Jurnal Teknik Informatika dan Sistem Informasi ISSN 2407-4322
Vol. 10, No. 2, Juni 2023, Hal. 21-28 E- ISSN 2503-2933 21
Adoption of Robotic Process Automation in Auditing Process in Metropolitan Indonesia: A Qualitative
Approach
Evelin Candratio1, Mayang Puti Harita2, Ary Daniel Hartanto3, Marko Sebira Hermawan4
1,2,3,4
Accounting Department, Binus Graduate Program –Master of Accounting, Bina Nusantara University,Jakarta, Indonesia 11480
e-mail: *1[email protected], 2[email protected],
3[email protected], 4[email protected]
Abstract
Currently, digital transformation is unavoidable. Digital transformation has an impact on increasing company performance and efficiency by making changes to the business process.
In the audit process, Robotic Process Automation is one of the processes that could be done by the auditor in the audit implementation so it can be faster, more efficient and accurate, especially in data collection and initial analysis. RPA can assist auditors in collecting the necessary data in the audit process in a shorter time. The external auditor has a contract for a short period with the client, which is not necessarily extended to the next period, while the cost of implementing the RPA is quite high. The effort used in building, developing, and implementing RPA in an activity is very high. Meanwhile, the audit processes that can be assisted by RPA are still limited, as well as lack of effectiveness and efficiency. Lack of human judgment is one of the biggest challenges in implementing RPA.
Keywords: Robotic Process Automation, Audit, Public Accountant, Technology Adoption, Audit Digitalisation
Abstrak
Saat ini, transformasi digital tidak dapat dihindari. Transformasi digital berdampak pada peningkatan kinerja dan efisiensi perusahaan dengan melakukan perubahan pada proses bisnis.
Dalam proses audit, Robotic Process Automation merupakan salah satu proses yang dapat dilakukan oleh auditor dalam pelaksanaan audit agar dapat lebih cepat, efisien dan akurat terutama dalam pengumpulan data dan analisis awal. RPA dapat membantu auditor dalam mengumpulkan data yang diperlukan dalam proses audit dalam waktu yang lebih singkat.
Auditor eksternal memiliki kontrak jangka pendek dengan klien, yang belum tentu diperpanjang ke periode berikutnya, sedangkan biaya pelaksanaan RPA cukup tinggi. Upaya yang digunakan untuk membangun, mengembangkan, dan mengimplementasikan RPA dalam suatu kegiatan sangat tinggi. Sedangkan proses audit yang dapat dibantu dengan RPA masih terbatas, serta kurang efektif dan efisien. Kurangnya penilaian manusia adalah salah satu tantangan terbesar dalam mengimplementasikan RPA.
Kata kunci: Robotic Process Automation, Audit, Akuntan Publik, Adopsi Teknologi, Digitalisasi Audit
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1. INTRODUCTION
According to Chan and Vasarhelyi quoted by Huang and Vasarhelyi, auditing is a labor- intensive and time-consuming process in the traditional sense [1]. Auditors play an important role in developing and safeguarding an organization's value [2]. However, data reveals that a scarcity of resources can cause severely limit the performance of audit teams
Audit companies, who are notorious for being slow to adopt new technology, are suddenly understanding the influence that these developing technologies may have on their profession, especially given the audit industry's stagnant revenues from its main business [3], [4].
The automation of audit work can improve the efficiency of both financial and non- financial external audits, while data analysis generated by the client and third parties can increase the effectiveness of such audits, allowing for a more comprehensive view of the client's business and the associated risks [3]. If implemented, it has the potential to have a considerable influence on auditing practice [3]. Mid-sized audit companies have caught up with and even surpassed the Big Four in terms of IT use and perceived importance, whilst small audit firms are still underperforming in their use of IT [3], [5].
Along with the development of technology, some existing jobs are being replaced by robots, such as tellers in banks, waiters in restaurants, etc. Likewise in the auditing process in the world of accounting, some jobs that are usually done repetitively are being replaced by robots [6, pp. 46–49] . Technology advancement has been rapid in recent decades and is becoming more important as accounting and auditing potentials are identified [7] (Gotthardt et al., 2020).
