Transforming Tax Auditing with Advanced Technologies and Strong Governance

Tax auditing is undergoing changes in respect of artificial intelligence, blockchain technology, and data analytic techniques, thus requiring a stronger compliance, governance, and risk management framework for appropriate implementation.

The tax auditing sector is undergoing a transformation: technology-driven change, the changes in the business environment, and the new demands make auditing different. According to Marc Jeschonneck, global assurance digital leader at EY, those nations who are rapidly changing ecosystems of geopolitical risks are in a great challenge now with their business model shifts. Given the fact that auditing practice should be aligned with newer business models while at the same time important risks identified, it is the most critical time.

Shifts in industries like AI, blockchain, and data analytics are indicative of a fully transformed profession. The $1 billion spent on technology at EY for tax audit spending is transforming the understanding and managing of risk, process improvement, and providing accurate information during tax audits. For example, the use of generative AI helps auditors improve the accuracy of financial reports and enables and accelerates work.

Nonetheless, these technologies also raise concerns about cybersecurity threats and AI-related errors. As Paul Goodhew, head of global assurance innovation at EY put it, “this clearly points out the need for robust governance frameworks to mitigate these emerging risks.”

Each assurance AI framework has been established with that in mind for responsible use of AI and against all possible rules globally.

With the advance of these wonderful technologies like AI and blockchains, auditors will be required to incorporate robust risk management and compliance mechanisms into their workflows. The right framework of governance, together with the requisite continuous training, will allow tax auditors to take these technologies safely and responsively to their needs and for the betterment of the financial system to be resilient and transparent.