How AI is changing the role of auditors

Brian Indradjaja:
As long as you equip yourself with further skills and understanding that this is a complimentary tool that has an art of judgement, of human judgement to it, I think we'll just become smarter, to be honest with you, Gavan.

Gavan Ord:
Welcome to CPA Australia's With Interest podcast. I'm Gavan Ord, business and investment lead at CPA Australia. Today, we're exploring one of the most significant shifts in the profession, artificial intelligence, and what AI actually means for audit and the profession more broadly. My guest today is Brian Indradjaja, FCPA, Indonesia leader at Deloitte, Asia Pacific digital regulations leader, and someone with over two decades of experience in risk, governance, and digital transformation across the region. Welcome to With Interest, Brian.

Brian Indradjaja:
Thank you, Gavan. Thank you. Nice to be here.

Gavan Ord:
Let's start with the big picture, AI is being applied in audit in a lot of different ways from automating transaction, testing, flagging problems, and supporting risk assessment. Where are we actually at with AI and audit? Is it a genuine transformation or are we still largely at the introductory experimentation phase?

Brian Indradjaja:
So, very interesting question, Gavan, and welcome to all the CPA Australia members who are watching, very fortunate to be here and blessed. Back to your question, of course, AI is a constant thing, is a constant change that's happening in our profession at the moment. You mentioned a few of the processes that we've had around vouching, sample testings, even around transactions and risk assessments.

Whilst those things do encompass some of the processes that happen within AI, I think it goes back, we take it back a notch a little bit here. For us in this profession, in this accounting profession to be successful in adopting AI, we have to have the mindset of adapt and adopt. And I will explain to you why. Adapt means in our profession, we have to constantly adapt with the changes that are happening at the moment, whether it's regulatory changes. In Australia, you have AASB, changes with all the different regulations.

You got to comply with APRA, you got to comply with, in Indonesia, in Singapore, you have MAS, OJK, you've got all the different types of IFRS regulations. Those are the norm, those are the things that we are used to doing as accountants, as auditors. But with this recent wave of changes of technology, particularly at AI, adapting takes a different meaning. Adapting means that you have to really understand how this will impact your day-to-day lives.

Simple things such as going to the office and actually looking at an auditing file, looking at a financial statement report, you really got to understand where can AI replicate some of those process that you are doing at the moment. And you mentioned some of those processes as well. Now, the adoption part is how you can adopt that by increasing your skills, increasing your talent skills. So, big organisations such as us, one of the big four accounting firms, we like to think ahead of the curve.

And the way we apply that, particularly with adopting methodology, is understanding that we need a different breed of talent to come in. So, whether it's increasing the skills or increasing the skills of our current workforce at the moment, whether there's certifications in AI and actually getting some through different courses or even changing our talent model, recruiting people and recruiting analysts and recruiting auditors who come with a bit more technological mindset. So, it is happening, Gavan, it is quite a change to our profession, but we are very much at CPA Australia, and I believe at Deloitte and also I believe in our profession globally, and regionally, and also locally, we are at the forefront of it, and we are very well suited and adapt to it.

Because I think what we are doing as a community in the education advisory committee and all the good things that we are doing, particularly with all the different advisory committee members, we are discussing this day in, day out every single time. So, adapt and adopt, Gavan. So, those are the key things, the mindset thing that I have been engraving in our people, and I would like that to happen with our community as well.

Gavan Ord:
And just on that, so what do you see the future auditor accountant to look like? What skills do you think they should have? Obviously there's the technical skills, what other skills do you think they should have?

Brian Indradjaja:
I like phrases, Gavan, the art of judgement is important. The most integral part of AI is the human art of judgement. So, being able to apply AI into the work that you do, processes, whether it's vouching, sample testing, and different sectors will have different type of AI regulations as well, or AI processes as well. So, as an auditor, as an accountant, when you are doing a financial statement audit for a bank, for example, will be different to what you do for a mining company, such as in Australia, there's a lot of mining companies, right?

