3 keys to the future of audit

It is no secret that the audit profession is in the midst of profound change. Increased client demands, evolving regulations, and the dawn of AI are reshaping the profession. However, this transformation unlocks both challenges and opportunities for audit firms that hold the keys.

According to the Thomson Reuters Institute Audit Survey, many respondents agreed that their audit firms must evolve in their adoption of progressive technology like AI. While they’ve considered how systems like generative AI (GenAI) could enhance their audits, they also stated that achieving this transformation is daunting, partly because of perceived shortages in the qualified personnel capable of understanding and exploiting the benefits of these technologies.

Attracting and retaining talent and ensuring compliance with professional standards are also critical considerations. Most firms do not have the resources, bandwidth, or time to implement highly disruptive changes. They must adopt new technologies carefully to ensure compliance with professional standards and avoid jeopardizing peer review.

In this white paper, we delve into three essential keys that will shape the future of audit: the ability to adopt and sustain AI-powered innovations, the capacity to attract and retain top talent, and the commitment to maintaining compliance with professional standards.

Key #1: Adopting and sustaining AI-powered innovation

With the exponential growth of big data and an influx of progressive technologies, innovation has been and continues to be critical to the success of audit firms. The strategic insights firms can derive from structured, unstructured, and semi-structured data are significant, enabling them to remain competitive and relevant.

In many respects, the technological advancements needed to succeed are present and available for firms. The challenge for many is finding ways to sustain innovation. As noted previously, this involves consistent, continuous progress toward the future to ensure that your firm remains relevant and competitive, but doing so in a way that does not completely disrupt your firm and your processes.

Thanks to advancements in technology, auditors are no longer confined to limited amounts of data. They can now transform data into insights to identify risks, uncover opportunities, and integrate that with knowledge that extends beyond financial statements. In other words, they have the ability to think holistically and promote innovation — which, of course, begins with ensuring the quality and integrity of data.

Data: Quality over quantity

The quality and integrity of data is paramount, and auditors must have confidence that the data is clean. Analysis based on bad data is not only unhelpful, but it results in wasted work and can even be detrimental to the firm's reputation.

Gathering data in disparate forms from various sources increases the risk of unclean data or errors occurring during the data-gathering process. That’s why quality checks are necessary before diving into any data analysis.

The following factors determine data quality:

• Verification of completeness
• Accuracy
• Data integrity to ensure it has not been altered
• Consistency in data formats, naming conventions, and precision
• Multiple data-source agreement
• Exportability and portability
• Cost-effectiveness considering the effort and time required to obtain, clean, and verify the data

Unfortunately, sometimes there are barriers to data access. When a client has numerous accounting systems containing different sets and data types, it presents potential challenges for auditors. Data existing in disparate forms and locations increases both the risk of unclean data and the time and complexity necessary even to access it.

The solution to this risk is to use a high-quality data ingestion service provider that offers connectors for the accounting systems that your audit clients use. Such a service can make ingesting, cleaning, and standardizing data a highly efficient process — a critical first step in a data-driven audit.

Data analytics: Unlocking insights

Data analytics, which is essentially the science of examining raw data to draw conclusions, is not new to auditors. The profession has used analytics in various forms for years. Firms are increasingly using more sophisticated data analytics to deliver high-quality audits in less time and in a less labor-intensive way.

As outlined in a recent article by the Association of Chartered Certified Accountants (ACCA) on data analytics, the increased access and manipulation of data and the consistency of the application of tools can increase audit quality and efficiency in numerous ways. These include:

• Thorough data analysis with dashboard displays to detect anomalies or outliers
• Improved risk identification with directed testing
• Efficient processing of large data volumes for better focus on risk areas
• Easy manipulation of data for audit testing, including sensitivity analysis
• Enhanced fraud detection through interrogation of all data
• Testing segregation of duties
• Adding greater value to audits with insights from data analytics

Several examples of the use of data analytics to perform audits include, but are not limited to:

• Matching purchase orders to invoices and payments
• Comparing the last time an inventory item was purchased with the last time it was sold and at what price
• Analyzing revenue trends by product and region
• Testing segregation of duties by identifying combinations of users involved in processing transactions from the metadata attached to transactions

Further, AI-powered systems can enable audit firms to better identify pertinent trends, locate anomalies, and thoroughly assess any high-risk areas in their assessments. By streamlining and automating risk assessment procedures, audit firms can achieve greater consistency in predictive analytics, which could lead to more in-depth risk assessment results.

As audit firms increasingly rely on data analytics for comprehensive insights and enhanced audit quality, it becomes evident that the infrastructure supporting these data-driven processes is equally crucial.

