How COVID-19 unexpectedly prepared the audit industry for the future.
As the world gradually emerges from the COVID-19 pandemic and returns to a more regular routine, the permanent effects of the last 2 years on various industries are becoming apparent. Most professions were severely disrupted, especially during stricter lockdown times, with accounting and auditing being no exception. However, in many cases, these changes brought about by necessity have had a positive long-term effect. Covid prepared us for the future! The audit industry has been forced to evolve and embrace more efficient and progressive operating methods, which will benefit auditors and their clients in the future.
How did the auditing process change? Moving towards “virtual audit.”
The coronavirus pandemic caused almost all businesses to operate remotely and utilise digital technologies. When traditional audits of working onsite for weeks became impossible due to mandatory lockdown measures, this presented a challenge. Auditors could no longer travel to audited company premises or even their own offices, and audits had to be completed remotely.
The audit process was already evolving with the development of new technology, with lockdowns significantly accelerating the switch to a “virtual” audit. While for some industries, working remotely simply meant having a meeting over video chat, this is more complicated when it comes to an audit. One can have an online meeting and share computer screens, but there still needs to be clear, documented evidence for an audit to be considered accurate and legitimate.
Auditors are now employing technology to conduct audits remotely, such as remote data extraction and analysis, while still adhering to established standards and delivering assurance to stakeholders. Before the pandemic, many larger companies were already in the process of digitising their documents, but smaller businesses were often just getting started.
The pandemic forced all businesses to move to a new way of conducting audits. Cloud-based data-extraction systems were created or used more extensively, where auditors could extract and download clients’ financial reporting data (including supporting documentation).
Before, if auditors used a statistical sample approach on a set of invoices, there was usually an expected error rate. Remote access to clients’ data has, however, allowed auditors to apply new enhanced data and analytics (D&A) routines that are able to evaluate a higher amount of individual transactions.
There has been a move from statistical sampling to reviewing a high volume of a client’s transactions in real-time with rules-based automation and artificial intelligence. The outcome is clear: a much higher quality audit through technology. Allowing machine technology to perform routine, rule-based tasks, also results in a much more efficient audit, allowing auditing professionals to focus their efforts on dealing with any anomalies.
Audit firms can prepare for the future by focusing on:
- Document storage: helping clients implement centralised document storage with remote access for authorised users.
- Technical Expertise: providing the technology experience and knowledge necessary to perform audits in a different way.
- Effective Teams: building tech-savvy teams who can respond faster and more efficiently
- Deeper Insights: encouraging teams to use critical thinking and data to generate deeper insights.
- Diverse National/International Workforce: taking advantage of increased workplace flexibility and hiring talent across the nation/globe.
- Alternative Audit Procedures: improvise or develop alternative audit procedures where teams are not able to get on site.
How does this help us provide a better service to our clients?
All in all, the changes brought about by the pandemic circumstances have enabled us as audit professionals to serve our clients more effectively and be better prepared for the future. Being armed with greater knowledge of helpful technology and having to develop greater flexibility and adaptability out of necessity has allowed us to offer a much more streamlined service.
Clients will benefit from:
- A more diverse, technically knowledgeable team of auditors
- Organised cloud-based document storage for their own purposes, as well as for auditor access
- Remote audit procedures in case of any future scenarios where onsite audits cannot be conducted
- Greater accuracy and error-free audit checks
- More detailed insights and analytics are available
We welcome the positive changes brought about in the auditing profession as an unexpected benefit of the detrimental coronavirus pandemic. If you would like to learn more about our auditing services and how we can assist your company, contact us.