Mar 18, 2016

Leveraging Technology to Transform the Audit while Engaging Millennials

By Allison Henry, Vice President – Professional & Technical Services

Amazing advances in technology are transforming the world around us. Who would have thought that someday you could purchase a driverless car? Think of the fun ramifications: maybe you won’t have to shuttle the kids from point A to point B, or perhaps you could read a book, watch a movie, or take an online class instead of suffering the drudgery of the daily commute. How about liberating the disabled or the elderly who are no longer able to drive? Will car ownership even be necessary if we can call up the nearest driverless car on an app?

WomensHisMon_J_reducedSo where are technological advances in the accounting profession going? How about an app that could review contracts for provisions that deviate from a standard? What about one that will prepare and review a set of financial statements for compliance with all available authoritative accounting guidance? The opportunities are endless. But how would these apps change what you do?

New technologies that enable the analysis of huge quantities of data are poised to radically transform auditing, presenting countless opportunities and challenges for the CPA profession. While the use of data extraction software on audit engagements has increased and provided incremental improvement to the audit process, advances in workflow automation and artificial intelligence will soon result in a complete overhaul of the audit process. An AICPA white paper, Reimagining Auditing in a Wired World, provides a glimpse of a new type of audit that would markedly increase the level of assurance through the collaboration of professionals from a variety fields, including data analysis, business intelligence, data visualization, gamification, big data analytics, and text and process mining.

The transformed audit will likely lead to significant advancements in audit quality. This is perfectly timed since the audit profession is facing unprecedented pressures from regulators. At some point, standard-setters and those charged with governance will need to weigh in to encourage the new approach through standards changes and engagement team selection. While the transition to the new audit norm will be a challenge for many, those that embrace the change by acquiring new skills will likely be rewarded with significant new opportunities. For example, the increased use of big data analytics platforms will drive the need for assurance on the data and the systems used to compile that data, which in turn fuels the need for more SOC engagements. Furthermore, the increasing use of big data also provides the potential for new advisory services as new business insights are uncovered. Pivoting to these new opportunities is important to ensure the long-term viability of the profession.

The technologies that create the potential for significantly improved assurance services and new service lines challenge the status quo and present potential resource constraints for many CPA firms. However, many view the technology-leveraged audit as a recruitment tool as it is more in line with the expectations of the next generation of auditors. Could it perhaps be perceived as a technology-based game? Or how about positioned as an important fraud-finding mission? While the transition to the fully automated audit is likely several years into the future, it’s important to begin to assess the impact of these changes on your practice now. Consider the need to learn new skills, hire professionals with different credentials, or engage other professionals on a part-time basis. Stay up-to-date on related standard-setting activities. As we are all experiencing this change together, join the dialogue, provide your perspective, and stay engaged. Many of these issues are discussed at the Accounting and Auditing Procedures and IT Assurance committee meetings. Feel free to join these committees or reach out to the committee chairs through the previous links, or contact me directly at ahenry@picpa.org.

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Statements of fact and opinion are the authors’ responsibility alone and do not imply an opinion on the part of PICPA officers or members. The information contained in herein does not constitute accounting, legal, or professional advice. For professional advice, please engage or consult a qualified professional.