The last year, despite all its challenges, has been a valuable learning experience for Mitchell Charlesworth. Whilst we had already embraced the changing technological horizon before Covid, it certainly accelerated our journey, says Mitchell Charlesworth head of audit, Louise Casey.
Many audit firms of a similar size to us started with adopting paperless auditing. That now seems like a distant memory with the newer audit tools that are on the market today. Clients are now expecting auditors to be innovative in their audit approach, whilst still maintaining competitive fees, and giving them an efficient and effective audit that adds value to their business.
Whilst audit may have been in the press for all the wrong reasons of late, it is imperative that confidence in the audit process is restored, and it is now far more evident that business owners are looking for something extra from their annual audit.
But what constitutes a positive audit? Obviously, quality is at the forefront, ensuring the appropriateness of the audit approach and the level of testing. However, isn’t this to be expected when you appoint a qualified audit firm, who are members of the applicable institutes and governed by set auditing standards and financial reporting standards? We have been looking at ways to ease the burden of the audit process for our clients, streamlining dataflow, and reducing the resources clients need to provide during the audit process.
Technology has a vital role to play in bringing these attributes to life. The step change is one that is easily adopted, but there is sometimes a resistance to change what has been done in the past, so it is important that auditors communicate early in the audit process.
Automation of processes from requesting bank confirmations to electronic signatures are the new norm, and the introduction of data analytic tools and client collaboration is a crucial step we have taken to enhance both audit offering and quality, with a view of achieving this added value in the audit process.
The data analytic tools have wide ranging capabilities, and with the advancement of client accounting software and ERP packages, the integration we have experienced has proven successful in achieving full data set reviews rather than a manual sample-based approach, imparting an element of the risk detection and sample detection to artificial intelligence. This whole data set review strengthens the audit process from both a risk and advisory perspective.
The use of data analytics can also bring out meaningful discussion and reporting on findings, ideal for board discussions, audit committee scrutiny, and for making useful recommendations in relation to the processes and control environment, which for many companies is high on the agenda in light of audit reforms and current government consultation in relation to the role of both directors, boards and the auditor and their individual and joint responsibility to stakeholders.
Will technology replace the auditor? I don’t believe so. The level of judgement and subjectivity that will remain within audit, and the scepticism that comes from years of audit experience, and direct client dealings, in my opinion, cannot be replaced. For us, the higher level understanding a human can obtain from getting to know their clients, how their systems work, and how they are exposed to risk is a significant aspect to a quality audit, but AI can certainly support and complement this, taking potential bias out of sampling or targeting of heightened risk transactions.
As we slowly come out of the other side of Covid, and the remote audit challenges it has brought, we have benefited from many lessons, but the most important aspect is still that nothing is more important than human interaction, whatever technology and the future may hold.