Leveraging the cloud

The migration to cloud-based solutions has been underway for some time, but in recent years, it has certainly accelerated adoption as firms move to remote audits. The reality is that in today’s tech-driven environment, the cloud is vital for firms.

The cloud brings indispensable value to the audit process, and auditors expect to standardize its use as a tool in their toolbox. This technology offers significant efficiencies, drastically reducing the time spent on audits.

Cloud-based solutions provide several crucial benefits for auditors, including:

• Unified access to the same data and source information for all audit team members, facilitating quick and seamless collaboration
• Consistent file organization across the team, leading to a more efficient and frictionless experience
• Enhanced data security through encryption and access controls, ensuring that individuals only see the data relevant to them

The adoption of cloud technology is no longer optional but necessary. Those who have not yet transitioned to the cloud are at risk of falling behind in the evolving landscape of audit practices.

Key #2: Attracting and retaining talent

According to the 2024 State of the Tax Professionals Report, talent is a top priority for firms, with many directing more of their energies toward hiring, training, and retaining quality people and cultivating a healthier, more sustainable work culture.

After all, according to the Thomson Reuters Institute audit survey mentioned previously, 58% of firms see attracting and hiring skilled professionals as their top challenge, with another 41% citing staff retention as the biggest challenge.

Perhaps what makes the audit talent landscape particularly challenging is that many firms aren’t just looking to fill positions. They need candidates with substantial technical knowledge and the mental agility to handle unexpected situations. Additionally, many firms are facing significant bandwidth and resource constraints, and numerous firms have more work than they have the staff to handle.

When asked how their firms intended to maximize retention and tackle talent challenges, almost half (49%) of the tax professionals survey respondents said their strategy was to increase salaries and offer other incentives, such as bonuses and better benefits.

While increasing salaries and offering bonuses are immediate solutions to retention, investing in progressive technologies like AI presents a strategic approach to attracting tech-savvy professionals eager to advance their careers.

Interestingly, while technologies and automation can help fill skill gaps, they can also be used as a recruitment tool. Firms that utilize progressive tools like AI are often better positioned to hire and retain staff who want to build their technical skills and become more productive and efficient.

So, not only does AI help bridge talent gaps, but it also supports audit staff in terms of talent development, engagement, and retention. By leveraging AI-powered automation to address talent shortages, audit firms can increase efficiency and insight while opening up value-added roles that enable staff to focus on more fulfilling and rewarding work.

The result is a happier, more engaged audit team; reduced staff turnover; and insightful, data-driven analysis that enhances the client experience.

Technology is vital in winning the war on talent

Providing auditors with the innovative tools and resources they need to work more efficiently and flexibly can prove game changing for firms struggling with strained bandwidth. Engagement suffers when employees feel they don’t have the technology and resources needed to work effectively and further develop their skills.

However, many firms have more work than they can staff for, so most do not have the bandwidth or time to implement new, disruptive processes or execute pervasive change management projects. This situation is, however, where technology can make a significant difference.

By leveraging a cloud-based, end-to-end audit solution, firms can improve efficiencies with real-time digital collaboration between audit teams and clients. This technology enables auditors to work faster and smarter, regardless of their physical location, and better serve clients. They can eliminate the time spent toggling between disparate systems — and pushing data back and forth between them — and free up time to better serve clients with more informed insights and higher-quality audits.

The proper solution also enables firms to provide staff with a better work-life balance. It is an essential factor to consider, especially in light of research revealing a connection between a greater work-life balance and high-quality audits.

Technology to improve working efficiency

From a workflow perspective, many auditors feel as though they are over or under-auditing. Many firms are missing out on valuable time savings without the ability to roll data forward or efficiently build an audit program and edit checklists. Plus, don’t forget the time it takes to stay on top of industry-specific guidance and changing standards while collecting, managing, and keeping track of PBC documents.

On top of all that, managing collaboration, file exchange, synchronization, and data access — including the time it takes to import trial balances, get financial confirmations, and build or update financials and lead sheets — can be an enormous challenge. This difficulty is especially true when multiple staff members are working on the same audit from different locations.

With a cloud-based audit suite, you can easily access a wide range of resources, including customizable templates, checklists, and practice aids. Designed to simplify the audit process, these tools allow you to focus on the critical aspects of your work rather than get bogged down with administrative tasks.

How? A roll-forward feature can provide engagement information, reporting periods, dates and indexing, trial balance, and work-paper settings for the subsequent year’s audit file. The power of AI can help you see how your firm’s identified risks stack up to similar industry engagements. A secure digital platform and global network for confirming financial data can cut confirmation time from weeks to days.

