This article helps the reader to understand the whole concept of what is a technology called ROBOTIC PROCESS AUTOMATION(RPA) and how it affects the accounting and auditing.
To understand the technical and non-technical side and how this technology is applied in the practice, you may consider this following example, imagine you are an accountant in a multinational company. You have several invoices & other financial records. It’s your daily task to maintain spreadsheet containing name of company, invoice number and date of processing. At the end of the day mail this spreadsheet along with financial records to higher authority.
Over a period of time, you find that this task is time consuming and repetitive. You get frustrated, afraid to complete the task within deadline and also want to complete the task in efficient manner. And finally, you stumble across Robotic Process Automation. Here is a way you may considered to do monotonous work in an easy and efficient manner.
WHAT IS RPA?
Robotic Process Automation is a type of software that mimics the activity of a human being in carrying out a task within a process. It can do repetitive stuff more quickly, accurately, and tirelessly than humans, freeing them to do other tasks. In short, it’s a software tools with artificial intelligence and machine learning capabilities to handle high volume repetitive task which were previously required to perform by human.
THERE ARE SEVERAL MISCONCEPTIONS ABOUT RPA
1. Robots Will Replace Humans
These technologies are not entirely independent as of now. They need humans for high-level thinking. At the same time, RPA allows employees to increase their efficiency and productivity. The manual workforce will be definitely reduced, but it will never replace the complete manual workforce.
2. RPA Will Not Work in Small Industries
A common misconception is that RPA is used only by large scaling productive industries. However, RPA can be applied to almost any repetitive, rules-based, and high-volume business activity in any type of industry.
SOME OF POPULAR RPA TOOLS IN THE MARKET ARE
There are numerous tools available in the market, each providing various functionalities according to your need. But, the top 3 tools in today’s market are **UiPath, Blue Prism, **and Automation Anywhere.
USAGE OF RPA
Apart from imitating human actions, repeating high volume tasks and performing multiple tasks at once, RPA can also be used to do the following:
_Automate the Report Generation:-_** **Makes accurate and timely reports by automating the process of extracting data
_Reduce the Gap between systems:-__ _Reduces the gap between systems by preventing custom implementations
_Assurance of quality Delivers quality:-__ _product by performing testing and automating customer use case scenarios
**_Cross-check information:- _**Data across various systems is cross- verified to validate the information
**_Migration of Data:- _**Unlike traditional systems, RPA allows automated data migration through systems
_Forecast Revenue:-_** **Updates financial statements to predict revenue forecast automatically
_Virtual system integration:-_** **Automated systems transfer data between disparate and legacy systems by connecting them at user interface level
RPA IN ACCOUNTING PRACTICE
RPA has already collected interest from accounting firms, particularly with respect to taxation, advisory, and assurance services. For example, a significant portion of tax activities, such as the calculation of book-tax differences and the preparation of tax returns, has been successfully automated by RPA software tools. RPA is also offered to clients as an advisory product and service. While RPA software has been widely implemented for tax and advisory activities.
RPA IN ACCOUNTS PAYABL
Lowering the overall invoice processing costs and improving and standardizing the account payable process are the key objectives that drive organizations to reassess their AP function. RPA offers great potential to completely transform the invoice processing landscape specifically for the accounts payable teams considering the fact that the process involves a number of manual and repetitive tasks.
The role of Robotic Process Automation in accounts payable is to eliminate all repetitive, time consuming, and low-value tasks such as data entry from employees and allow them to focus on other higher-value tasks.
RPA technology can make the processes simpler for AP professionals, which leads to many benefits. Some of these are discussed below –
RPA FOR AUDITING SERVICES
RPA for auditing services remains in its early stages due to the highly regulated nature of audit services for public companies. Revenue audits can be automated by software robots that perform rules-based functions to execute reconciliations, analytical procedures, and dual-purpose procedures. For example, internal control tests and tests of details. Revenue is generally a high-risk area in audit engagements, and automating the tasks that do not require auditor judgment has the potential to improve audit quality by reallocating the work of auditors to analyzing the differences generated by the RPA software.
RPA FOR RECONCILIATION AND ANALYTICAL PROCEDURES
In the audit of revenue, RPA can assist auditors by logging into a client’s secure file transfer protocol (FTP) site to retrieve related audit evidence, including the listings for current and prior year sales and the trial balance. RPA can then calculate the total sales per the listing and compare it to the total per the trial balance. Assuming the amounts reconciled, RPA can subsequently calculate whether the total revenue amount from the current and prior year listings is materially different, and generate an alert if the difference exceeds the materiality threshold.
RPA STEPS FOR THE AUDIT OF REVENUE: -
IC: Internal control SP: Substantive Testing
RPA FOR DUAL-PURPOSE AUDIT TESTS
RPA can be programmed to calculate whether the price and quantity are different from sales invoices, sales orders, and shipping documents, and to generate alerts for sales transactions that contain differences in price and quantity. By automating these procedures, auditors can reallocate their time to more value-added activities, which will inherently increase audit quality. By using RPA software, auditors can obtain a better understanding of the client’s business operations and therefore be able to more precisely assess the risk of material misstatement.
RPA- BASED AUDITS IMPLEMENTATION STAGES
RPA implementation consists of three main stages:
1. Process understanding
The audit processes that would benefit the most from RPA are those that contain defined audit tasks that are repetitive and time consuming and that do not require audit judgment. Public accounting firms may identify an audit process where RPA can add value by considering expert knowledge, such as that of revenue audit leaders, and calculating the actual hours spent performing audit tasks. Furthermore, the most important factor to justify automation is the number of times a firm needs to perform a particular function, which is mainly dependent on the number of similar audits being done.
Once a firm determines that a process is a good candidate for RPA implementation, the next step in understanding the process is to divide audit tasks into small audit modules that can be interpreted by software programs. For example, the task of importing or exporting data is intuitive to a human user, but for a software program, the task would have to be divided into a series of small steps:
2. Audit data standardization
RPA audit applications need consistency across data fields. Audit-related data may come from different sources, such as the client’s ERP systems or third-party asset managers; thus, data field names in different audit-related reports that contain the same information may be different. If RPA software will not be able to execute the intended audit test. Consequently, the second stage in RPA implementation is for public accounting firms to create an audit data standard for each process that will be replaced by RPA.
3. Execution of RPA-based audit tests
The final step in the RPA audit implementation is framework the program software. To automatically execute audit tests and deploy it on real-world audit engagements
COMPANIES USING RPA
There are so many hyper-growth companies like the listed below use the top 3 RPA tools in today’s market to sustain in this industry.
In last want to conclude by saying that _“Technology like art is a soaring exercise of the human imagination”._
_ Robotic Process Automation_ allows companies to reach operational excellence without sacrificing quality and valuable time. And also, to make your accounting and auditing processes seamless and guarantee continuous growth.
Analyzing present covid-19 pandemic, I personally believe RPA is going to be turned into new normal which will not only ease our work but help us to complete our task in efficient and effective manner.
I hope you have a happy reading.
Author’s Name- MAHIMA PATEL
_Student Registration No-_WRO0613596