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The small practice approach to the future of audit

Author: ICAEW

Published: 29 Jan 2021

29 January 2021: Barry Au moved from big firm audit into a director role at small practice Wisteria Accountants. He explains how collaboration, technology and how audit can contribute to the greater good, as part of a series of articles based on themes from ICAEW’s Audit Manifesto.

Barry Au, director at boutique accountancy firm Wisteria, says that when it comes to audit many businesses believe that bigger is better. 

“I think there is often a stigma attached to smaller firms not providing the same level of audit quality as the bigger firms,” he says. “I intend to quash this perception here at Wisteria.”

Au joined Wisteria at the beginning of 2021, bringing with him a decade of experience from Grant Thornton, which he moved to after training at Holborn-based firm Alliotts. Heading up the audit team, Au plans to bring a bit of large firm thinking to his role, blending that with the best that small firms have to offer. 

“I learned a lot at Grant Thornton on the bigger stage. Working in a very fast-paced and at times stressful environment has set me up to work where I am today, leading Wisteria’s audit department,” he says. 

Wisteria takes a very partner-led approach, which provides the option to influence the direction of travel and ensure that the firm is adding value to its audit services. 

“There’s the expectation set internally to add substantial value to all our client base,” Au explains. “I pick up the phone to new leads and clients are often surprised that it’s me, the partner, getting back to them. So even from the get-go, I am having that initial conversation with potential clients.”

It’s an approach Au particularly enjoys. As a partner, he has a greater degree of autonomy and decisions happen at a much quicker rate – almost overnight. “Being agile is key to success, particularly in the current environment we’re facing,” he adds. “There are more processes and protocols at Grant Thornton, so change was a longer process given the size of the firm.”

Au is already making plans to initiate his own changes to the audit function. He aims to futureproof the team by investing in training and development, and looking to attract new talent, which he says will bring a different perspective and fresh new approaches to the table, touching on the need for collaboration and fresh thinking highlighted in the Audit Manifesto.

“My approach will be to listen to the new generation of auditors,” he explains. “I’m planning to bring on an audit graduate shortly, so while I will train, coach and nurture them, I also want them to feel empowered enough to speak up and challenge the status quo where necessary. It’s about being open-minded and listening to a different perspective.”

Au himself is big on audit quality and the need for robust, consistent documentation which stands up to scrutiny. Auditors must demonstrate complete independence and control over every aspect of the audit. For Au, it’s about being clear and making sure the right processes are in place, obtaining and corroborating the right evidence.  There is also a strong focus on documentation; if something hasn’t been documented, assume it hasn’t been done, he says.

“Delivering a quality service is being ISA compliant,” he explains. “It’s applying the appropriate audit methodology, hitting the mark on audit quality through corroboration and meeting regulatory requirements, all while maintaining auditor independence and being professionally sceptical while sitting in the shoes of the users of the financial statements.” 

That will always be the core of audit, but there are always improvements to be made, he says. Ongoing reviews of audit methodologies and emerging technologies, he says, will ensure Wisteria will be well-equipped to deal with evolving requirements of the profession now and in the future. 

The future of audit, says Au, will be in AI. Wisteria themselves already use some degree of AI in their approach to sampling. Items are selected at random, replacing human choice and removing inadvertent unconscious bias on the part of the auditor. Au believes this creates a completely independent approach. 

“Future innovations will definitely come from AI,” he says. “Possibly a tool that analyses the full financial population of data from pre-set parameters and risk profiles to identify any unusual transactions or exceptions which will then require the auditor to investigate further. This may well revolutionise the way audits are performed, and the skillsets required of auditors in the future.”  

Such technology has the potential to shake up the auditor’s role, enabling them to focus more on human judgement while AI carries out the more mundane, time-consuming tasks such as analysing high volume, low transaction ledgers. This, in turn, will add value through relationship building and vital interactions with stakeholders. 

Building on stakeholder trust is also critical. As Au points out, it’s one of the reasons why audits are so important to the economy and society as a whole: audits reinforce stakeholder trust in financial statements which are used to make key decisions and manage risk. In so doing, it boosts confidence in a company and their financial profile. 

“Where there is confidence in an economy and society, it will lead to greater stakeholder investment and ultimately, to economic prosperity and growth,” Au explains. “Looking at it another way, if corruption and fraud are prevalent in an economy, there will be no trust in that economy. Yes, there have been many high-profile company failures recently but there’s also been a lot of great work done by audit professionals. Audits can and do contribute to the greater good – they can help economies to thrive.”

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