The current state of new technology in auditing Work smarter and more effectively by leveraging innovative ideas and cutting-edge technology

Introduction

Ask the average person to picture an auditor, and they might envision someone hunched over a pile of paperwork or scanning endless columns of numbers. Of course, most accounting professionals today know that image is outdated in the new digital era. Today, auditors are less likely to be sorting through massive amounts of information manually and more likely to leverage innovative ideas and cutting-edge technology that allows them to spend time focusing on navigating client relationships.

Technology has an enormous impact on the profession. Thanks to new tools and resources, auditors are able to work smarter and more effectively — with each other and with clients.

Machine-learning based tools can rapidly analyze hundreds of documents and identify exceptions and outliers in a fraction of the time it took a decade ago. What used to require days of review can now happen in near real time.

Despite these advances, some firms are still hesitant to move forward with new technology in auditing processes and workflows. Some worry they don’t have the technological background to navigate the new digital world. Others have analysis paralysis, not knowing what they should be spending on technology and where.

In this white paper, we’ll take a look at current challenges affecting the profession, new technologies entering the audit area, and how firms can move forward.

The Risk: Technical Debt

What happens when firms stick to the technology status quo? Technical debt.

The term technical debt describes the costs a firm incurs when they choose an expedient route over a long-term approach that would take more time and effort. Some examples are; supporting several versions of a desktop-based accounting solution rather than transitioning clients to the cloud, having users on different versions of Windows, maintaining several different “standard desktop” setups through the office, or running other applications that are no longer supported.

In the short term, the firm saves time and money by keeping the status quo. However, over the long-term, failing to address issues and loose ends results in high costs for maintenance and even more expensive fixes. The problem with technical debt, like all debt, is that it accrues interest that must be paid off before you make a new “purchase.”

The cost of technical debt has always been high, but it’s even higher today. As the capabilities of new technologies in auditing are growing exponentially, so does the cost of technical debt. It’s no longer just about ripping and replacing old computers and monitors, upgrading operating systems, and migrating to cloud-based applications. Now, the cost of technical debt hinders innovation. The resources used for maintaining substantial technical debt — fixing things that break and putting out fires that come out of nowhere — cannot be used for anything else.

It’s up to firm leaders to determine where they want to be on the adoption timeline. Do you want to be cutting edge and leverage technology? Do you want to be a fast follower, getting in once best practices are established? There are successful firms in both categories. Where you don’t want to land is with the laggards — firms that get into a cycle of technical debt, believing it never “makes sense” to move to new technologies because they’ve invested so much into the old.