THE HISTORY of the audit profession there have been shifts in how audit is executed, because of the transformations in the environment in which companies operate. The audit industry is now facing significant changes in this financial crisis and as the purpose of audits change, we implement the learnings.
An auditor was once trusted to provide an accurate and detailed account of company data without the need or requirement to offer meaning or purpose to that data, but now auditors are increasingly in need of different skills to adapt to new user needs.
The key driver of this change has undoubtedly come from the users of audit data who are demanding an increasingly diverse array of data sources, those that do not traditionally fall within financial accounting. As a result, we are seeing more requests for data related to governance and corporate social responsibilities.
For example, data might be collected on the carbon footprint of company movements or information related to employees. This data is then open to users that would not traditionally have use for audit data, such as company employees and partners.
Technological change is also occurring at a rapid pace, ushering in the capability to capture and share data, on an unprecedented scale and almost instantaneously. This has resulted in an increasing focus on data, whether structured or unstructured, and whether generated internally or externally to the entity.
This new demand for data has led to the most critical aspect of this change to the audit industry. Auditors increasingly need to adapt to the changing needs of users and therefore provide meaningful interpretations of data. While many traditional investors would have pored through the financials to make long-term decisions, a newer breed of investors is more likely to invest in companies that offer a holistic view.
This view would be on how they treat their employees, manage their carbon footprint and anything that indicates the company is moral and upstanding. Auditing is no longer a transactional reporting exercise and the auditors have a key role in contributing to the credibility of the financial statements as well as obtaining assurance.
We auditors are now being called upon to provide a final step in the audit process – data illumination, requiring a two-fold development. Firstly, the auditors of the future will need to embrace technology and the ever expanding array of tools and techniques that advanced data analysis affords them. Secondly, they will need to be experts in data interpretation and synthesise meaning from the empirical evidence.
When I think of our newest RSM trainees, their experience will differ radically to my experience. Our newest RSM recruits are as comfortable discussing machine learning as they are forensic accounting, and we must cultivate these new skills if we are to continue to remain relevant.
Companies are increasingly driven and defined by their purpose, and we are seeing this at all levels of business activity both regionally and globally. Auditors must go further to make sure they are at the heart of these changes by continually engaging with all stakeholders and moving towards a new reality where they can lend credibility and confidence over a continuous stream of meaningful information.
Consumers of client information are no longer focused solely on the one time audit of the year. Now we must embrace the audit of the future
By Bob Dohrer who is global leader of quality and risk at RSM