AICPA ENGAGE Conference - Key takeaways - Part 1
It’s been 3 years since I last attended ENGAGE, AICPA’s flagship annual super-conference. It was great to be back! There was a real buzz of enthusiasm as so many people converged to discuss developments in audit and accounting.
It was also great to (finally) meet some of my US colleagues. Having worked with some of them for nearly 2 years it was great to finally meet.
The AICPA ENGAGE conference is an action-packed 4 days – in effect it is 7 conferences rolled into 1. So many sessions are going on across the conference it’s a challenge to prioritize your schedule. And the expo hall is so big it spilled over 2 huge rooms in the Aria resort!
Here are my first three key takeaways from the seven I identified relevant to all US CPA firms, and mostly relevant to those outside the US.
1. More Progressive Thinking
Overall, there was a noticeable difference in the topics and tone of conversation. It’s been a tough couple of years for US CPA firms that has really exposed some of the challenges with the traditional business model. An incredibly hot labor market attracting talent away from firms. Legacy technology solutions struggling to support a remote workforce. Dated processes inhibiting the adoption of progressive technologies.
Firms have shifted from the theorizing and talking about “the future of audit” – which never arrives – to more quickly solving the challenges existing in their business today.
To learn more read our article “Welcome to the era of the digital audit”
2. Everyone is Resource Constrained
Every firm I spoke with is struggling with capacity. I heard Partners telling me they had to audit cash balances during busy season as they had no staff. I heard firms who are turning down audit opportunities that are coming to them as they can’t deliver the service. This is a profession-wide problem which needs some new ideas to start fixing it.
Several people explained to me some of the issues they felt existed in the US which were hurting the talent pipeline in the profession:
- Accounting at the college level – accounting typically being a 4-year program but requiring 150 credit hours is turning off students at the entry point.
- Dated approaches – when graduates do join firms, it doesn’t take long for them to be turned-off by dated working practices and legacy technology. They are leaving to join bigger firms who have adopted new technologies or are leaving the profession completely.
- Busy season – auditing has always suffered from seasonality, and the US market is the worst for this. But there is a sense that busy season has been longer and harder in recent years. With people prioritizing balance in their lives more than ever before, new ideas are needed to address this inherent challenge.
Check out my conversation with Donny Shimamoto, on empowering clients and staff through innovation.
3. Remote Audits
I attended a great session on remote audits. The speakers positioned remote auditing as the new normal, highlighting the audit standards don’t stipulate HOW to gather audit evidence, simply WHAT audit evidence needs to be collected.
Regarding controls, they stressed the importance of the auditor’s involvement in testing. Inquiry procedures are not enough. If the client prepares a control walkthrough document, inspecting the document is not the same as inspecting the controls.
For analytical procedures, remote auditing may require more granularity. Year-over-year may not be enough. Data analytics can certainly elevate the sophistication of analytical procedures to enhance risk assessment and testing.
And fraud was identified as an area of the audit heavily impacted by working remotely. Naturally there is a reduced ability to assess surroundings, observe body language, and “stare into the whites of the clients eyes”. But what was most insightful were data points across the 2 types of fraud:
- The average value of a financial statement fraud is $600,000
- The average value of a misappropriation of assets fraud is $100,000
Thus, given the requirement on auditors per the auditing standards is to detect material fraud, auditors should focus their risk assessment and audit testing far more on financial statement fraud, rather than misappropriation of assets fraud.
To perform remote auditing effectively firms need to embrace cloud-based technologies such as client collaboration portals, data acquisition, data analytics, and engagement management software. See what all of these technologies look like here.
Coming soon, I will discuss, risk assessment, standard changes, quality management and dynamic audit solutions from the AICPA ENGAGE Conference.