Gavan Ord:
Yes.

Brian Indradjaja:
So, sector knowledge, the depth of industry knowledge is key because that's where the art of judgement comes in. And when you're able to apply that, and when you're able to apply the art of judgement, and you're able to apply also the sector and industry knowledge that you have as a specialist, at the end of the day, it'll be a complimentary tool for us.

Gavan Ord:
So, it's the human side. Do you think it elevates the human side of the profession?

Brian Indradjaja:
Definitely. Definitely, Gavan. Definitely, Gavan. I think it will definitely help us in creating a better workforce, a better profession, and at the same time, I think the regulators will benefit a lot from it as well. I urge and I really encourage people, particularly in our profession, whether you're an accountant, whether you're an auditor, whether you're a financial controller or CFOs, to be able to always connect with the regulators. Because the regulator, whatever we are facing here as a profession, as a professional, the regulators also need to be on the same page with us as well.

Gavan Ord:
Exactly.

Brian Indradjaja:
Because governance, AI governance and digital regulations are constantly changing as well because you've got new applications coming out every single second now, every single day. So, it's exciting times, Gavan, it is exciting times indeed.

Gavan Ord:
Yeah. I mentioned about obviously the individual, what about the firm? So, what does the firm have to have in place so they can apply AI effectively in audit or in advisory? What do you suggest there?

Brian Indradjaja:
So, I came from an advisory background, and obviously now that I'm obviously overseeing the whole firm here in Indonesia, helping as part of our Deloitte Southeast Asia firm, I like to probably put into three important things that we do here. Number one, governance. We ensure that within our firm, our risk and reputation team will have a very clear definition on exactly what we are doing in terms of AI.

We work together with clients that encourage us to be able to automate some of the processes that they have from an advisory perspective, and we ensure that that goes through the whole conflict checks, background checks, and to make sure that we encompass the whole governance piece into that as well. From an audit perspective as well, I mentioned earlier, we work closely together with the regulator as well. Here in Indonesia, we have two regulators for our audit firm, which is OJK, which is similar to the APRA in Australia, and we also work together with P2PK.

P2PK is basically the accounting and taxation board as well of Indonesia. So, we work closely with them to ensure that whatever we put forward when it comes to technology, automation, process and things like that, we make sure that it complies with the governance as well. Number two, the people, Gavan. It's important for us to understand that the world is changing at a very fast pace.

Therefore, for us, us as partners, us as leaders within the firm, we need to really be able to understand first and foremost, how does AI or technology will really improve our current services and offering, but then our products is our people. How do we actually ingrain the importance of AI and technology into them, and how do we actually upskill them to be able to serve our clients well? So at Deloitte we have a saying, clients at the centre, putting people first.

So, clients at the centre because we serve our clients first and foremost. Putting people first, we make sure that our people, which is our number one asset, our key product of our firm, will be able to serve the client well and the regulators well. And number three, it's fun. Gavan, it's fun. But at the same time, number three, I would like to say you learn from what your competitors are doing and you also learn from what the peers, industry peers are doing. Because for us at Deloitte, we have a very specific in-depth industry knowledge and industry expertise is something that we are proud of.

So, learning from your peers within the industry is key, and also being able to attend a lot of talks, a lot of association and be at the forefront of the changes in AI, and also learning from your competition as well because your competition at the end of the day, we are in this community together. We learn from each other on how we can best serve our clients and how best serve our community as well.

Gavan Ord:
So it's get the governance right first, bring the people along.

Brian Indradjaja:
That's right, Gavan. Yeah.

Gavan Ord:
And then look at what your competitors are doing, look at what the industry is doing.

Brian Indradjaja:
Is doing. Yes. Yes.

Gavan Ord:
I think it's really good advice. I think it applies basically to everything as well. But the people are very... Often people say to me AI, is a people challenge more than anything else, more than a technology challenge. Just going back to AI and audit. So, if AI can test more transactions faster and with fewer errors, what is the auditor role becoming? What do you see the auditor role becoming?

