Want a two pronged efficiency gain for your audit engagements?
What about wowing your audit clients with key business insights revealed by their data?
New technology innovations continue to change the way auditors conduct their work. The move away from business servers to embrace cloud has been accelerated by the effects of the pandemic. Technology to facilitate work-from-home requirements, means the influence and the speed of transformation has ramped up in recent years, says Sarah Butler, Head of Product for Caseware Australia and New Zealand.
“We regularly hear from auditors now that they want to audit smarter. So many are embracing technology innovations like automation and analytics, and using them throughout the audit process.”
Butler, who began her career as an auditor at PwC, is speaking ahead of the release of a new eBook from Caseware, Build a Modern Accounting Practice with Transformational Technology (available at the bottom of the page). Among the emerging technological changes covered by the eBook is the use of analytics, or data-driven auditing.
Data accessibility & integration for more efficient audits
In the past, trying to import financial data easily has been a burden, both to auditors and clients. The evolution of technology and the move away from business owned servers to a cloud environment is removing that burden, and making access to a variety of data sources direct and instant.
In Caseware’s software suite, for example, there are a number of audit, analytics and financial reporting solutions that can directly integrate with popular cloud-based packages such as Quickbooks, Xero and MYOB. Butler says once direct integration gets to a certain level, you unlock a two-pronged efficiency gain. Not only is the typical manual intervention automated, but the process also instantly maps data into the relevant areas of an audit engagement file. This allows the auditor more time to assess business and material misstatement risks during the engagement.
Insights from applying data analytics to audits
Generally, auditing data has been largely defined by the year-end trial balance and the transactions that sit under it. This is changing.
Auditors are beginning to access other data that helps them better understand their client’s businesses and define their audit approach. It could be staff-related data, such as payroll, business KPIs, forecasts and budgets, or profitability and performance measures.
This type of “data-driven auditing” allows an audit practice to offer clients a point of difference. Butler says one customer who has begun using analytics within their audits was amazed at the particular insights that hit the mark with her client.
“In one case, a standard data analytics test revealed transactions were taking place on weekends, at specific times of the year – the client had no idea that was happening,” she says. Potentially fraudulent transactions such as this are harder to find when you manually sample a large dataset to find “the needle in a haystack”, says Butler. Analytics technology makes it much easier – essentially, finding the needle when every strand of hay is accounted for.
So, how should you approach onboarding analytics or other new technologies?
Adoption of emerging technologies can be a challenge for both the auditor and the client. The ideal approach isn’t jumping headfirst into the latest software innovation without due consideration about what it might deliver of benefit. Butler suggests that a gradual introduction of new technology, such as analytics, evolves best at the pace that works for your audit business and your clients.
Defined projects staffed with people interested in new technology, is perhaps the key to successful technology integration into your audit business. It helps enormously to get good training and ready access to a knowledgeable vendor help desk. The project itself might take the form of working closely with a few handpicked clients willing to provide a complete suite of online data records and the team demonstrating the insights available with some standard analytics reports during the audit.
“The amount of trust this type of approach inspires between clients and auditors is very pleasing to hear about. We’ve had a number of our customers relishing further business opportunities that have arisen because of a more trusted relationship,” declared Butler.
Audit technology transformation is ongoing
While technology changes over time, Butler suggests that much about auditing stays the same.
“Some auditors were worried they might one day lose their job when the industry first started talking about digital transformation opportunities with newer technologie. These auditors were afraid technology would potentially reduce the need for auditors. However, almost the converse is true. Our industry will always need auditors.”
Butler believes that the technology now being applied is making tedious and repetitive tasks within the audit a thing of the past. This allows staff more time to concentrate more on the challenging and critical tasks of an audit. This includes reviewing business risk and processes in more detail, and suggesting to clients options that improve these aspects. The auditors in most demand will be those that embrace new technology, can understand data and effectively communicate with audit clients. These auditors raise the audit from a costly compliance exercise to a business risk consultation with an audit report just one outcome.
In short, technology transformation of the audit won’t obliterate the need for quality auditing by humans. Auditors need to continue to nurture their technical skills, scepticism and professionalism. Clients need human interaction from their auditors, to read and interpret whatever is being suggested or presented by the technology. This excellent article from the European Court of Auditors details more technologies likely to influence how audits might be conducted in coming years.
Caseware technology solutions for audit
“Caseware has a long history in the Australian audit industry that started out in the desktop environment. We’re now offering hybrid and cloud solutions to the industry, while maintaining our desktop versions and providing transition plans between those environments. We’ll continue to provide newer and better technology solutions as they become available,” says Butler. “In our business as usual approach, Caseware will continue to make sure that those solutions aren’t just about the technology, but fully support the work around the audit and the relationship between auditors and their clients.”
If you’re looking for auditing or accounting solutions for your practice, please get in touch with us via firstname.lastname@example.org to chat about which of our products might be useful for your practice.