental issues. We have promoted the digitization of records.
By using Web communication tools and making data cloud-based, we have been able to accelerate our efforts so far, and most of the documents are now digitized and paperless, except for the documents required by standards.

Ⅳ. Data analysis automation
As described in "V. Utilization of ActiveData, a data auditing tool," we have been actively using electronic data for auditing operations. However, until now, each audit team had to manually verify financial figures obtained from clients, cleanse data, and create analytical data, and it took a lot of man-hours to process the data. For many years, we have been working on automating the processing of electronic data received from clients in order to improve the efficiency of such operations.
As a result, a prototype of a course record automation tool was completed in March 2021, and operation began in April for some audit work. By using this tool, it is possible to automate a series of operations from importing, processing, extracting, tabulating, and creating analytical data of financial numerical data obtained from clients.By automating data analysis, it is possible to quickly shift to essential audit work such as examination of analysis materials, hearings, and verification of abnormal data, so that the core part of audit practice can be deepened and deep audit procedures can be carried out.
In the future, we will expand the operation of automation tools to all audit work, improve the automation tools to make them more efficient and effective, and develop automation tools for other audit work. Is the issue.

Utilization of data audit tool ActiveData
Since the establishment of this corporation, I have felt the need to introduce CAAT, and have been involved in the production of the Japanese version of the data auditing tool ActiveData. Since 2011, I have incorporated it into our auditing practice and positioned it as a core data analysis skill.
Since 2021, we have adopted a tool analysis method for automating data analysis in earnest, but Active Data is indispensable for audit-specific analysis.
Our corporation has two pillars, a tool for automating data analysis and ActiveData, and we are trying to perform deep audits such as analyzing a huge amount of data from various angles to detect and respond to financial fraud.
*ActiveData: http://fraud.co.jp/

VI. Start of utilization of RPA
We are planning to improve the efficiency and automation of routine work by adopting the RPA tool "Microsoft Power Automate Desktop" and introducing Robotic Process Automation (RPA). Although it is still in the research stage, we are studying business processes to which RPA can be applied, and constructing and testing flows.

VII. Development of DX human resources
In order to carry out high-quality audits that are expected by society and by demonstrating deep audits and leadership functions, we have traditionally conducted more than 100 hours of training during business hours per year. Human resources are at the core of promoting DX. We have significantly reformed our training curriculum and increased the number of courses on IT, statistics, data analysis, etc. We are actively developing DX human resources so that audit staff can utilize digital technology and fully demonstrate their data analysis capabilities.

※1:DX is a concept proposed by Professor Erik Stolterman of Umea University in Sweden in 2004.
“The digital transformation can be understood as the changes that the digital technology causes or influences in all aspects of human life.“
After that, the Ministry of Economy, Trade and Industry of Japan defined DX as follows.
“Companies respond to drastic changes in the business environment, leverage data and digital technology, and transform products, services, and business models based on the needs of customers and society. At the same time, change the business itself, organization, process, corporate culture and culture, and establish a competitive advantage. “
("Guidelines for promoting digital transformation (DX promotion guidelines) Ver. 1.0", December 2018, from the Ministry of Economy, Trade and Industry)