Autonomous Auditing in Asset Management

Asset managers today operate in a landscape defined by speed, complexity, and relentless innovation. Hedge funds execute trades in milliseconds. Private equity firms manage intricate, cross-border deal structures. Venture capitalists navigate rapid valuation cycles and dynamic cap tables. Yet, internal assurance processes often remain anchored in periodic reviews and manual sampling, an approach increasingly mismatched with the exponential pace of change in the space.  

Industry leaders recognize that modernizing these internal assurance processes is now imperative. In line with this recognition, many of our clients also appreciate the urgent and inevitable need to embrace autonomous auditing as a precursor to competing, building trust, and responding dynamically to market complexity. Some have already taken important steps to achieve this goal. While external audit firms are also innovating in this area, this article focuses on the asset manager’s internal assurance perspective. 

Defining Autonomous Auditing 

Autonomous auditing enables asset managers to adopt ongoing, intelligent monitoring powered by advanced technology, ensuring assurance processes keep pace with the speed and complexity of modern financial operations. In this context, “autonomous auditing” refers to a firm’s self-directed, automated internal auditing and monitoring of its own operations (as opposed to activities by an external auditor). By integrating artificial intelligence, machine learning, and real-time analytics, firms can monitor financial data in real time, rather than relying on monthly, quarterly, or annual snapshots. This shift enables earlier detection of issues, faster responses to anomalies, and a stronger foundation of trust with investors, auditors, and regulators. Importantly, autonomous auditing doesn’t replace auditors; it empowers them to focus on higher-level analysis and strategic decision-making.  

Why Autonomous Auditing Is a Game Changer  

Real-Time Risk Detection 

Advanced systems continuously monitor financial activities, flagging anything unusual as it occurs. This immediate awareness means that errors, suspicious transactions, or compliance issues can be addressed right away, reducing the risk of losses or regulatory trouble. It’s a shift from reacting after the fact to staying ahead of potential problems. 

Greater Coverage and Accuracy 

Traditional audits often rely on sampling, which means only a fraction of transactions are reviewed, increasing the risk that errors and irregularities go unnoticed. Automated auditing tools, on the other hand, can review an unlimited number of transactions.  

By casting a wide net, these systems are significantly more likely to detect inconsistencies or outliers, giving stakeholders greater confidence in the accuracy and completeness of the financial metrics and reports they receive. 

Operational Efficiency 

Many audit tasks are repetitive and time-consuming, such as verifying calculations or checking policy compliance. Automation takes these routine jobs off auditors’ plates, handling them quickly and consistently. This frees skilled professionals to focus on areas where their expertise is most valuable, such as analyzing complex issues, interpreting results, and advising on business strategy. The result is a more efficient audit process and better use of talent. 

Enhanced Transparency 

Automated systems create detailed records of every step in the audit process, from the checks performed to the issues identified and resolved. These digital trails are easy to access and share, making it straightforward to show regulators, investors, or internal teams exactly how compliance was maintained. This clarity not only builds trust but also streamlines responses to questions or reviews. 

Key Internal Auditing Procedures that Benefit from Automation  

Building on the transformative impact of autonomous auditing, asset managers can increasingly harness automation to enhance the reliability and efficiency of key internal assurance functions. The following auditing procedures are examples of how automation can deliver improved outcomes across a range of critical activities:  

Capital Account and Waterfall Calculations 

Automated checks ensure capital calls, distributions, and carried interest allocations are calculated accurately. This reduces manual errors and provides private equity and venture capital teams with greater confidence when reporting to limited partners.  

Valuation of Level 3 Assets  

Illiquid or early-stage investments often present valuation challenges. Artificial Intelligence (AI) can benchmark inputs, flag inconsistencies, and support fair value assessments, making the process more reliable and defensible during audits.  

Fee and Expense Allocation 

Autonomous auditing tools continuously monitor management and performance fee calculations. By comparing these figures to fund documents, the system helps prevent misallocation and reduces the likelihood of regulatory scrutiny.  

Related Party Transaction Monitoring 

Detecting patterns and relationships across entities is complex, but AI excels at identifying potential conflicts of interest. Automated monitoring supports more accurate disclosures and helps firms stay ahead of compliance requirements.  

Mandate Compliance 

Real-time oversight ensures that investment activities remain within fund mandates and regulatory limits. This proactive approach helps prevent breaches and supports stronger governance.  

Digital Audit Trail 

Automated documentation creates a transparent, easily accessible evidence base for all stakeholders. This not only streamlines the audit process but also makes it easier to respond to questions from regulators or investors.  

The Strategic Imperative  

The integration of autonomous auditing into asset management represents a significant advancement for asset managers. By enabling real-time risk detection, comprehensive coverage, operational efficiency, and enhanced transparency, these technologies empower firms to meet the demands of a rapidly evolving financial landscape. Embracing autonomous auditing not only strengthens internal controls and compliance but also positions asset managers to deliver greater value and trust in a digital-first era.  

EisnerAmper is actively partnering with our asset management clients to implement these autonomous auditing capabilities, providing strategic advisory and technology support to help realize this vision. Connect with our team to learn more.