As multinational organisations evolve in response to technology-driven innovations, the expectation for the audit industry to keep pace is increasing as well. New quality demands placed on auditing firms are being driven by their multinational clients, especially as enterprise business models grow and become more complex as they move through digital transformation.

Audit quality is influenced by the auditors’ internal systems, compliance process, and the technology in place to streamline the audit process. As market dynamics remain in a state of flux, leading audit firms are leveraging technology to become advisors to businesses.

Businesses, too, are now looking for auditors who have the appropriate technology controls in place to help them manage the complexities of the business environment, prevent fraud, increase stakeholder confidence, and maintain and improve market perception. As such, the longevity of audit companies correlates directly to their agility toward digital transformation. 

The Current State of Audit

Fraud and non-compliance cause significant losses to organisations each year. In fact, data shows that organisations lose 5% of revenue to fraud each year. This number stands at an estimated loss of $4.7 trillion on a global scale. 

Businesses are also facing an unprecedented level of scrutiny from both regulatory bodies and the general public. The increasing list of fines issued by the PCAOB, a US regulatory body that is followed internationally, proves that businesses must transform their processes to stay in step with the current regulatory landscape.

Along with the financial impact in the form of fines, penalties, and settlement costs, the real cost of fraud and non-compliance goes beyond what meets the eye. It shows up in business disruption, productivity loss, and reputational damage. The latter impacts organisational longevity and financial recovery since these are heavily influenced by market perceptions and trust.

Navigating the Audit Challenge

Audit companies are starting to evaluate their technology maturity to identify whether their business can keep up with the current regulatory environment, their client’s increasing expectations, and the expectations of a new wave of talent.

Amidst labour crunches, resource constraints and frequent staff turnover, maintaining audit quality becomes a key concern. Audit firms can leverage technology to obtain good quality audit evidence using fewer resources while facing a labour crunch. As staff turnover is a common phenomenon in the audit world, technology can also help ensure that critical evidence is not lost during personnel transitions. 

As multinational organisations and audit firms both become responsible for the quality of audits, the need for creating greater transparency, traceability, and control over information management becomes pivotal to drive sustainable and high-quality audits.

The Future of Audit

The pandemic was instrumental in accelerating digital adoption in audit firms. The 2022 State of Accounting Firms Trends Report stresses that those who adopt technologies such as cloud, RPA, and data analytics develop a significant competitive edge over those who do not.

The report also highlights that two-thirds of accounting firms plan to adopt cloud technology (in some form) in the next two years to improve online collaboration, visibility, and efficiency. The report shows that while one-third (31%) are still completely desktop-based, a majority indicate that they plan to bring cloud technology into their practices over the next two years.

To Conclude

Robust technology platforms are becoming important tools in the auditors’ arsenal. Digitally transforming traditional, paper-based processes like the audit confirmation process not only provides more control over record-keeping but also enables more accurate results. The Thomson Retuers Confirmation platform, for example, eliminates some of the key challenges that impede high-quality audits. The platform:

• Streamlines and simplifies the entire confirmation process and eliminates the need for back-and-forth communication that leads to errors.
• Provides a safe place to communicate sensitive information between audit firms, clients, and banks, and its recognised data security system prioritises user privacy and confidentiality.
• Guides entry-level auditors and alleviates concerns about auditor oversight.
• Reduces errors by almost 35% and increases confidence in audit results.
• Delivers fool-proof internal procedures that maintain information integrity and reduce the risk of fraud.
• Offers the world’s largest network of validated responders like banks and law firms, which guarantee a response.

Connect with our team to see how Confirmation, the global gold standard for audit confirmations, protects against fraud while increasing audit quality, improving customer experience, and advancing organisational profitability.