Enhancing work-life balance

According to the Thomson Reuters Institute Future of Professionals Report, 24% of professionals said they would choose to spend their time enhancing their work-life balance, pursuing additional hobbies, or simply resting.

When asked about the potential improvements to the value of their work that technology could bring, professionals also identified three levels in which AI can deliver greater value:

• Freeing up time
• Increasing efficiency and productivity
• Directly adding value to work

More than half of professionals said they were most excited about the value of new AI-powered tech in terms of time savings. This time saved through AI and cloud technologies translates directly into improved work-life balance. As repetitive tasks are automated, professionals can focus on higher-value work during regular hours, reducing the need for extended workdays and improving overall job satisfaction.

AI-powered cloud solutions not only increase efficiency but also provide flexibility in work schedules. This flexibility allows professionals to better manage their personal and professional lives, leading to improved work-life balance. For instance, automated processes can reduce overtime work during busy seasons, allowing auditors more time for personal pursuits.

Additionally, when firms leverage cloud-based solutions that enable auditors to work anytime, from anywhere, it tears down geographic borders and significantly widens the pool of job candidates. No longer constrained by state and city lines, firms can hire top talent to work remotely regardless of where they live. This remote work capability also enhances work-life balance by allowing professionals to eliminate commute times and work from locations that best suit their lifestyle, integrating work more harmoniously with their personal lives.

A comprehensive solution that can manage the full spectrum of audit tasks in one place to save time and improve efficiencies — and having a trusted partner to help your firm safely move into the future with advanced audit technologies — is crucial to attracting and retaining talent.

The synergy between AI, cloud solutions, and enhanced work-life balance is reshaping the audit profession. By leveraging these technologies, firms can improve efficiency and quality of work and offer a more attractive work environment that prioritizes the well-being of professionals. This holistic approach to leveraging technology is vital to winning the war on talent in the modern audit landscape.

Case study: Forrestall CPAs

Forrestall CPAs is a leading metro Atlanta CPA firm offering a full range of services. The firm, founded in 1978, was voted the Best CPA Firm in Gwinnett County for fifteen years by Gwinnett Magazine. It was also ranked among the top fastest-growing CPA firms in Atlanta for six years by the Atlanta Business Chronicle.

In recent years, like many firms in the industry, Forrestall CPAs faced challenges and rising pressures due to an evolving profession. The firm, a long-time user of Thomson Reuters products, implemented Cloud Audit Suite in late 2022 and has been fully up and running since the start of 2023. Since then, they’ve found it much easier to streamline the audit process, from IT support to ease of client access.

One of the most notable improvements was in client communication. For example, the firm uses what it calls a “prepared by client (PBC) checklist,” which it sends out to clients for an audit, detailing what is needed, from whom, and when. With client communication available right from Engagement Manager, this process is automated, saving them significant time. Plus, the ability to customize the template to fit their needs has further enhanced efficiency.

“The sooner we can get the data, the better our efficiency and realization is,” says Jeff Forrestall, CPA & Managing Partner.

In addition, the firm can give immediate access to peer reviewers, which has been particularly beneficial in intricate auditing scenarios. When swiftly and securely sharing large files for due diligence purposes was necessary, the team found that the ability to copy over what they needed quickly was a game changer.

“We can’t find more staff,” Jeff says, mentioning the limits on his ability to increase prices.
“The only thing I have left is to become more efficient.”

With the help of data analytics and smarter intelligence in Engagement Manager, Jeff and his team are becoming more efficient, finding more fraud and helping clients with controls. Not only that, but they’ve seen a 30% increase in time savings.

This increased efficiency has also positively impacted staff retention. Employees are more engaged and motivated, as they can now focus on more strategic and analytical tasks. “We talk about whether AI is going to replace humans,” says Jeff. “Never. Auditors are stronger than ever.”

Implementing Cloud Audit Suite has not only streamlined processes and increased efficiency but has also fostered a culture of innovation. This transformation has positioned Forrestall CPAs to be well-equipped to meet the challenges and opportunities of the future.

As the accounting and auditing landscape continues to evolve, such adaptability will be crucial for firms to thrive and meet the diverse needs of their clients.

Key #3: Ensuring compliance

Foundational to success in the future of audit is ensuring ongoing compliance amid a complex and ever-changing regulatory environment. Firms must employ a guided engagement process to perform efficient and profitable audits that comply with professional standards and pass peer review.

In an increasingly remote environment, auditors must keep up with regulation changes on the go and share information while simultaneously accessing and working on engagements in the field or anywhere else.

