Planning an audit transformation? Start with these 5 questions.

We've talked about the audit of the future for years, but the reality for firms is that the future is here – and transformation of audit practices is happening now. I was recently part of a webinar on audit transformation and technology with Sarah Flischel, CPA, Director of Audit Transformation and Training at AAFCPAs, where we asked attendees where they were in their audit transformation journey. 64% of respondents said that they were actively evaluating new technology, in the process of transitioning, or had already moved to a new technology. That speaks to the pervasiveness of practice transformation. With changing market forces, and the needs expressed by firms in the market, the process of when and how to transform can seem overwhelming. The message however, is less complicated. Start somewhere, and start today.

To help get started, begin thinking through the following five key questions:

1. Does it have the functionality and capabilities we need?

   A comprehensive methodology, data analytics, financial statements, tailored audit programs, workpaper templates, prebuilt client communications, visibility to the tax practice for information needed by both audit and tax teams – these are capabilities that a modern, advanced audit solution should deliver right out of the box. It should also have the flexibility to enable customization and authoring to fit the specific needs of your firm. When you narrow down your list of audit solutions, set up a product demonstration to walk through the audit workflow, asking questions about how it meets your firm’s needs. And dig in – if it is asking deeper questions or getting your hands on the solution, be sure to understand the full offering and how the solution meets your needs.

2. Does it have a complete set of industry-oriented content and features?

   Your audit solution should offer plenty of ready-to-use capabilities focused on the needs of the key industries you serve. Does it have robust content, and an infrastructure of capabilities designed to support the industries that your firm focuses on? Are the audit steps canned or are they tailored to align with industry specific needs, so that your engagement teams feel the benefits of the right content within the methodology, powered by a strong technology engine? Along with these considerations, it is important to understand the level of resources that the solution requires to be adequately updated and maintained. While some firms want to custom author content and help maintain methodology, many are transitioning to an “out of the box” solution to reduce or eliminate firm resources dedicated to maintenance.

3. Will it enhance quality, be effective and increase efficiencies across stakeholders?

   Your new audit solution should empower and enable your audit teams. This means enhanced quality, greater efficacy for users and a more efficient workflow in a modern interface. That requires features such as:

   • Full data ingestion
   • Clear and intelligent linkages between audit steps, back to standards and throughout the engagement
   • Comprehensive risk and response libraries
   • Streamlined financial statements and draft disclosure footnotes
   • Smart and functional use of automation

   Plan on talking to firms that have already adopted the solution to learn about their experience: When all is said and done, did it make their jobs easier? Are they confident in the way the solution enhances audit quality? The vision of a better way, while adding to audit quality should be felt by your stakeholders.

4. Will it make the migration and transition to a new methodology as painless as possible?

   Today, your firm already has a wealth of data encapsulated in your existing technological environment. You need to know exactly how all this data will be stored in a new environment, how it will get there, and the best practices the solution provider uses to aid the migration. A successful transition involves many different factors, and data is at the center of the process.

5. Does it come with enablement resources to support firm transitions?

   Making the move to a new, advanced audit solution calls for commitment to the vision and process – and your firm shouldn’t be the only one that has this commitment. Your solution provider is your partner and should offer a team of experts to help at every step along the transformation journey. It should also provide the infrastructure and tools to assist with change management, data migration, training and implementation.

Change management: Beyond technology

Technology is a significant part of audit transformation, but it’s not the only factor; a comprehensive change management strategy is critical for success. Here are a few of the change management considerations to put at the top of your agenda.

The right people make all the difference

Regardless of the size of your firm, having a core transformation team at the helm is a best practice to guide you to success. The key to a successful team – and ultimately, a successful audit transformation – is bringing a diversity of viewpoints and expertise together. Front-line staff are going to bring very different perspectives and needs to the team than managers and partners. IT specialists, quality control leads, industry experts – each stakeholder embodies important perspectives and insight that need to be reflected in the transformation. Make sure the right people are at the table.

When it comes to the rollout process, you have choices

“Audit transformation” can sound intimidating, calling to mind a long leadup to a dramatic, flip-the-switch-and-hope-everything-works moment. In reality, there are multiple paths to adoption that can be customized for your firm. Here are four examples of how firms approach the transition:

• Pilot: A guided, controlled process for a small group to run engagements and identify gaps in processes in advance of a larger rollout.
• Full adoption: This is the flip-the-switch option, which works well for many firms.
• Tiered adoption: Roll out to certain industries or a handful of engagement teams first.
• Simultaneous tiered adoption: Everyone starts using the audit solution at the same time, methodically increasing the number of clients on the solution in each busy season.

Your technology partner has a big role to play, too

Audit software providers should bring extensive expertise to your engagement, drawn from their work with other firms of all sizes and types. And they should use it to provide hands-on guidance at every step of your firm’s transformation journey. Choose providers who have a track record of helping ensure successful adoptions and are prepared to provide a high level of support long after the new solution goes live.

The Dynamic Audit Solution (DAS)

Whether your firm is actively planning an audit transformation or is just starting the evaluation process, I encourage you to learn more about DAS. Built by the AICPA, CPA.com, and Caseware along with the talent of practitioners in leading firms, DAS combines decades of experience in audit technology, methodology, and implementation services. The industry’s most advanced and only fully integrated, end-to-end audit solution, DAS was developed by the profession for the profession and offers CPA firms an unprecedented opportunity to digitally transform their audit practice and client services.

Visit cpa.com/DAS to learn more today.