Utilising technology to create a truly digital audit process
Inflo and Accountancy Age brought together over 150 audit and accounting professionals to discuss how firms can utilise technology to create a truly digital audit process.
The panel explored how new technologies, new market demands, and new methodologies are changing how auditors approach their work, but more importantly how firms can take steps to establish a truly digital audit approach.
Caroline Monk, Executive Partner at Beever and Struthers, and Lindsey Tyler, Partner at Azets are leading the pack in innovating the audit approach and managing change in their firms. They were joined by Inflo Founder and CEO, Mark Edmondson who is changing the audit landscape by making innovative technology solutions accessible to accounting firms of all sizes.
Digital evolution and why innovate now
The global pandemic has accelerated the pace of digital adoption for many businesses. During this time, the accounting profession has generally been successful in moving away from the traditional service model – now embracing remote working and digital service delivery.
This move to remote working has dispelled myths that previously inhibited progress, such as the idea that audits must be performed at the client’s site. Research, such as a McKinsey study released in November 2020, shows the accounting profession is strongly positioned to retain effective remote working into the future. Finance, management, and professional services were identified as the sectors with the highest potential for remote work. 
This will have implications and potentially change the focus of client visits. Utilising technology to deliver a remote audit does not necessarily remove the need to visit the client’s premises, but stands to change the purpose of the on-site collaboration. The auditor already has the information they need, the conversation now becomes much more valuable in terms of providing insights and advice to the client.
Using technology innovation to attract staff
Firms are utilising technology to differentiate themselves, not only to impress clients but in attracting and retaining the best people within their firms.
Caroline discussed “Competitive pressure always exists between firms, we are essentially selling a process that results in an audit opinion. Staff are a rare commodity at the moment, but new technologies are providing a unique competitive advantage for firms in attracting and retaining good audit staff.”
Lindsay noted “Being dynamic and forward-thinking when it comes to data analytics and insights really do help to attract and retain staff at a graduate and newly qualified level. Effective use of technology also helps to attract bright people back into the industry too as it provides a flexible way of working.”
Challenges firms are experiencing in adopting digital audit technology
During the session, a poll revealed, 67% of firms indicated that same-as-last year thinking was their major challenge in delivering valuable audit services.
Caroline discussed “by starting the audit process with the actual data for the current year you are reviewing, ensures you are discussing that year’s story with clients to help eliminate that same as last year thinking.”
44% of firms identified the impact of clients not understanding the audit as a major challenge, Mark discussed “this is not necessarily specific to technology and innovation but squarely points to communication and the impact of a lack of understanding from the client-side. There’s an opportunity to move the dial and emphasise the value of a digital audit approach in terms of being data-driven, using benchmarking and unique insights to enhance the audit process.”
Strategic opportunities for firms
The potential opportunities and competitive advantages for firms are significant. Firms leveraging digital technologies and navigating different working practices are adding value in new ways.
For Caroline one of the biggest benefits of adopting a digital audit process “is about creating an audit fit for purpose and resetting the whole audit process – moving away from a checklist mentality, using the actual data to determine the appropriate audit approach. But more importantly, it really engages the staff, giving them the opportunity to explore data and understand it.”
Lindsay agreed “Azets employs really bright people, hones skills to identify and assess risks, changing the focus of the audit to where the anomalies are, meaning staff are having the right conversations at the right level. Meaning the audit is much more dynamic, flexible, sophisticated, and fit for purpose.
Mark believes there are two key strategic opportunities firms need to consider when looking to move to a digital audit process. Firstly, improving existing services through time efficiencies and enhanced understanding gained via technology helps to unlock capacity in teams, ensuring they can spend time with clients on higher-value activities. Secondly, introducing new services, whether you charge for them or not, such as analytics-as-a-service providing monthly benchmarking and dashboards, changes the whole value proposition of the audit, creating new client value and strengthening the trust in the relationship.
How firms are leveraging the greater availability of data
With the explosion of data availability, firms have already started to work with much larger data sets allowing firms to delve deeper into the analysis.
Lindsay discussed “Azets is working with clients on process mapping, which is helping to identify changes and understand the business, which is really informing client conversations and structuring their audit approach around that.”
At Beever and Struthers, Caroline shared “our approach is to involve data analysts in the process, this informs conversations and adds value to strategic planning from the client’s point of view. For smaller firms, management can be a lonely place, so the value being added is really enhancing their business planning.”
Firm considerations in adopting a digital audit approach
The digital audit is transformational. It is a new way of thinking about the value of the audit. It is a new way of conducting an audit. It involves rethinking how firms provide audit services, and it enables an entirely new service experience and level of value for your audit clients as well as your staff.
Mark discussed ways firms can assess whether they have the right platform or tools required to support the audit process. In terms of data, questioning whether the platform has been designed with data in mind or is it more of a file repository. Often cloud technologies have multiple API opportunities, so ensuring that technology is talking to each other is an important part of this decision-making as we will continue to use more technology in the audit process.
Most importantly he says firms need to consider the 3P’s: people, platform, and process, and think about change more holistically. Even with the best technology, if you have left behind the audit process and your people that is unlikely to lead to progress. Technology is only one part of digitising and advancing audit services.
To find out more, contact our team.