Auditing – the future starts now

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o is it true to say we are already living in the future? I would suggest we are. This presents a challenge for business owners as they seek to innovate while remaining competitive. Disruptive technologies, new business models, and a global economy underpinned by Big Data, present new opportunities for businesses, but how do they make efficient and accurate decisions in this environment?

English law has required businesses to be audited since 1845, to protect shareholders from impropriety by those directors and others involved in the running of a business. However, auditors had no professional status. There existed no organised accountancy or audit profession, no uniform standards or rules for auditing, and no established training or qualifications. Interestingly, the law required auditors to be shareholders in the entity they were auditing, giving them a common interest with the shareholders they were tasked with protecting. In all other respects, auditors were independent.

Until the 1930s, auditors in the US used their own discretion to decide the direction and scope of an audit. This changed with the enactment of US federal securities laws that shifted the focus to one of detecting fraud. Since then auditing, and professional auditors, have become an essential business tool for ensuring the reliability and integrity of accounting information.

Let’s now return to the question of how businesses can continue to make efficient and accurate decisions against a backdrop of a continually changing business environment. To address this, businesses will need to make use of all available tools, technologies, and expert knowledge, while rethinking how they analyse and use data to drive decision making.

If business must evolve, auditing models must also evolve. However, technology can’t be the sole solution – auditing professionals will continue to play an essential role. Auditing in the future will mean accessing clients’ enterprise resource planning (ERP) systems to extract data, identify transactional discrepancies, and create full, automatic, and standardised reporting. This will replace, and improve on, the current analysis of sample transactions.

The latest 5G technology will accelerate this process as it will enable faster, and more reliable remote connections. Further in the future, artificial intelligence will allow auditors to review, in seconds, multiple documents with minimal risk of error. This can only enhance the value of an audit that is only as good as the data on which it is based.

The new technologies I’ve mentioned create the foundation for the auditing profession of the future. They will allow auditors to provide more precise results, more quickly. This can only benefit businesses and is unobtainable with a conventional manual audit.

As well as the impact of new technology, we should not forget the influence that the Covid pandemic has had on working practices. Post-Covid, we can reasonably assume a future hybrid operating model that encompasses both in-office and remote working. Unlike before, businesses will lack the spare office space to provide to auditors for extended periods.

This new business and auditing landscape will be different from what we know but, thanks to new and innovative technologies, our businesses will be more efficient than they are now. The auditor of the future is a professional who makes the most of these technological advances to optimise the extraction, reliability, and analysis of data.

The future of auditing starts now.