Sep 11 2018

How Can State Auditors Achieve Digital Transformation?

Auditors, comptrollers and treasurers need to have clear digital strategies, train their workforces and enhance data accessibility, according to a Deloitte report.

State auditors and treasurers do not usually make the kind of splashy announcements that governors do. However, they are the officials whose management of state finances enables governments to invest in new technologies. And they want to use those innovative digital tools themselves but seem to be facing hurdles to doing so

According to a 2018 survey on digital government transformation by Deloitte and the National Association of State Auditors, Comptrollers and Treasurers, NASACT members are investing more in digital transformation, yet only 35 percent of respondents are satisfied with their organizations’ responses to digital trends. That figure is down from 64 percent in a 2015 survey NASACT conducted. This year’s survey includes feedback from more than 70 NASACT member offices, according to the organization. 

“The survey reveals an eagerness for state financial professionals to use digital technologies on par with the private sector,” R. Kinney Poynter, executive director of NASACT, said in a press release. “Our members want to take advantage of emerging technologies, but clearly impediments to being more digital remain.”

The report indicates that for NASACT members to take full advantage of digital technologies, they need to have a clear and coherent technology strategy, revisit their investment choices, prepare their workforces to use new IT tools, enhance data accessibility and be willing to embrace disruptive technologies


Treasurers and Auditors Face Hurdles to Digital Technology Adoption

It is difficult to escape technology in today’s state governments, and the report makes clear that state auditors and treasurers are not immune from changing digital trends. 

“Digital processing and cognitive technologies are disrupting the economy, as new ways of creating value are displacing traditional methods,” the report says. “This is true for government finance as well. Finance stands at the core of public administration, and technology is at the core of finance.” 

NASACT members surveyed stressed the importance of having a strong digital strategy, according to the report. And while most, though not all, indicated that their organizations had a digital strategy, only 45 percent of NASACT respondents felt their organizations had a “clear and coherent” strategy. Another 23 percent reported they either do not have a digital strategy (11 percent) or lack a clear and coherent digital strategy (12 percent). 

Notably, the survey found that there is a clear link between having a coherent technology strategy and digital capabilities. “Organizations with a clear digital strategy generally considered their digital capabilities to be comparable to or ahead of the private sector (57 percent), while in organizations without a strategy, 76 percent of the respondents consider their digital capabilities to be behind the private sector,” the report says.

When it comes to specific technologies that auditors, comptrollers and treasurers can use, the report notes that robotic process automation can be a good place to start, since it is a relatively simple form of process automation that does not require large-scale system implementation.

Yet only 29 percent indicated that robotic process automation was a possible area of investment in their organizations. RPA can help agencies save time and money on repetitive, mundane tasks. A 2017 Deloitte study on artificial intelligence in government found cognitive technologies could free between 4 and 30 percent of a state’s total labor hours, depending on the degree of investment and adoption.

Why do so few organizations seem willing to adopt RPA? The report speculates that there is a lack of awareness regarding RPA, “since only 17 percent of survey respondents reported use of RPA within their organization, which is much lower than the usage observed in the private sector.”

In terms of more advanced technologies, only 11 percent of organizations reported broad use of automation and cognitive technologies. “These numbers become critical when we consider that public and private audits are likely to be substantially augmented by automation and cognitive technologies in the coming years,” the report says. “Automated audit sampling can help auditors get to a point where 100 percent of the populations are reviewed, which can help improve the quality of the audit significantly.” 

To adopt new digital technologies more rapidly, NASACT organizations say they will be looking to upgrade their employees’ skills. However, there is a significant amount of concern about a shortfall of technological capacity within NASACT organizations’ workforces.

The report says that around 48 percent of respondents believe their employees do not have sufficient skills to execute digital strategy, and 49 percent lacked the skills for automation and cognitive technologies.

How will they close the skills gap? Staff training is the most common response, the survey says, with 68 percent indicating it will be a focus in the years ahead. However, 39 percent say they will augment their staff with consultants and contractors.

How Can NASACT Members Achieve Digital Transformation?

To achieve digital transformation, auditors, comptrollers and treasurers should develop a clear digital strategy, the report says, since that provides a vision for the future and helps reduce barriers to technology adoption. 

The report also recommends that NASACT members rethink their technology investments and balance investments in both established and emerging technologies

State organizations can also build their technological capacity by focusing on enhancing the skills of their employees. “Proactively providing training can help public finance leaders minimize the disruption,” to their workforces, the report says, adding that consultants and contractors can help augment expertise.

The report also notes that data is a powerful resource, and its thoughtful use can help organizations enhance transparency, monitor performance and achieve greater operating efficiency. The report says that, in some cases, public data transparency websites may be helpful.

Finally, organizations should be willing to embrace the future. The report notes that, as digital technology matures, public finance and audit leaders can use it to fulfill their mission as stewards of public budget expenditures and operations. “Organizations that leverage technologies under the wise guidance of experienced finance professionals should be well positioned to successfully meet this mission,” the report says.

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