Robotic Process Automation (RPA), often known as 'robotics' or 'robots,' is a automation rule-based process using software that uses the user interface and may operate in any program, including web-based applications, enterprise resource planning (ERP) systems, and mainframe systems [8]. RPA allows you to automate tasks that would otherwise be done by hand [9] (Ernst & Young, n.d.-a). Many traditional corporate processes are being disrupted by RPA, which has become a fundamental element of operations, reducing laborious, time- consuming, and error-prone jobs [10].
RPA acts as a "virtual human," following a set of instructions and reproducing the manual processes required to complete jobs [10]. RPA solutions work with people to increase speed, accuracy, and production while collaborating with them [9]. RPA enables end-to-end process automation focused on a large number of iterative multi-level tasks with many validation rules [10]. RPA can also adapt, appraise, and execute cognitive activities such as detecting, predicting, and inferring, and it uses artificial intelligence aspects for complex decision-making [10].
According to PwC, 45 percent of labor activities can be automated, resulting in a $2 trillion savings in global labour expenditures [11]. RPA software revenue increased by 63% in 2018 and is expected to increase by another 54% in 2019 to $1.3 billion [12]. RPA software is used in all industries, but its largest users are banking, insurance, telecommunications, and utilities. Traditionally, these organizations have many legacy systems and are choosing RPA solutions to ensure integration capabilities [12]. According to a survey conducted by Deloitte, cited by Kokina & Blanchette, 53% of respondents have started implementing RPA, and 19%
predict that RPA will be rolled out within the next two years and almost globally within five years [8], [13].
RPAs are simple to set up, need minimal IT knowledge, and can be taught and deployed fast to automate manual operations. They may copy and paste data across applications, reconcile
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and cross-reference data between multiple systems, and make high-level decisions at important stages in the business process, among other things [11].
In simple terms, RPA is a type of computer-coded software that uses cross-functional and cross-application macros to replace people with iterative rule-based tasks. RPA is a non- walking, speaking autobot, a physical machine that processes paper, artificial intelligence, or speech recognition and response software [8]. In auditing, RPA is projected to not only replace manual and boring audit duties, but also motivates the redesign of the auditing process [6].
According to the survey conducted by Deloitte, the key hurdles in the proof-of-concept and pilot phase of implementing RPA are process standardization and management changing [8]. Integration with other information technology systems and the RPA solution's adaptability are frequently mentioned as hurdles as firms proceed to pilot, adoption, and scale [8]. Many companies that initially considered RPA as an experiment are now experiencing IT issues, process intricacy, illogical expectations, and a "piloting" approach [8].
Indonesia's digital economy will continue to grow and become more vibrant. Based on research conducted by Alpha JWC and Kearney, Indonesia has a great digital opportunity and is the country that provides the biggest support for digital transformation in Southeast Asia [14].
In that research, Indonesia was classified into 4 tiers based on socio-economic, namely metropolitan, rising urbanites, slow adopters, and rigid watchers [14]. Tier 1 or metropolitan contributes 50-70% to the digital economy in Indonesia [14]. One of the factors that make Metropolitan the biggest contributor to the Indonesian economy is better connections and more teenagers and adults than the elderly so that more individuals living in the metropolitan area easier to learn about technology [14].
Based on these matters, a topic entitled "Adoption of Robotic Process Automation in Auditing Process in Metropolitan Indonesia" was taken by researcher. This research was conducted to examine why public accountant, both big four and non-big four in metropolitan areas in Indonesia using (or not) Robotic Process Automation in the external audit process.
2. RESEARCH METHOD
This research is an exploratory qualitative research that aims to test tentative assumptions about why a phenomenon occurs by using a pre-existing theory. This research belongs to the philosophy of interpretivism which was developed with an inductive approach. Data collection method in this research using survey to IT team in Public Accounting Firms, both Big Four and non-Big Four, both internationally affiliated and unaffiliated, in Jakarta and Surabaya. In qualitative research methods, data is collected by interviewing people who have experience in the field of external audit, both general audit and IT audit. The interview technique applied in this research is by adopting semi-structured interviews. The data analysis method used is Computer Assisted Qualitative Data Analysis Software (CAQDAS).
