For auditors, technology will allow you to be the person you’re trained to be, rather than someone who shuffles numbers around on spreadsheets, according to ICAEW’s Head of Tech Policy Esther Mallowah and Head of Data Analytics and Tech Ian Pay.
Cloud: levelling the field…
While technology in the audit has been a differentiator for firms in recent years, cloud is now levelling the playing field. No one needs expensive, bespoke software to offer clients a technology-enabled audit. Instead, a growing market of specialist vendors can offer the right tools at prices that match a firm’s scale.
Any firm can, in theory, have state-of-the-art apps and tools, and take advantage of secure platforms to manage the audit process. Cloud is the medium that can replace traditional back-and-forth methods of exchanging information with clients: everything can be requested, received and signed off on a single secure platform.
Cloud is also changing the dynamics of audit talent, Pay explains: “If you’re working in a hybrid or virtual environment, it doesn’t matter where people are based. It therefore opens the doors to employing the best people for your organisation. We’re seeing a lot of middle-to-large firms exploring outsourcing and offshoring more, because tech platforms allow them to work in that way.” This works for smaller and mid-tier firms too, as they don’t need to be in large cities to get access to the best audit talent.
AI: taking away the pain
There remains a lot of interest, debate and uncertainty around the use of artificial intelligence (AI) in the audit. But it’s already beginning to have an impact on the audit role, helping with some decision-making and analysis. Journal testing is one area where, according to Pay, the use of AI is reaching a tipping point: “It’s becoming more accepted that AI can assess large volumes of data and identify risk activity in a more robust and predictable way than humans. For journal testing, it feels doable today, and regulators are engaging more.”
AI’s potential for automating information flows and painful routine tasks frees up the auditor’s time to apply their in-depth knowledge and judgement.
Blockchain: making room for more skills
When there’s an immutable, tamper-proof ledger that anyone can access, will we still need audit? Mallowah doesn’t doubt it: “Context is important. It’s here that the auditor’s understanding of the business and how it operates, and their judgements, will be essential.”
As with automation, this technology has the potential to take away some of the more mundane elements of an auditor’s role. As Pay points out: “If we get to a place where information is stored and agreed across multiple locations, it removes some of the need for auditors to do reconciliations and get verification or confirmations from third parties. This is still a long way off but it’s possible to see the potential future.”
As blockchain is adopted, it will also need more (and different) talent in the audit. Mallowah notes: “While blockchain is supposed to be immutable, it’s all code, so there is still going to be value in auditing blockchain code. This will need a higher level of skill than the average auditor currently has.” Despite the fact that firms will, therefore, need more technologists and data specialists, auditors will continue to be valued for their experience, sector-specific knowledge and communication skills.
However, auditors will need enough understanding of the technology to know, for example, the limitations of tools and how their configuration affects the output. As Mallowah says: “People are not going to let the technology do it on its own with no judgement or without an appreciation of what the technology can and can’t cover.”
Pay concurs, noting that: “It’s going to be very important to understand what the use of blockchain technology means in terms of professional scepticism and ethics. It’s about understanding enough to know where to draw the line or what else to check.”
Data and analytics: more freedom for auditors
So as audit becomes more data-led, the auditor’s role becomes less about mechanics and more about judgement and technology. Achieving 100% transaction testing efficiently while maintaining quality is a big area of focus for many firms. Once this can be achieved, AI models can learn how to test and how to approach data, using their own logic rather than tests selected by auditors.
Overall, the increasing use of data, analytics and visualisation tools in the audit is set to further liberate auditors from routine tasks such as generating audit reports, while requiring them to understand the strengths and limits of these technologies.
The machines aren’t coming for auditors’ jobs. In a happy story of technology transformation, they are instead taking away the tedium and leaving auditors to apply the knowledge and judgement they have worked so hard to acquire. However, audit is changing. For firms to optimise their audit talent, audit professionals will need high levels of tech literacy, and the ability to work symbiotically with data specialists, technologists, and sophisticated AIs.
Attractiveness of the profession
Businesses around the UK, and the rest of the world, are experiencing a talent shortage. In this context, is the profession representing the value and benefits that it offers to talent in the best way? Perception, purpose, diversity and development all matter in bringing the best people to the profession.
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