Brian Indradjaja:
I think the auditor role will become more smarter, to be honest with you. It's up to the organisations, it's up to the firm. It's also up to the individuals themselves on how can they better equip themselves to become smarter. I don't think our profession is at danger. I think our profession is at danger if we're complacent. I think our profession is at danger if we don't be with the trenches, be there with the trenches.

You don't put your feet on the ground. You're not there with your people, you're not there adopting and adapting, that's when our profession will be at danger, and that's where firms, organisations, auditors, accountants will be at danger. But as long as you equip yourself with further skills and understanding that this is a complimentary tool that has an art of judgement, of human judgement to it, I think we'll just become smarter, to be honest with you, Gavan.

Gavan Ord:
And do you see the composition of audit teams changing, maybe a few more technology people in it as well?

Brian Indradjaja:
Definitely. Definitely. Definitely. So, at Deloitte, we focus now a lot on our data analytics team and also we have a lot of tech play as well, tech service offering here at Deloitte, which encompasses some of our audit and assurance offering as well. So, some of our clients may have multiple subsidiaries within a holding as you would in Australia as well. In Australia, you probably have one large conglomeration of companies and you've got all these different subsidiaries likewise here in Indonesia as well.

And you can imagine the myriad of financial statements that you would have, and how you can amalgamate all those together when it comes to reporting time, financial statements, reporting time. And what better way to do that, but basically embedding technology into that? And it's been great for us, we will continue to invest in our people, we will continue to invest in our clients, particularly with the technology tools that we have, and we'll continue to further make the process more efficient.

Gavan Ord:
And as you said before around, engaging with the regulators as well so they know what is coming up. So, obviously regulators don't like surprises and obviously engaging regularly with them is really important. Just going to regulators, so there's been a lot of talk about auditing standards and whether they're fit for purpose in the current environment. Do you see auditing standards as fit for purpose with the emergence of AI and other technology?

Brian Indradjaja:
Look, I think it's a learning process for everyone. I think at the moment we are, like I mentioned to you earlier, the world is moving at a fast pace, particularly with AI. I think particularly for us as one of the big four accounting firms, it is important for us to always be at the front of the regulator working together with them, assisting them to understand as well in terms of what are the changes, particularly in more developed markets. So, for example, here in Indonesia, we will sit together with our regulator and say, "Hey, look, this is what Australia is doing." Australia's a much more developed market.

And even closer to our region, we have a very much connectivity, we are connected one Deloitte Southeast Asia firm, where our regulator in Singapore and Indonesia with our connection, particularly as the one Deloitte Southeast Asia firm, we'll work together with them on how they can actually embed some of these governance regulations better, particularly when it comes to AI. So, it's hand in hand, we have to work closer together with them. At the same time, we learn from each other as well.

Gavan Ord:
And do you see regulators themselves approaching AI regulation differently or are they collaborating?

Brian Indradjaja:
I think in my experience thus far, I think they're collaborating, Gavan, particularly here within the region. I think we have a very close relationship with our regulators. Again, like I said for you, they would also change the way they will adapt and adopt, particularly the regulations. Where, before I mentioned to you before, maybe they focus a lot on the IFRS part or ASSB in Australia, now they're probably focused a lot on what is a breach of data privacy, or what would happen when there is a breach in automation of a financial statement that may be fraudulent and things like that. So, the concept will change definitely, and obviously it's for the benefit of both parties to be able to work together and learn from each other as well.

Gavan Ord:
Just a more general question on regulation. Is there a risk that governance or regulation frameworks can lag too far behind where the technology is heading? Do you see risks there or are regulations in place already technology neutral enough to be able to adapt to all technology that comes along?

Brian Indradjaja:
I think for us, particularly us for what we see in the market at the moment or particularly globally as well, I think the pace of adoption is something that I think will need to be quite consistent across the whole three arms, three pillars. The regulators, the professionals, and also the software companies that make these AIs.

