Our CEO Mark Edmondson had the pleasure of sitting down to chat with David Chitty, Crowe Global’s International Accounting and Audit Director, in December 2018.
In this conversation, David shares the unique insights he’s gained from driving innovation and transformation across the eighth largest accountancy network in the world.
You can watch the full interview above, and here’s a quick look at the highlights for a taste of what to expect:
“The market has moved on from our traditional approaches to sampling”
For David, embracing the latest and greatest technology available is the way forward for accounting firms of all sizes.
“The technological change that we’re seeing is something we have to embrace because… the market has moved on from our traditional approaches to sampling”, he tells Mark. “The market expects us to look at more data and give feedback on that data. The days of trying to explain to someone ‘well, we looked at 20 items out of 10,000’ is gone, so we’ve got to use the technology that’s available to us”.
It’s not just the technology accounting firms need to use differently, according to David. “We’ve got to use our people in a different way as well, because it’s more satisfying for them. And if you’re recruiting highly qualified highly educated young people, there’s probably better ways to use them than giving them mechanical tasks to do”.
David isn’t the first to make this point, either: during his Conversation with Mark, Geoff Woodhouse explained that cutting-edge tech is the key to attracting top talent.
David went on to explain that there’s never been a better time to get started with the latest accounting technology – even if you’ve struggled adopting cutting-edge solutions into your firm in the past.
“The beauty of the applications coming to the market today is that they’re flexible, they’re easy to learn how to use, in relative terms they’re not particularly expensive, and firms can get up and running with them very quickly”, he told Mark.
“I’ve often used the analogy that people are very used to using apps on their phones, yet people have held back using that many apps in their business. And yes, if you’re an equity partner in a firm, it can be a leap of faith changing the way you do things. Sometimes people have had bad experiences with technology in the past, but many of these applications – because they’re much simpler and much more flexible to use, – it makes it much easier to take the risk to adopt them. And there’s a growing community of people around who can support you to make best use of them.”
“Bringing in an application is not just a case of installing it and then life goes on”
Later on in the interview, David goes on to say that change management is just as important as finding the right software. “Bringing in an application is not just a case of installing it and then life goes on”, he says. “It’s then thinking ‘how do we use it in the right way’ and being open to changing what you do”.
For David, this comes down to “using the software in an efficient and meaningful way with a small team of dedicated experts”. He explains that one of Crowe’s member firms has just become its lead user of a piece of software that tests the valuation of financial instruments. This approach to change management has involved installing a small group within one of its firms which, on behalf of all Crowe’s audit teams, run this new software and then provide reports to the audit teams who discuss further with their clients.
This echoes BHP’s approach to managing the change to a new auditing approach, which Lisa Leighton, the firm’s Head of Audit, explained to Mark in their recent Conversation. BHP chose a single location and started by establishing a small team of forward-thinking champions.
Focus your innovations on the areas that pose the most risk
The last key takeaway from David’s conversation with Mark is to know which areas are key when it comes to introducing new process and technologies.
David recommends asking “where is the risk of material misstatement within the financial statements?”, and then focusing on those areas. He continues: “There are some areas of the audit that to be honest, we don’t need to worry about. But there are other areas we do need to focus on, and applications like Inflo can help us focus in not only on the risk, but also on the right assertion that we should be addressing to manage that risk. And that helps us get our audit programme right.”
So, before you jump into adopting the latest technologies into your firm, make sure you analyse your existing processes and identify the areas where there’s the most risk. Begin your journey by plugging these gaps with the solutions available to get some quick-wins and build confidence in your team so they can progress to more significant innovations.
Watch the video above to take a deep dive into the conversation and learn from the experience of someone driving innovation in accounting firms across the world.
And if you’re interested in seeing how Inflo could transform the way your firm works, get started for free today.