Firms can achieve this ability using a fully integrated online solution that enables them to manage all types of engagements — like financial statement audits, single audits, reviews, compilations, and preparation — increase accuracy, and simplify the audit process.

When evaluating solutions, consider one that includes the following features and capabilities:

• Cloud-based functionality for streamlined access, sharing, and collaboration during engagements
• Customizable audit programs tailored to a firm's specific risks and assertions to minimize the risk of over-auditing
• Template creation for engagements, incorporating industry-specific requirements in compliance with SSARS, SAS, and PCAOB PCR standards
• A roll-forward feature for engagements that facilitates continuity by eliminating the need for recreation and rekeying each tailored engagement
• Trusted audit content applicable across various industries
• An efficient process for transferring and receiving client engagement files
• Robust security measures to protect sensitive data
• Step-by-step guided engagements with expert insights and engagement and representation letters
• Alerts and diagnostics to avoid overlooking unresolved issues
• A versatile platform optimized for conducting single audits

A guided engagement process and a fully integrated online solution with the features mentioned above can help firms conduct efficient and profitable audits that comply with professional standards and pass peer review.

Dispelling the myth of disruption

In today’s rapidly evolving audit landscape, it’s important to dispel the myth that to be an auditor of the future, you must radically overhaul your audit technology and methodology. This belief is simply not true — and the perception that integrating new technologies must be highly disruptive is likely contributing to slow technology adoption among auditors.

While no single obstacle stands in the way of audit firms adopting next-generation technologies, the adoption delay could stem from various challenges. According to the audit survey mentioned earlier, many respondents said their firms lack the resources, the personnel, and the time to integrate new technologies into their operations.

However, modernization does not need to be revolutionary. It can be incremental, evolving over time rather than happening all at once. Given the limited time between audit cycles, it’s practically impossible to revamp both audit technology and methodology in a single year.

That’s why taking a gradual, evolutionary approach is essential.

It’s also important to note that the core fundamentals of audit will remain intact. What’s changing is the ability to integrate modern technologies into your workflow seamlessly. Since auditing is a high-stakes service, it’s critical not to rush into a major transformation.

To ensure ROI on your investment, you must choose providers with long-term stability who can partner with your audit firm to deliver the latest tools and technologies in a way that works best for you.

Although auditors don't need to become data scientists, the profession is evolving to focus more on real-time and forward-looking practices. Firms aim to go beyond basic audit services and provide clients with valuable insights; advancements like AI-powered audit technology can help achieve this goal.

The new auditing role

An article published in the ISACA Journal suggests how the new auditing role could create additional advisory and value-added opportunities, such as:

• Providing effective feedback to top management
• Performing adaptability testing of new technology
• Giving continuous input for improving processes
• Improving operational standards
• Assisting in the implementation of standard operating procedures (SOPs)

Having a clearer understanding of the keys to the future of auditing can help firms overcome challenges and provide more significant results and a better overall client experience.

As auditors integrate AI-powered tools and other advanced technologies into their workflows, they’ve positioned themselves to offer more than just basic audit value, encompassing real-time, forward-looking insights and value-added advisory services.

Ultimately, firms that can navigate this evolving landscape — balancing traditional audit principles with innovative technologies and expanded service offerings — will be best equipped to overcome challenges, deliver superior results, and provide an enhanced client experience.

Embracing the future of auditing

The audit profession is rapidly changing, and keeping pace can prove challenging for firms as they navigate strained bandwidth, increased client expectations, regulatory changes, and an influx of innovative technologies.

As the world moves toward a more automated and data-driven audit environment, it is becoming increasingly clear that the right tools and technologies can make all the difference in driving efficiencies, increasing confidence, and, ultimately, delivering better outcomes for clients.

In this evolving landscape, firms need a reliable partner to guide them through the adoption of advanced audit technologies — which is more than just integrating new tools into your audit workflow. It includes the necessary guidance to ensure your firm and your audit staff apply these new technologies in ways that drive new efficiencies and pass peer review.

The future of audit is here, and it’s more powerful, efficient, and collaborative than ever before. It’s time to leverage groundbreaking technologies to revolutionize your practice and keep pace with the changing industry landscape. 

Meet the future and stay ahead of the competition

Seize the opportunity for innovation and empower your firm to thrive in the new audit era. The Thomson Reuters Cloud Audit Suite — a powerful platform that leverages the latest in cloud technology — enables seamless collaboration, streamlines workflows, and automates many of the manual processes associated with audit.

To learn more about the future of audit, watch our on-demand webinar, “Future-proofing audit firms: Embracing modernization and technology.”

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