WHITE PAPER
Winning strategies for revolutionizing your audit: Harnessing the power of AI
Today’s auditors face many challenges. From a complex regulatory environment to growing client demands and a shrinking talent pool, the audit profession must evolve and embrace change to remain competitive. While adapting to change can be intimidating, therein lies an opportunity. By taking advantage of powerful tools like AI, today’s auditors can drive efficiencies, deliver higher-quality audits, and boost revenue — all while reigniting excitement for the profession.
If you’re an auditor ready to gain a competitive edge, take note of the following trends and winning strategies to successfully revolutionize your audit practices and unlock opportunities for growth.
The power of AI and automation
Historically, auditors have heavily depended on manual processes to identify risks in financial statements and business operations. While this method is somewhat effective, it is undeniably time consuming and vulnerable to human error. The introduction of AI is revolutionizing the auditing field, allowing firms to harness the capabilities of data analytics and machine learning to automate processes while enhancing efficiency, accuracy, and overall profitability.
Because AI algorithms can swiftly analyze extensive datasets and detect patterns, anomalies, and potential risks at an unprecedented speed, auditors can shift attention to more complex and strategic work, like interpreting results and uncovering insights for clients.
AI also enables predictive analytics, which means auditors can anticipate potential risks and trends based on historical data. This proactive approach enhances the process of risk identification and decision making, providing a more comprehensive understanding of the financial landscape.
Navigating environmental, social, and governance factors amid a complex regulatory environment
Keeping pace with evolving regulatory changes and audit standards is no small feat, whether it’s ensuring clients are compliant with the new revenue recognition standard or the new leasing standard — to name just a few. On top of that, environmental, social, and governance (ESG) is making an already complicated regulatory landscape even more complex. However, many auditors are taking advantage of this trend. Much like the audits of financial statements, third-party assurance from an accounting firm can help ensure that a company’s ESG report is high quality and reliable — and this expertise is in high demand.
Whether gauging sustainability or quantifying the ethical impact of supply chains, the manual collection and aggregation of ESG data, along with understanding associated regulatory requirements, can be overwhelming for businesses. Many find it challenging even to initiate the process — and that is where the opportunity lies.
Many tax and accounting professionals are expanding their service offerings to provide clients with ESG-related data, assurance, and tax optimization strategies. These services include providing clients with ESG audit support to validate the efficacy of controls, conducting activities to identify gaps and assess risks, and formulating recommended courses of action for companies.
As more tax and accounting professionals expand their service offerings to encompass ESG-related data, assurance, and tax optimization strategies, the integration of AI and machine-learning algorithms is emerging as an essential component. With the ability to continuously learn from auditors' interactions, AI and machine-learning algorithms can adapt to these changing industry regulations — meaning AI tools become more sophisticated over time. For example, AI can be leveraged to automate the reporting of emissions data — including Scope 3 carbon accounting — ensuring compliance with sustainability reporting standards and reducing the administrative burden of managing emissions data.
In addition, generative AI can assist in keeping track of evolving regulatory requirements and ensuring that financial practices comply with the latest standards, which helps reduce the risk of non-compliance. By aggregating patterns in search habits, an AI-enabled tax research platform can more accurately predict the exact information you are looking for over time, enabling you to find the right answers faster.
Auditing in the cloud
In a constantly changing audit landscape, technology provides a new way to achieve the efficiency, accuracy, and consistency auditors need to manage the audit process.
For instance, a robust online audit solution enables auditors to easily ingest client data from 100% of accounting software systems. This ability eliminates the manual step of uploading a trial balance and allows auditors to quickly import transaction-level detail from the client’s books into the audit software. The auditor can then apply various analytical procedures, such as year-over-year variance analysis, or take a deeper dive into the data to ask detailed questions and set more impactful expectations. Taking it a step further, auditors can automate sampling and tests, sending selections directly to the client to track status from within the workflow tool.
Furthermore, leveraging a fully integrated online audit solution helps auditors keep up with changes on the go and share information while accessing and working on engagements simultaneously in the field from anywhere, at any time.
When looking for a robust audit solution that helps you keep pace with evolving regulatory changes, consider solutions with the following features:
- Intuitive tools that enable you to take advantage of expert guidance from content authors who have extensive audit experience
- Real-time collaboration so you can easily share information with your audit team while accessing and working on engagements simultaneously from anywhere without profit-killing version control issues
- A risk-based audit design so you can start your tailored audit programs with, for example:
- Suggested audit procedures based on identified risks and risk assessments
- Expert-authored content pre-tailored for small, non-complex entities
- AI-enabled decision-making capabilities that tap into anonymized data from others who have faced a similar risk scenario and suggest areas of risk you may not have considered
In an evolving audit landscape, auditors can no longer afford to struggle with inefficiencies due to outdated processes. Leveraging a solution that brings engagements to the cloud, streamlines audit workflow, and provides quick and easy access to trusted answers enables firms to audit more effectively, confidently, and profitably.
