Future of audit will be transformed by human intelligence – interview
Human intelligence and the future of audit
Q1. An overwhelming 96% of respondents welcome the use of technology in the audit process, according to a recent market survey. The most cited benefits were: it saves time, enables the auditor to focus on added-value tasks and gives auditors more time to analyse and challenge data. Do those findings surprise you and are they the benefits you see on a daily basis?
FS: What surprises me is that 4% do not welcome the use of technology. If we go back just fifteen years ago, auditors went through forms by hand and ticked off sections using different colours. Technology has completely improved audit team performance and the survey reflects that.
Technology saves time and improves audit quality every day. Using robotic process automation (RPA), for instance, means you remove manual risk error and makes procedures identical, which speeds everything up and improves the rigour of the process. That gives auditors more time to add quality judgements, trust and expertise to the statements – leading to a reinforced audit opinion.
Still technology does not remove the crucial role of auditors: human intelligence remains critical for designing, running and adapting technological solutions, and then deploying professional scepticism.
Q2. The findings reflect that – the top three criteria for selecting an audit firm did not include ability to integrate new technolgies. Knowledge of the business, an ability to understand the company environment and work with its teams, the stability of teams involved, and the consistent quality of the service provided, emerged top of the list. How does that match the views of your clients?
FS: The criteria finding might surprise those that view audit as a commodity that can be fully automated. In reality, audit users understand there are limits to technology and there is an enduring need for auditors.
Audit is about trust: selecting someone you trust to handle and sign off on information that will reassure the market. Technology, like artificial intelligence (AI), cannot work on its own, it needs human intelligence for design, monitoring and improvements.
Even the most ardent technology supporters still want to get to know the team that will be handling the tools and be on the journey. At present, audit technology skills are hard to find and it’s rare for clients to have them in-house. But when they meet a firm where auditors combine a risk appetite with technology appetite, like Mazars, they are reassured and want to know more about how the people use technology to test, experiment and, ultimately, deliver better quality audits.
Q3. Many of the most selected qualities valued from an auditor, according to the findings, are skills that technology cannot easily replicate, including critical thinking, listening and discretion. Could technology one day replace these skills or is it more useful as a tool to enhance them?
FS: Audit technology is at its most useful when leveraging the skills of a quality auditor. Business leaders do not want to pass on all their financial information to a robot – which is not feasible at the moment anyhow – they want to speak with a trusted adviser who can apply critical thinking.
Technology helps by prompting auditors to look at certain areas, and AI can be programmed to challenge human assumptions and identify patterns of abnormal behaviour. But tech still enhances people’s skills, it does not replace them – which is reflected in these findings.
Q4. If the next generation of auditors want to work with innovative technology and firms that appreciate their skills and interests, how can audit firms rise to this challenge?
FS: Technology is an investment that organisations need to make, but this must be done simultaneously with helping people develop critical knowledge and skills.
A decade ago, auditors were typically people who liked accounting, finance and risk management. But gradually audit teams became comprised of people who want to understand and apply transformation and process complex information in new ways.
For us, it’s about new joiners having freedom to build the career paths they want, namely a combination of experience with accounting, technology, client management and new areas like ESG. We are building paths where people can spend six months on automation topics and then six months on sector matters, for example. The best ‘future profiles’ of auditors will combine diverse sector expertise with agile business knowledge to create new, improved approaches.
Firms have to show new auditors they can have countless lives within an organisation. By offering opportunities to work with new technology, as well as researching innovation and collaborating with R&D firms and universities, it will lead to a sense of belonging that brings out the best in people.
The rise of technology has increased the need for human expertise and intelligence in audit firms. In turn, firms should plan to attract the best talent by highlighting and reinforcing how auditors will need to leverage technology to deliver on audit’s mission of creating trust and added value.
Q5. Audit, like any industry, has its challenges. Are you optimistic for the future?
FS: I am very optimistic. Audit and its role in building trust is more important than ever. Governance scandals, questions of fraud and businesses that are digital-natives all bring new market challenges. On top of that, we have growing financial, environmental and even pandemic-related risks. Someone needs to act as the guardian and stand up for what is good for the market and the public interest. That is what we do, and the best audit firms will fully leverage technology to achieve it.
In a world where trust is falling, the role of auditors – empowered but not replaced by technology – will be more valuable than ever.
Mazars recently commissioned an independent research firm to take the pulse of the global market’s views of the expectations and future direction of audit, inviting stakeholders to consider necessary changes for its evolution. Read ‘The future of audit: market view – myths, realities and ways forward’ here.