So, usually I would like to say that what I've seen thus far, particularly with our alliances with some of our technology software companies that we work with, it's been quite a line, because licensing and getting licensing across, being able to get a regulatory approval, you do have to have that sharing, a lot of sharing sessions, particularly with the regulators, particularly within this market as well.

So, so far it has aligned. There will be some risks when there will... The art of judgement, I'll go back again to the out of judgement. Where you will have some individuals or you will have some professionals who may or may not understand fully how to use AI.

And again, it goes back to my point before, clients at the centre putting people first. If your organisation does not put people first, particularly in this world of AI, in the modern-day technology of AI, it's going to be quite difficult to then comprehend that out of judgement on how to use AI properly, and how to use AI legally, or how to use AI in the best possible way for your organisations. So, there is a risk element there, Gavan, but so far I think particularly when my organisation is concerned, we have been quite diligent in following up with the three pillars with our alliance partners and also with our regulators as well.

Gavan Ord:
And clients in the centre, people first, it's not technology first, technology is the tool.

Brian Indradjaja:
Exactly, it's a compliment.

Gavan Ord:
It's a complimentary tool and it augments what your people do, what accountants out there do as well.

Brian Indradjaja:
That's right. That's right.

Gavan Ord:
Last question, and this is about auditing or verifying AI itself, the outputs of AI. In your mind, what does it mean to audit an AI system and AI outputs? And do you think this is a role for accountants and auditors more broadly?

Brian Indradjaja:
So, I think that's a very, very good question, Gavan, and it's very heartwarming for me to hear that question. Because I have just, obviously at Deloitte Southeast Asia, this is at the forefront of our conversations within our executive team as well, particularly how we can actually embed AI better in our service offering. Now, in terms of auditing, I think it's important for us to understand that the traditional way of doing audit, whether you did the tick and check and balances and things like that, those are probably slowly disappearing.

You have to understand that for you, you are serving your clients and your clients are moving at a fast pace. Your clients are already adopting and adapting AI probably much faster than you are. So, it is important for us, and I always, of art of judgement, I guess from my side, to speak to our auditing professionals to say, take a step back and see how we can better improve the efficiency. So, things such as being able to understand where we can be more efficient in terms of the vouching, sampling, testing I think is key.

Understanding your client's needs is very important. Your clients may want to be able to do a job a lot faster now because of AI. I mean, I came back from a... I mean, it's an advisory client, but I was speaking to the CFO, whereby she wanted to have a particular work done, a particular service and offering that we have here at Deloitte, where we usually do this within a year or maybe 10-month timeframe, and she wants it to be done within five months.

And her exact comment was like, "Well, you got AI, you got technology, so five months is the max that I will accept this work to be done." And we did it, well, we are doing it, and we will continue to further improve the efficiency, and of course with the right governance as well in place. And the last part is to actually understand exactly where the auditing process, which auditing process you can actually, I wouldn't use the word cut out, but you can better improve-

Gavan Ord:
Improve, yeah.

Brian Indradjaja:
... in terms of how you can actually effectively manage that as well. And the last part, which is very important, Gavan, and to all the CPR Australia members as well, and for all of us that are watching, is communicating this. The articulation and communicating AI and technology to your people, to your clients is the most important thing because the moment you are complacent, the moment you let AI... I'm just going to let AI do the process, because at the end of the day, it's a complimentary tool. It's how you as an auditor, you as an accounting profession, be able to actually articulate and communicate this to your stakeholders as well. So, I hope that helps, Gavan.

Gavan Ord:
That's a great learning to end today's session on. So, thank you so much, Brian.

Brian Indradjaja:
Thank you, Gavan.

Gavan Ord:
Thank you for all your time and thank you for Deloitte for giving us some of your time as well. To me, this has been really valuable, and I hope that our listeners and people watching this find this incredibly valuable as well.

Brian Indradjaja:
Thank you.

Gavan Ord:
If you've enjoyed this episode of With Interest, please subscribe and tell your friends in the business community. Until next time, thanks for listening.