Mr. Karan is a consultant tasked with helping a mid-sized manufacturing company modernize its operations by integrating Internet of Things (IoT)…

Internet of Things: IoT is the concept of connecting any device (cell phones, coffee makers, washing machines, and so on) to the internet. Key components of IoT are data collection, analytics, connectivity, and people and process. IoT not only changes the business model, but also affects the strategic objectives of the organisation. The risk profile of the entity changes with exposure to new laws and regulations. Example (i) Connected Cars, connected manufacturing equipment's, smart home security, (The options for home security from doorbell cameras or outdoor cameras users can view video feeds when they are away from home). (ii) Data from machines can be used to predict whether equipment will break down, giving manufacturers advance warning to prevent long stretches of downtime. (iii) Refrigerator placing an order with a grocery store whenever the supply of eggs falls below a certain number. (iv) Smart oven works by scanning QR or bar codes and connecting to Wi-Fi, which it then uses to determine the best temperature and time to cook the food to avoid undercooking or burning. (v) Researchers use IoT devices to gather data about customer preferences and behavior, though that can have serious implications for privacy and security. Common risks of IoT: The key risks associated with IoT including, device hijacking, data siphoning, denial of service attacks, data breaches and device theft. Audit Implications A shift to connected devices and systems may result in auditors not being able to rely only on manual controls. Instead, auditors may need to scope new systems into their audit. Audit firms may need to train and upskill auditors to evaluate the design and operating effectiveness of automated controls. Consumer-facing tools that connect to business environments in new ways can impact the flow of transactions and introduce new risks for management and auditors to consider. Consider payment processing tools that allow users to pay via credit card at a retail location through a mobile device. This could create a new path for incoming payments that may rely, in part, on a new service provider supplying and routing information correctly. Auditors would need to consider the volume of those transactions, and the processes and controls related to it.