At the AICPA ENGAGE conference in Las Vegas a few weeks ago, there was much discussion on the speed of change and the impact of technology on the audit profession. Data analytics was the buzz word of choice at the conference, and there was standing room only in many of the sessions that promised to enlighten all those who attended about new technologies and techniques and about how these advances would change the way things are done today.
For those who haven’t had the opportunity to listen to someone talk about the value that data analytics can bring to your clients and your audits, you should take a moment and digest what is going on around you. Yes, audit standards have yet to catch up to the pace of change that is driven by technologies that enable auditors to sort through vast sums of detail contained in data files and perhaps allow them to ask better questions by investigating the trends, the exceptions, and anything that falls outside a given set of parameters. And, yes, the AICPA is well aware of the changing landscape and the impact it can have on audit firms of all shapes and sizes. Indeed, it is widely known that technology does have a way of being disruptive, and unless audit firms wake up to the changes going on them around them, many will be left behind.
Millions of dollars are currently being invested in technologies that capture the imagination. Whether it be the advantages of Big Data where an audit firm is tied into a client’s accounting systems 24/7 and continuously running scripts that provide for real-time, exception-based auditing or the enticing proposition of running data analytics on entire populations of detail transactions to analyze trends and potentially provide your clients with a different way of looking at things, the possibilities do seem endless and intriguing.
What shouldn’t get lost in this flurry of innovation, however, is the ever-present importance of thought and interaction between the client and the audit team. It is in that relationship that true value can be found.
With advancing technologies, one might wonder what the audit of the future will look like and what will be its impact on client service and relationships. Today, audit teams spend the majority of their time in the field performing audit procedures, talking with client personnel, and then spending some time in the office wrapping up loose ends and producing documentation. It may be that for the audit of the future, the majority of audit time will be spent running data analytics in the office and that the time spent at the client site is much less. That said, the quality of the time spent with clients is where the true value of the audit is delivered. It is time spent resolving questions, discussing trends, assessing assumptions and parameters used, and validating results. It is the time spent communicating with the client, illustrating relationships between data and providing insights into the client’s business that they may not have even been aware of or knew existed. It’s where we can add new tools to owners and management’s toolbox that can give them an edge to make better business decisions.
These are the critical moments where knowledge sharing occurs and business partnerships are forged. In my opinion, data analytics brings its fair share of challenges, but also tremendous opportunity, to better understand our clients business and deliver better insights and recommendations to help improve their businesses. Let’s make sure to balance the immense benefits of data analytics with the undeniable value of client interaction as the audit process continues to change and evolve.