The challenges of 2020 have been immense, but now so are the opportunities. As we move forward, let's ask ourselves how we can learn from this year, returning not just to normal, but to even better. It all starts with advances in technology that streamline business processes and provide organisations with efficiencies that were once unthinkable.

Hosted by Accountancy Age, Confirmation’s European Managing Director, Kyle Gibbons, DO’s Arbinder Chatwal, Richard Spofforth of Kreston Reeves, and audit partner of BKL, Jon Wedge, recently gathered to discuss how technology will transform the audit process.

If you missed the live event, you can watch it below.

The panel began by reflecting on the changes in auditing during the last decade. In 2010, auditing was a largely paper-based process - auditors "coming back from client sites with transit vans" full of files and using "A3 music sheets" for checklists.

Businesses are now more complex and tech-based, and digital innovation and technology has evolved auditing.

Arbinder considers the growth of advanced data analytics (ADA) to be the major paradigm shift, becoming a key part of the audit process.  

ADA has allowed auditors to focus their data samples based on risk profiles, giving them more opportunity to find "that anomaly, that proverbial needle in the haystack." There will be an acceleration of ADA in future, and greater integration with other systems. 

Richard sees AI's growth as the big technological change, and an AI offering is already essential to any bid for new business. He described his organisation's successful use of an AI tool in analysing their general ledger - the entire data population is run through the tool, which creates high, medium, or low risk profiles.  

His firm intends to broaden its usage of AI to cover accounts payable and receivable, predictive data analytics, and interpreting legal contracts. 

In concert with behavioural science techniques, AI may help identify areas of a business where morale might be low, and therefore risk and fraud are more likely to occur.  

Kyle pointed out that “we’ve heard from Brydon around his desire for audit to take a greater role in preventing and detecting fraud,” and highlighted the reforms proposed in the Kingman and Brydon reports to increase the quality of the entire audit process.  

Technology has a crucial role as a supporting tool to help improve audit quality, “allowing professional scepticism the air and space to be exercised.”  

This means having a more independent and robust approach to questioning clients’ senior management and being willing to qualify an audit report.  

Confirmation’s clients are leading the drive toward process automation – they recognise the value of having an encrypted, validated and digitised network. 

Jon said that firms need to invest heavily in R&D in response to the current economic situation. That was where competitive advantage lay during the last two recessions, and it will enable firms to get out of this economic downturn more quickly. 

The availability of real-time data makes a continuous audit more viable: “why wait for the year-end to conduct an audit?” 

The panel concluded by saying that auditors need to embrace new technology and grow with it, or get left behind. Firms must continue to invest in staff training, but also address the cultural aspect - helping staff to be more comfortable with innovative technologies and to adopt a fresh mindset. 

Please reach out to us if you’d like to know more about Confirmation or anything you heard in this recording. We’re here to help!