3. RESULTS AND DISCUSSION
Respondent Profile
The respondent for this research are people who worked as IT Security Governance, IT audit and consulting, and IT risk, technology risk and technology control. All of them are Big 4 former employees who already has experience in the field of IT auditing. In this research, we conducted interviews with three people who have experience in the IT audit field for less and or more than 10 years.
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Semi Structured Interview
Below are the questions that were asked during the interview with the interviewees.
These questions are followed by follow-up questions according to the answers and responses of each interviewee.
Table 1. Questions in a Semi Structured Interview
No. Questions
1 How long is your experience in assisting the audit process?
2 What are the stages of the audit assisted by the IT team in your KAP?
3 Are you aware of any Robotic Process Automation that can be applied to the audit process? How do you know that?
4 Is the RPA applied to the audit process in your KAP?
5 At what stage of the audit do you use RPA?
6 To what extent can using RPA help you and your company in the audit process?
Data Analysis
During interview sessions, a video recorder was used to record the video information.
The video information then transcribed into descriptive form. Afterwards, the transcripts were analyzed using coding techniques to get a comprehensive explanation of phenomenon described before which is of Adaptation of Robotic Process Automation in Metropolitan Indonesia.
1. Interviews
There were 3 interviewees for the interview session which were conducted by the authors.
Interview were done by three interviewers which is one note taker, and two interviewers, to get different perspectives from various interviewees
2. Implementation of RPA in the Audit Process
Data Collection
According to PwC, RPA allows users to copy and paste data stored across applications and collect it in a single file or folder [11]. This can greatly assist the auditor in collecting financial reports or other data needed during and can help shorten the time in collecting the data needed for the audit process. As mentioned by Interviewee 3 :
“In terms of the audit process itself, if we connect to the audit stage earlier, maybe for data collection, there is a possibility for us to use bots.”
Also Interviewee 3 mentioned:
“Let's say that one prospect is represented by an excel file, if we do substantive work, for example, one hundred thousand, for example, or one hundred thousand clients. it means that the number is also the excel file that we have to display. if we use bots, I think the process can be helped, we can as long as all the branches use the same file structure,”
But interviewee 3 also mentioned about implementation of RPA if using different structure of data:
“Because if you have a different file structure, it means that there are limitations in the automation that we can do when we create a bot, the bot cannot be replicated to each branch.
We have to make our own bot in almost one branch, so in that case, the scenario is actually almost the same as if we manually extract each branch.”
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As Interviewee 3 mentioned the point of using RPA for collecting data needed for data collection:
“Like, for example, we created a bot to copy or move files that are so many scattered into one place. Before the bot can be run we know in the end result we will have a lot of files. For example, for an audit, we usually don't know the final result, right, instead we seek the results through the inspection procedure itself. So usually for types of activities whose final results we don't know, we usually have to avoid using automation.”
Frequency of Audit By External Auditos
There are some conditions that company using the external auditor has contract with a short period (every year), which is not necessarily extended in the next period, while the cost of implementing the RPA is quite high.
As interviewee 1 mentioned:
“So because the implementation of the general audit is arguably not long enough, the general audit time is usually short, it could be that this client could be only a year, it could be 3 years or 4 years, but I can't be sure, I mean the contract with The client is every year, not necessarily next year it will continue again,”
Interviewee 1 mentioned that RPA more suitable for internal audit process:
"So when compared to the internal audit, which does stay there every day and does work for that one company only”
Effort For Applying RPA In Audit Process
The effort required for develop and implement RPA is quite high, while the impact on its use in auditing is still quite low. Syed, et. Al. stated that RPA requires a design blueprint that captures the many possible sequences of detailed actions that the bot should perform to accomplish a task [15]. For the most part, the design of a bot is still a largely manual effort, which can be tedious, inflexible, and error-prone
As Interviewee 2 mentioned that RPA required big effort Effort:
“The analogy is this, I have an application that is outside of SAP outside of Oracle, I am self-developing, of course there are challenges if we want to apply RPA, but it can be done if for example we target what we want to automate into a standard system, so we have to translate the non-standard it became the standard form first, there is another effort, right, effort one. Only then can we run the RPA. We are talking about the easiest way is Excel, yes, the company has this format, while our company wants to run RPA in a different format. So, it means that there is an effort to translate Excel from the company into our RPA form. Only then can we run RPA, not necessarily when we translate it is not necessarily correct. I'm talking garbage data, it's very often encountered. What is called garbage data, what is this unclear data, not to mention the format. It's not that it can't, but so far the effort is too big compared to manual pulling, that's the reality now.”
