Five Ways Audit Leaders Can Nurture and Enhance Their Audit Practiceby
The future of audit may not be seen as rosy or positive, but according to Alan Anderson, president of ACCOUNTability Plus, it’s in the auditing profession’s hands to make the future more relevant than the current state of audit.
“The future of audit is directional, but it’s up to us to choose the direction the future of audit should take,” he said during a session at the American Institute of CPAs (AICPA) Practitioners Symposium and TECH+ Conference in Orlando, Florida, on June 8.
“Your mantra should be: Auditing smart yields fewer forms, smarter decisions, and better results,” Anderson told the audience. “Talk to your staff and ask: What should we do to provide value to our clients? Bringing value to clients results in happier clients, increased business, and auditors looking forward to hitting the books on Monday morning.”
During his presentation on Monday, Anderson, a former partner and national director of audit for McGladrey & Pullen LLP, provided the following five key attributes of how audit leadership can nurture and enhance their audit practice to achieve a much-needed “rebirth” of the audit.
1. Quality. “We cannot underestimate the importance of quality. It’s our foundation,” Anderson said. “We all have the responsibility of doing high-quality work.”
Audit leaders should adhere to the following “qualifications for quality control,” according to Anderson.
- Relying on your quality-control expert means the auditors abdicate responsibility for quality assurance.
- Staff needs to know the auditing standards not by “form” but by understanding what they are intended to do.
- What’s their impact? Have free-for-all discussions to stimulate thinking.
What else can audit leaders do? Anderson said they should have “active learning sessions” with staff, such as:
- Role play.
- Plain paper exercise.
- Meet a client with a staff member.
- Make leadership into mentorship.
- Question of the week contest (with prizes).
- Get them to think whatever way you can.
- Challenge yourself to think.
“The result is a staff that asks questions, interacts with each other and with clients, abandons ‘same as last year’ (SALY) by thinking and planning, and leverages the audit information to help clients plan effectively for their financial future,” Anderson said.
2. Relevance. Anderson stressed the importance of always regenerating relevance. “We also need to give our staff the ability to create relevance,” he added.
Anderson cited several ways auditors can regenerate relevance:
- Make yourself indispensable by offering sound business advice.
- Do your homework about your client’s industry.
- Make schmooze time off the clock – and it will create a client who needs you.
- Get out of the back office and into the trenches – talk to the sales manager, the production manager, the warehouse worker, the administrative staff – and verify information from multiple sources.
- Help your clients make the right decisions by reflecting on the business effect of financial decisions.
- Understand the standards such that you can explain why they matter to your clients.
- Don’t be afraid to live in the gray; black and white is overrated.
- Deliver what you claim on your website.
“The more relevant your advice, the more likely you’ll retain clients, and the more you’ll feel relevant in a profession that is creating its own irrelevance,” Anderson said.
3. Innovation. Anderson said audit leaders’ core focus should be, first, their people, then their process, and then their systems. He added that technology shouldn’t be placed above what the people need and what the process should be. “Technology is a tool that helps drive innovation,” Anderson said.
Here are some other innovation tips Anderson provided:
- Technology: You control it; don’t let it control you.
- Planning: Lose the “first in, first out” and SALY mentality. Start with a blank piece of paper to plan how you’re going to audit this company this year.
- Mindset: Flexible, quick-on-your-feet, out-of-the-box thinking, maintaining a vision of your ultimate goals.
- Efficiency: It’s built into the right planning process, the best use of technology, and a successful delivery of the audit – on time and with the nuances that make it invaluable.
“The result is a well-thought-through plan that will yield an efficient use of time to get the information you need, from the people who have it, without lowering fees or compromising quality,” Anderson said.
4. Business mindedness. “You have to remember we’re in a business,” Anderson told the audience. “There needs to be a balance between quality and business mindedness.”
He offered the following advice:
- Bring back the thinking auditor: Use business expertise to advise clients to improve profitability.
- Net collected rate versus fee realization: Take fee realization out of your vocabulary. It’s a bogus metric.
- Remember: Decisions are not always black and white. Get comfortable in the gray.
- Function over form: The quality of an audit is not measured by the number of rules you follow.
- Don’t compromise our professional standards, but don’t lose sight of the forest for the trees.
5. Empowerment. “This drives the bus,” Anderson said. “We have to give our staff the opportunity to think. If we make and empower others, we’ll absolutely make a difference.”
He offered the following four empowerment tips:
- Empower your staff: Provide education and experience-based learning.
- Empower your clients: Interpret their business practices and advise them how to improve.
- Empower leadership: Find a vision that uses next-generation tools today.
- Empower your firm: Provide the value you guarantee on your website. You’ll not only retain clients, but get new ones.
The AICPA Practitioners Symposium and TECH+ Conference continues through June 10.