Better, Faster, Cheaper? What You Should Expect from Next Generation Audits

The banking industry has been (understandably) shaken by the rise and impact of technologies like automation and artificial intelligence. The audit profession has been similarly shaken. Already, machines can handle a substantial portion of the audit services we provide. Oddly enough for a client service profession, however, it’s virtually impossible to find any information about how tactical audit process changes will impact our clients. A quick Google search shows no articles about what audit clients should expect to experience in the coming seven or so years.

We see opportunity in that gap in the conversation. The audit profession tends to be so focused on processes and standards. With technology stepping in to manage many of those, it’s an opportunity to re-center our attention on the most important part of what we do: serve the client. With that in mind, we outlined a few things that clients should expect from the new audit services approach.

More focus on you.

An automated audit approach will allow many of the less technical and more time-consuming tasks to go the way of the dodo bird. This change should allow audit teams to focus on higher risk areas and delve deep into client’s businesses to provide the genuine market insights and business advice most of my client’s ask for every day.

Better counsel.

The overall quality of the engagements should improve because of a more risk-based approach. Auditors should have more time to consult, guide and deliver value to clients. I’ve never had a client thank me for an excellently performed payroll voucher exam. I have had thanks for resolving regulatory conundrums or improving their customer’s experience through more effective processes. The next generation audits should allow for more of this type of consultation.

More accurate audits.

Automation could result in testing of 100% of a population of transactions year-round. There shouldn’t be a need to tie up conference rooms and the finance team for weeks or months of the year when the audit can be performed on each day’s transactions as they occur. If transactions are tested daily or weekly, exceptions can be brought to the client’s attention throughout the year. There will be less testing performed at year-end, allowing for timely and speedy sign offs of financial information. Because auditors will be looking at a larger number of transactions than are currently tested using sampling, they should be able to identify redundancies in controls and processes. The value delivered by an audit should increase significantly and potentially increase operational efficiency for clients.

More specialization.

Audits can and will be performed from anywhere in the world. Firms will deepen their specialization, increasing competition and allow clients to select auditors that may meet their needs better than firms in the past. The drawback to using a remote firm isn’t necessarily the face-to-face component (which can be addressed through video conferencing and travel) but more the security of the data being transferred. Cybersecurity will be key to both clients and auditors as audits become more virtual.

Normally, when automation comes online and competition increases, fees/costs decrease. That may not happen in this brave new audit world. Auditors will deliver so much more than we have in the past. The value clients should expect to see from their audits will be exponentially higher. That higher level of effort will result in improved deliverables, though not necessarily cheaper ones.

There’s every reason for our clients to look forward to the next generation audits. Even though the overall audit cost may not change, the value to be delivered through these services will increase exponentially. Start the conversation today with your current service providers to plan how you’ll make the most of this future approach.

This blog was originally published on AccountingToday.com. See the full article here. 

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