Interviewee 2 mentioned that Efficient effort with the results obtained:
“Second, RPA itself is not easy to make, the coding and testing process is quite complicated. So actually in terms of efficiency, it's also a waste when we have to put in a lot of effort up front to develop the robot, but then we only use it once to carry out one small audit procedure.”
“Economically speaking, the effort they have to invest in making one bot, where the bot itself cannot be scaled up because each auditee has a different profile. Finally economically their decision, this is not scalable to do automation.”
Moreover, applying the RPA in Public Accountant Office is quite challenging. Because the public accounting firm has many clients and each client has a different form of database.
As mentioned by interviewee 2:
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“So far I have not seen any. Again the challenges are because the KAP has a lot of clients. But what I have seen is that they are prototyping how they translate the data that is placed in one database and then runscript on that. For example, from system A, it is translated into a standard format in the KAP, because it is standard, we can easily make automation. The challenge is how to translate the system from person A into standard form.”
Human Interaction
In the current situation, the biggest challenge from RPA implementation is lack of human interaction. Human judgment is more flexible, because when there is a finding that is not up to standard, it will be seen if there is something that is not up to standard. and if you use RPA, the answers you get will only match yes or no.
As stated by Interviewee 2:
"Ok, one of the biggest challenges from RPA is because RPA lacks of human interaction.
For example, if there are too many human judgments or subject judgments, it will be difficult.
So for example, we met finding, met RPA, oh, it turns out that the control is not not according to the standard, ok… it turns out that they have a reason why it is not up to standard.”
“Well, there is a certain degree of judgment there. That's what often becomes a problem, RPA will be suitable if for example eee…. I see, yesterday I had a discussion with my friend, coincidentally, this RPA will be suitable, especially this RPA audit will be suitable if for example it is already saklek.”
In assessing something on audit process it is better to use human resources where there will be many perspectives that cannot be obtained if you use bot.
As stated by interviewee 3:
"When we draw conclusions, so far I still feel that human resources are still more sophisticated than the bots themselves actually."
4. CONCLUSION
Based on the research conducted, it can be concluded that implementing Robotic Process Automation (RPA) in the external audit process in metropolitan areas of Indonesia is still quite challenging. There are several points that need to be considered before implementing RPA for the external audit process. Firstly, RPA can assist auditors in collecting necessary data in a shorter time. However, the external auditor has a short-term contract with the client, which is not necessarily extended in the next period. Moreover, the cost of implementing RPA is quite high.
Secondly, the effort used in building, developing, and implementing RPA in an activity is very high. Although RPA can assist in some audit processes, the processes that can be assisted by RPA are still limited. Therefore, there is a lack of effectiveness and efficiency in implementing RPA for the external audit process in metropolitan areas of Indonesia.
In conclusion, while RPA has the potential to assist in the external audit process, the high cost and limited effectiveness and efficiency should be taken into consideration. Further research and development are needed to fully realize the potential of RPA in the external audit process in metropolitan areas of Indonesia.
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5. RECOMMENDATION
The results of this study recommend public accounting firms to start considering the use of robotic process automation in auditing, although not all stages of the audit can be automated.
Robotic process automation can support audit implementation to be more efficient, especially in the data collection stage and initial analysis of the data obtained. However, the public accounting firm needs to determine the auditee criteria selected to be used by the RPA in conducting the audit, such as audit fees, company scale and the system used by the auditee. This is necessary because the effort used in building, developing, and implementing the RPA in an activity is very high, while the audit time is limited.
The results of this study recommend companies to consider the use of robotic process automation in the implementation of audits by the company's internal audit division. The use of Robotic process automation can support the implementation of audits to be more effective and efficient, because the internal auditors in the company only audit the company so that the use of RPA can be carried out continuously and for a long period of time.
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