Unlocking growth opportunities with AI
The advent of AI is transforming auditing, empowering firms to leverage data analytics and machine learning for improved efficiency, accuracy, and profitability. AI algorithms can swiftly analyze extensive datasets and detect patterns, anomalies, and potential risks at an unprecedented speed. This analysis allows auditors to shift attention to more complex and strategic work, like interpreting results and offering experience-based insights to clients.
In addition, AI facilitates predictive analytics, enabling auditors to foresee potential risks and trends by analyzing historical data. This proactive methodology improves the identification of risks and decision making, offering a more comprehensive understanding of the financial landscape.
By leveraging AI and user data, assisted decision-making capabilities are possible using anonymized data from other auditors who have faced a similar risk scenario. By proactively suggesting areas of risk you may not have considered, your audit team is empowered to complete audits more efficiently and confidently. Not only does this enhance the risk identification process, but it also allows you to continue working on your engagement without ever leaving your workflow.
With the right tools and resources, auditors can future-proof their services and strengthen client retention by delivering actionable insights and value-added services that go far beyond the audit report more quickly. This capability enables firms to expand their client base and secure future revenue streams through advisory-based services.
“What's going to make the audit of tomorrow different than the audit of yesterday is taking advantage of new technologies. These technologies are becoming more and more powerful and more and more transformative, and that's what makes it both challenging and exciting. Thomson Reuters is uniquely positioned to help firms move into the future because we’re doing it without asking firms to completely disrupt their workflow,” said Scott Spradling, Director of Audit Innovation at Thomson Reuters.
What to look for in an AI-powered audit solution
To help your firm unlock growth opportunities, consider an integrated audit solution that offers features such as:
- The ability to compute KPIs and financial statement ratios measured against extensive peer group benchmarks to provide crucial information to clients.
- Transaction-mapping technology to help quickly identify anomalies.
- Groundbreaking AI and machine-learning anomaly detection techniques to quickly flag transactions that indicate a high probability of fraud or error, which helps ensure staff can protect both clients and the firm.
- Automated work paper creation and variance analysis that provide in-depth visualization of client general ledger detail compared with auditor expectation for fast, effective risk assessment analysis.
- An automated sampling process so auditors can quickly and easily complete substantive program steps across the entire population and then request client-supporting documents to edit.
- A comprehensive web-based engagement management tool with full trial balance capabilities, work paper management, and financial statement reporting functionality.
- Sophisticated trial balance capabilities that enable staff to benefit from fast trial balance imports, advanced filtering, and organizing capabilities to boost speed and accuracy.
- The ability to instantly access audit data from any location with simplified workflows that eliminate the worry about transferring, backing up, restoring, or refreshing audit files.
- Decision-making abilities based on AI that utilize anonymized data from other users who encountered similar risk scenarios.
Battling a shrinking talent pool
Attracting and retaining top talent is a top concern for many firms. To rise above the challenges and maintain a competitive edge, firms must not only implement technologies that improve efficiencies and help reduce stress on staff but also invest in talent growth and development. This latter is especially true as the industry faces a profound generational shift. Creating a tech-savvy culture of growth is especially appealing to younger associates, who care deeply about the opportunities for professional development and expect to use technologies like AI to boost efficiency in their daily work.
Firms looking to win the talent war may want to consider implementing a strategic and systematic approach to learning and development if they haven’t done so already. As outlined by Tom Hood, CEO of The Business Learning Institute, there are six steps to creating a talent management and development strategy:
- Develop talent and leadership strategy aligned with the firm’s vision
- Create a competency model
- Develop the career path
- Map curriculum and content to the career path
- Develop an ongoing compliance and governance approach
- Create a graphical process to communicate well and inspire your talent
In addition, demonstrating your firm’s openness to AI and cloud-based technology will help set you apart from the competition. Leveraging the cloud enables firms to break down geographic borders and offer more flexible work options. With automation taking over those data entry tasks, you can focus on hiring quality staff over quantity.
Perhaps most importantly, technology enables a shift in focus from compliance-related tasks to more meaningful — and profitable — advisory work that excites staff members and strengthens client relationships. The result is a leaner and more engaged staff, deeper interpersonal connections, and a more desirable work-life balance.
Turning challenges into opportunities with AI-powered solutions
In the face of continually evolving challenges, auditors need to embrace practical solutions that drive tangible results. The integration of AI and automation offers not just a glimpse into the future but a reliable path forward to enhance efficiency and deliver value to clients.
The journey toward revolutionizing audit practices requires collective effort and forward-thinking strategies. Embracing AI-powered solutions is not merely an option but a necessity in today's dynamic landscape. By staying informed, fostering innovation, and embracing change, you can position your firm as a pioneer in the age of AI-driven auditing.
Access additional resources and learn more about how to turn your audit challenges into opportunities on our future of audit hub. If you're ready to transform your audit approach, explore revolutionary solutions with our e-book, “Propel your continuous audit evolution.”
Cloud Audit Suite is your dynamic, end-to-end solution for accurate, efficient audits