Modernize your audit practice: How AI is shaping the future of auditing 

There is no doubt that today’s clients want more insights, including valuable data-driven analytics that help them work smarter. With the dawn of artificial intelligence (AI), auditors are well positioned to meet these needs; however, they must move fast to modernize their practices — or risk losing out to the competition.

The emergence of advanced technologies has revolutionized auditing practices, offering audit teams powerful tools to better analyze risk assessments, improve efficiency, and generate meaningful insights. Clients want and expect their auditors to be current with these new technologies and use them to provide strategic guidance.

To remain competitive, firms must embrace innovation, particularly regarding AI, to help propel them into the next generation of audits. Let’s explore how your firm can modernize audit processes to improve efficiencies, leverage data analytics, and attract and retain top talent.

Where to start 

The cloud: Table stakes for a modern audit 

Cloud solutions — more specifically, cloud-native solutions — are a must-have for firms looking to modernize their audit practice. By leveraging cloud-native solutions, audit firms can access data, systems, and applications from virtually any location.

The ability to conduct remote audits effectively and securely begins with implementing the right cloud solution. Unlike solutions that are simply cloud enabled, a cloud-native solution is designed and built in a cloud infrastructure. Leveraging a cloud-native solution enables firms to enjoy the cloud-computing delivery model’s full advantages and deliver a modern user experience.

Outdated systems and applications are disconnected from one another, leading to version-control issues, collaboration issues between peers and clients, and missed opportunities to leverage them between various tools and users. Firms can maximize time and minimize risk on even the most complex audit engagements by adopting a completely integrated, cloud-native solution.

Accounting firms are gatekeepers to a treasure trove of sensitive client data and are responsible for ensuring that data is protected. Outdated software leaves firms open to security vulnerabilities like malware; on-premise servers risk data loss and backup and recovery challenges if not properly maintained and secured. Yes, firms can store data on an off-site backup server, but this comes with additional costs and maintenance fees. Furthermore, sensitive data can fall into the wrong hands if a laptop gets misplaced or stolen.

Cloud solutions provide greater security because they store client data on remote, encrypted servers with redundant, up-to-date security measures for retrieval only by those people authorized to access them. Leveraging the cloud also helps ensure business continuity when unforeseen events happen, such as a natural disaster, cyberattack, or a global event like the COVID-19 pandemic.

In short, cloud-native platforms are an essential first step toward a modernized audit practice. If your firm still uses outdated software, it’s time to change.

Remote audits

Advancements in technology have made remote work increasingly normalized, especially as employee expectations and desires shift and firms discover the advantages of working outside the constraints of a traditional brick-and-mortar office. Plus, the ability to perform high-quality audits at a distance offers many potential benefits to firms, including taking on new business opportunities and hiring talent in geographic locations other than their own.

While in-person audits are second nature for accounting firms, the logistics are slightly different in a remote environment. Here are items to keep in mind while developing your remote audit strategy.

Client availability

It’s hard to know where your clients are in the process of remote business continuity and their ability to access the information you need to conduct the audit. They may need to be in the office to get some of the information you need, so it’s good to do some pre-planning to ensure that everything goes smoothly.

Obtaining client records

If the client can send you records electronically, you must have a secure way to receive them. It’s dangerous to send sensitive information via email, and read-only records could fall short of the level of access you need to get into the data. Many firms have successfully used secure client portals to transfer records safely. If your firm doesn’t already have the technology, it’s worth looking into secure portals for this purpose.

Don’t forget about communication

Communication is the foundation of your remote audit program. Think about communication with your engagement team members and your clients. A clear communication plan will go a long way toward ensuring a successful remote audit launch.

Audit documentation 

Consider retaining all email and electronic communications, which might help meet the audit documentation requirements. For the workpapers, either include the relevant portion of the electronic communication or document the details of an email communication the same way you would document an in-person conversation conducted onsite, the way it’s used as audit evidence.

Remote audit engagements offer unprecedented flexibility for both clients and firms, but the success of any remote audit team rests on building a collaboration toolbox full of software and strategies to ensure clear communication with team members and clients, ensuring that all involved can send and receive the necessary information to complete the audit effectively and accurately.

How to modernize your audit 

In the quest to modernize your audit practice and stay ahead in the game, it’s essential to identify the technology and methods that elevate your firm to the next level. The ever-evolving auditing landscape demands a proactive approach to adopting new technologies and methodologies. The tools and strategies needed to elevate your firm are not luxuries that firms can take or leave; they are necessary for modernization.

Let’s explore the pivotal next steps and innovative tools essential for modernizing your audit practice and updating processes.

Greater automation 

It’s no secret that inefficiencies and bottlenecks in your firm’s workflow negatively impact productivity and time spent on tasks, quality of services, and profitability. Sharing data across applications and leveraging automation to weed out tedious, manual tasks — such as double data entry — enables firms to save time and resources while streamlining workflows.

When evaluating an integrated, cloud-native platform, consider a solution that delivers at least the following features:

• A web-based engagement management tool that requires no software downloads, updates, or versioning that impacts productivity.
• The latest audit standards that are automatically incorporated in the audit guides to ensure you comply and pass peer review.
• Automated document retention policies.
• 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.
• Web-based audit planning workflow management that ensures staff always has the latest version of a document.
• An end-to-end audit solution, including single audits, to avoid wasting time with multiple sources.
• The ability to initiate, monitor, and receive confirmations within one application.
• A solution that ingests data from 100% of client accounting systems in real time.
• An automated sampling process to save time.
• Automated PBC workflow and project management, as well as data extraction and validation from 100% of client enterprise resource planning systems.

Leveraging application programming interfaces (APIs) is also crucial to achieving greater automation of critical processes.

An API is a set of routines, protocols, and tools for building software applications. It specifies how software components should interact and enables applications to exchange data and functionality. In short, APIs connect otherwise disconnected third-party systems.

With APIs, modern audit practices can:

• Avoid entering data manually to reduce the risk of errors
• Increase visibility of client needs with connected solutions
• Gain insights for analysis and decision support
• Automate key processes and reduce hours spent on mundane tasks
• Connect otherwise disconnected third-party systems