Gone are the days when skills such as business acumen, critical thinking, and understanding market trends were expected of more senior auditors. In today’s world, thanks to the combination of technology, auditing and the evolving structure of the audit team, auditors need to develop these skills at a much earlier stage in their career.
The tremendous growth of technology has impacted every profession — and auditing is no different. With rapid changes in the business and accounting landscapes, not only should auditors be up-to-date with the changes, but also try to remain one step ahead. Empowered with technology that helps them complete simpler tasks faster, the audit team can focus on non-routine areas of audit that require more analysis and professional judgement.
Broad approach
Auditors should have knowledge of accounting and auditing, and this will never change. But as companies evolve, so does the way they are audited.
Auditors should, therefore, continue to tailor their procedures in response to emerging risk areas or complex transactions that are specific to each company. But today, auditors are rethinking the audit approach for a broad population of companies, given the more universal change in how companies operate.
The volume of data that companies create is astounding. This data is often across systems, and the extent of information captured may not be widely understood within the company.
By leveraging technology, auditors can analyse large amounts of data in a short span. This is changing the nature of audit by enabling them to better identify financial reporting, fraud and operational business risks and tailor their approach accordingly to deliver a more relevant audit.
Tech impact
The combination of big data, advanced analytics and visualisation technologies offer clear business insights that impact the way an audit is planned and executed.
For example, instead of testing a sample of transactions to see if they are consistent with revenue, an auditor can now analyse all revenue and contra-revenue transactions and spot inconsistencies across the business, or anomalies with specific customers and business units.
This allows them to identify transactions that fall outside expectations. Auditors can then categorise an activity based on its attributes, identify risks and drill down to examine the underlying transactions. The details that emerge out of these transactions help explain why a deviation was noticed.
Thus, while the audit evidence covers a complete population of transactions, testing procedures are specifically targeted. This increases the quality of audit while reducing the time spent on analysing such huge data.
The current economic climate continues to emphasise the role of independent auditors in the financial markets, with increasing expectations from the scope and value of the audit. Technology innovation has had a transformative impact on audit and has provided an opportunity to align the audit with regulators, investors and clients’ expectations.
(Sandeep Chaddha is Partner at Price Waterhouse and Ankit Anil Kumar is Senior Associate at PricewaterhouseCoopers LLP)