The manufacturing sector is experiencing a rapid transformation. Digital transformation has facilitated the integration of advanced technologies in the manufacturing process. Technologies such as robotics, artificial intelligence (AI) and internet of things (IoT) have made production lines more productive, accurate and efficient and considerably transformed the manufacturing landscape.
There has been a historical shift in internal audits at manufacturing organisations mainly focusing on fraud detection and financial compliance. Nevertheless, the recent trend is that the role of internal audits has broadened with the increased complexity of the business environment. Automated business processes have completely changed how internal audits are being done. Auditors are now able to analyse large data volumes and transactions with better accuracy using technology.
Despite these clear benefits and continuous advancements in these technologies, the automation of control testing remains highly underdeveloped. Even though automation is applied to various repeatable tasks that involve data processing, human intervention is still necessary when it comes to assessing control adequacy as well as regulatory compliance. This reflects a huge gap needs to be bridged.
Implementing automation control testing offers significant benefits. With the help of continuous monitoring and the ability to analyse data in real time, manufacturers can easily and swiftly detect deviations or anomalies, enabling immediate corrective actions to avoid disruptions or defects. Hence, this is a necessary change for organisations that require high levels of quality and compliance standards in today’s complex and regulated environment, as they look to improve their internal controls and audits.
Implementation techniques
Controls testing and automation implementation in manufacturing involves deploying sophisticated technological solutions tailored to specific processes. The key methodologies include:
Programming and scripting
Used to develop and automate control testing across various manufacturing setups
Third-party governance risk and compliance (GRC) applications
Rapidly adopted for access management and control, and automating process and Information Technology General Controls (ITGC) controls testing
Robotic process automation (RPA)/digital worker (bot) development
Though less common, RPA solutions have the potential for control testing automation, offering reporting and dashboard capabilities for periodic reviews.
Custom tool development
Some organisations develop bespoke tools to meet unique requirements, specifically for custom-developed enterprise resource planning (ERP) applications.
Manufacturers often employ a combination of these techniques for control testing and automation. To put into perspective, combining RPA and third-party GRC applications can help with the automation of repetitive tasks and the integration of results for unified reporting and control assessments. According to PwC’s Global Risk Survey 2023, 64% of Indian organisations have an enterprise-wide technology strategy that includes investments in technology for resilience and risk management.1
Key areas of automation adoption include:
- Application and process control: Utilising GRC and RPA solutions for integrated control testing and management
- Operational technology (OT) security: Automation of security controls to safeguard critical infrastructure
- Software licence management: Optimising the software usage and reducing costs with automation
- ITGC: Ensuring compliance with regulatory standards
- Fraud detection: Risk mitigation by utilising transactional analysis and anomaly detection
Benefits
Automation of control testing has considerable benefits, as showcased by these real-world examples:
- ITGC controls testing: A diverse multinational conglomerate has brought down the control testing time by 65% and increased the coverage of testing to 100% of the data, thereby saving significant amount of effort and cost.
- Process control automation: A large automotive conglomerate automated process controls, which resulted in 75% faster reporting and significant improvement in plugging audit observations.
These examples are based on the projects executed by PwC and highlight how control testing automation can reinforce internal controls, enhance risk management capabilities, lower costs, and contribute to improved operational effectiveness and regulatory compliance.
Future outlook
‘The future of organisations will increasingly be about taking intelligent risks and using them intelligently. This will call for a mindset change for business leaders and also a culture change at an organisational level.’
The future of control testing automation in manufacturing is promising, driven by significant advancements and emerging trends:
Integration of advanced technologies: Deeper integration of AI, machine learning (ML) and predictive analytics can enable businesses with proactive decision-making and risk mitigation.
Real-time monitoring and adaptive controls: IoT sensors and connectivity will boost real-time anomaly detection and adaptive responses, improving performance and quality.
Predictive maintenance and asset optimisation: With the help of predictive analytics and ML, algorithms can anticipate equipment failures, optimise maintenance schedules and maximise asset utilisation.- Compliance and regulatory adherence: Automated control testing will streamline compliance processes, minimise risks and ensure adherence to regulatory standards.
Overall, the future of control testing automation in the manufacturing sector is characterised by continued innovation and advancement. By embracing automation technologies and leveraging data-driven insights, manufacturers can rethink risk, enhance operational efficiency, ensure quality and compliance, and drive sustainable growth to become fit for the future in a competitive global marketplace.
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