We have moved the needle when it comes to audit quality, but we need the commitment if we want to experiment with what audit could be. –Barry Melancon, President, AICPA
These words echoed through the ears of CPA attendees at this week’s Digital CPA event in National Harbor, Md. as the evolution of audit was one of the core topics of discussion and with good reason.
It is a well-known fact that audit methods and technology have changed little in the time most current CPAs have been in the profession. But like all aspects of professional accounting, this too is being disrupted.
With the evolution of tools like machine learning and blockchain, and the increased acceptance of cloud, audit may finally have the time that core accounting and bookkeeping has enjoyed with the aforementioned technologies. To that end, much like initial fears of cloud and automation in general taking over traditional accountant duties, there is some talk that blockchain and the modernization of audit could diminish the role of auditors. Not so says a panel of professionals here at the event.
“You may recall when they said we [auditors] would be out of the job because of XBRL. There is a similar thing taking place around blockchain and again, it’s not going to do that,” said Brian Fox, co-founder of audit technology company Confirmation.com. According to the panelists, what will need to change, or rather evolve, is the skills of the auditor in order to properly adapt to new technology and methods of auditing if they are indeed to survive, he said.
“Auditing is not going to go away with blockchain or any modern technology, but it will change what is audit. There is a shelf-life for historical, financial data,” said Alan Anderson, CPA and owner, Account-Ability Plus. “There is going to need to be a base line of skills and then subject matter specialists within a firm.”
One thing Anderson did warn about the future of auditing was that the basic “top-down” method needs to evolve as technology is currently outpacing the skills of many of today’s auditors. He suggested, for one, that firm auditors start to get to know their clients more than their balance sheets or how their data made it into a ledger.
“Excel does a greater job than I can with a 10-key [calculator], but [younger] auditors today don't want to chase paper, they want to figure out how to help and be creative,” said Fox. “They won't be at a firm long if you are just having them add up columns and numbers.”
So the real question for the future of audit then becomes not so much getting minds around the new tools, but how exactly audit will be different and to conceptually come up with new strategies. As such, I will leave you as we began this article, with Melancon’s words from his morning keynote address:
“We are taking on the challenge of changing what audit is… today our challenge is also to create the capacity to see new opportunities, new services that we don't yet offer. If we do not do that we aren't guaranteed our space.”