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By Cassandra Bennett, CPA, DBA

Work during the pandemic was a challenge for most organizations. It was surreal for auditors. From being required to work from home as firm offices were closed to trying to communicate with clients as they too had become displaced was a significant hurdle to the auditing process. While challenging, the experience provided insight into the future of what an audit could look like when leveraging expansions in technology.

Virtual audits – driven to the forefront out of necessity during the pandemic – are primarily performed electronically, reducing the amount of face-to-face communication between auditors and client personnel. Meetings were conducted using live-stream technology, such as Zoom and Microsoft Teams, and scheduled among the parties at an agreeable. Compare that to having an on-site auditor knocking on the CFO’s door to ask questions at a time that might not be convenient.

The virtual audit process also bolstered the electronic transfer of information rather than using paper. Certainly, some electronic transfer of information was taking place prior to the pandemic through secure emails, but many auditing firms are now leveraging secure portals such as Huddle, Dropbox, and so on to transition all exchanges of information with the client to an electronic platform. These portals offer a secure way for clients to share data with their auditors. This improvement opens up opportunities to gain additional efficiencies during the audit process.

Two years ago, many of us had no idea what Zoom was or ever experienced a Teams meeting. But these advances in digital communication allow clients and auditors to communicate in new and more effective ways. The days of having auditors physically onsite performing final field work could be a thing of the past – or, at the very least, greatly reduced. Auditors, in fact, can use this type of technology to have clients provide them with a tour of facilities, to verify fixed asset additions placed into service, and so on.

As with any change, though, there are positives and negatives. Below are a few of the advantages and disadvantages of moving forward with fully virtual audits.

Advantages

• Significant flexibility in scheduling the audit work to appropriate times versus a set number of days at the client’s location.
• The use of portals provides an efficient method to transfer information as well as secure backups, so information isn’t lost or misplaced.
• Audit fees can be reduced by eliminating travel and out-of-pocket expenses.
• Potential reduction in overhead costs of maintaining large office space incurred by the audit firm.

Disadvantages

• Clients may be apprehensive to provide sensitive data through an electronic format.
• Auditing firms need to invest in the cost of supporting the technologies being used as well as continuous training.
• Some audit requirements can be more difficult to accomplish virtually.
• The client-auditor relationship could deteriorate without having on-site interactions.

The pandemic forced auditing firms to embrace new technologies that have advanced the implementation of the virtual audit. Although virtual audit techniques may still be developing, the advances in technology have made it not only possible to conduct audits in a virtual environment but have changed the auditing paradigm for the future.

Cassandra Bennett, CPA, DBA, is an assistant professor of accounting for Bloomsburg University of Pennsylvania in Bloomsburg and a member of the Pennsylvania CPA Journal Editorial Board. She can be reached at cbennett@bloomu.edu.

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