A progress update of this case study is now available, but we recommend reading this original version (from 2022) first for important background and context.
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Auditing and accounting are still widely viewed as traditional professions, but times are changing.
The profession is at a watershed moment and there is a need for change to respond to the evolving needs of stakeholders and re-establish trust in the quality of the audit. Audit firms need to embrace technology to respond to increasing scrutiny and the continued focus on improving audit quality.
There is also an increase in the number of companies who are using drones in their own operations, usually to calculate the volume of stockpiles such as coal, biomass and aggregates. Auditors need to develop a solution to enable them to test this use of emerging technology. They need assurance that the volumes provided by the client’s drone process, or other counting approach, are accurate and complete.
The traditional approach to auditing stockpiles consists of an auditor walking the site and observing the client’s own count approach. There is no independent volumetric data gathered. In contrast, a tech-enabled approach involves drone capture of a full volumetric dataset at the same time as the client is flying their own drones or using another counting method. This complete, independent dataset is processed and the results are compared with the client’s volumes. Removal of manual processes allows the auditor to focus on analysing the data and providing more value to the audit.
The benefits of this tech-enabled inventory testing approach are significant: increased volumetric accuracy levels as a result of the vast number of data points collected by the drone; health and safety advantages as the data can be collected from a safe vantage point; less disruption to clients as operations can continue on the site given the data is captured from above; and logistical benefits as the audit team have access to accurate digital models of the assets from anywhere in the world.
PwC has been a pioneer of drones in audit and with their first flights carried out in 2018, the use of drones for stockpile auditing is now an established methodology.
“Our use of drone technology is aligned to International Auditing Standards and to our wider audit vision, which is to deliver the highest quality audit, combining passionate people with leading technology to build trust in society. It is proving to be a game changer for audit teams who are embracing this fresh approach:
Using drones on the first year audit of a large mining client with multiple sites across the UK gave us accurate volume measurements of inventory in a quick and safe manner, avoiding the need to have people climbing over stock piles. Drones are certainly going to be an integral part of our inventory audit approach on this client in future years.”
PwC
Going forward, the digital revolution will continue to pose questions to the audit profession, challenging the way it currently does things and opening up the potential for technologies to increase the quality and efficiency of the audit. Although drone technology is being used to audit stockpile volumes, it is far from the norm and we expect that it will become business-as-usual in the next 5-10 years. There is also a lot more potential for drones and other robotics when we look at the audit of the future. For example, client investment in warehouse drones continues to increase. We might see a day when audit clients are using autonomous drones in their warehouses, with AI analysing data in real-time, seamlessly integrated with their warehouse management systems. Such an exciting use of technology will require a very different audit approach, as will the auditing of any AI-driven solutions.
This case study is an extract from the report
Skies Without Limits v2.0
