While many of these firms used to approach an audit by using the previous year’s audit files as a template, they’re now coming at it from a completely different perspective.
Here's a sneak peek at what that means for you.
Wondering when the “audit of the future” that we’ve all heard so much about over the years will become a reality? Well, it’s clear from my conversations with leaders at firms across the country that it’s already happening. While many of these firms used to approach an audit by using the previous year’s audit files as a template, they’re now coming at it from a completely different perspective. They’re fully re-engineering the audit to meet higher client and regulatory standards while achieving new levels of efficiency and delivering a lot more value along the way.
But what does that mean in practice?
I recently discussed this very topic with Jim Bourke, CPA, CITP, CFF, CGMA, Managing Director of Advisory Services for Withum, where we took a closer look at important changes in the audit underway today and what they mean for firms of all sizes. Here is a summary of the key highlights.
New data capabilities are changing what’s possible
Many core aspects of the audit will remain unchanged – regulators will still require a lot of the same basic principles and reporting. But how auditors achieve those outcomes is already changing considerably – starting with data. The difference between old ways of delivering the audit and new approaches is stark. In the past, firms relied on clients to feed them data, often paper-based, and then the firm’s staff would input the data into their own systems. Today it’s all about using advanced digital tools to ingest the data, analyze it, and find patterns and signals buried in the data to inform the audit and provide valuable insights to clients.
How firms are shifting to meet the moment
For many firms, this evolution requires a more dynamic, fast-moving and technology-centric approach than they’re accustomed to using. And it will require that they change in some important ways – not at some unknown point in the future, but right now. The first step is for firm leaders to embrace this change, signaling the importance of conducting the audit in new ways to the entire firm. Without that level of leadership and visibility, don’t expect anything to change. When it starts at the top, the message makes its way throughout the entire organization.
Once the firm recognizes that the audit of the future is a top priority, other critical activities will cascade out. Technology assessment and selection. Process updates. Training. Data strategies. And more. For example, Jim explains how his team routinely assesses the potential impact of new technologies and tool sets on improving audit quality, and how important it is to ensure that team members have the training and support they need to use the tools effectively.
The Dynamic Audit Solution – a practical, powerful tool for firms to transform the audit
The development of the Dynamic Audit Solution (DAS) is a partnership between the AICPA, CPA.com and their technology partner, Caseware International. DAS will play a central role in pulling together all the different threads of the audit of the future – people, processes, technology and data. DAS enables firms to transform the audit, not just make incremental improvements. Today, DAS is being piloted by a limited number of firms before a larger-scale commercial rollout in 2023.
You can read more about what’s next in the audit of the future, and subscribe to receive the latest updates, on our cpa.com/das web site.
In the meantime, you also can watch my full conversation with Jim in this 10min video, where he shares lots of practical front-line insights on the changing world of the audit. It’s an unscripted, insightful conversation that I think you’ll find useful as the profession moves to embrace the audit of the future.
