More Analytics and Tech Needed in Auditsby
A new Deloitte survey found that technology and data analytics should play larger roles in audits of publicly traded companies.
In the survey, entitled Audit of the Future, most of the respondents indicated that audits are necessary to ensure that financial statements don't contain material misstatements and that internal controls over reporting are proper.
Respondents strongly indicated that auditors also need to expand their use of technology, with 84 percent of preparers, 76 percent of audit committee members and 70 percent of users agreeing.
While 70 percent of audit committee members and preparers believe auditors use of innovative technology and process improvements have kept pace with the industry, users were far less likely to believe that with less than half (46 percent) agreeing.
But 59 percent of financial statement users and 46 percent of audit committee members believed auditors should be more proactive in handling evolving demands, the survey showed.
Note: No response percentage was provided for financial statement preparers.
The majority of all three response groups â 66 percent to 67 percent â indicated that additional information would be especially valuable if it goes beyond what's provided in traditional financial statements, such as earnings releases, investor presentations and risk factors.
The firm surveyed the following:
- 150 financial statement users -- finance sector professionals who use documents and analysis for investment research
- 50 audit committee members -- current or former board members of publicly traded companies who oversee reporting and disclosure
- 50 financial statement preparers -- senior executives and managers involved in the preparation of statements and documents for audits.
âThe investing public is looking to a trusted source in an increasingly complex and challenging global business environment,â Joe Ucuzoglu, chairman and chief executive of Deloitte & Touche LLP, and leader of Deloitte's audit practice, said in a prepared statement. âMany investors are looking for broader and deeper insights that can help them make smarter, more informed decisions. The audit profession as a whole will be looked at to expand outside the domain of the historical financial statements.â
Ucuzoglu also stressed that auditors should consider reporting on the most important business metrics that affect markets. Those metrics include key performance indicators, industry metrics and non-GAAP measures.
âThe business environment is constantly shifting, spurred by technology innovations and evolving expectations,â Ucuzoglu said. âTo deliver the most value, the audit profession must lead by taking deliberate steps to get in front of the challenges and bring audits into the future. This will require significant investments, and a mindset that is bolder than the public accounting profession has historically been known for.â
Finally, the survey indicates that users are limited in how well they can completely understand audits and what an auditor does aside from the reports themselves, according to the company's news release about the audit. That signals the need for more direct contact between auditors and users so that each can better understand the other, according to the release.
Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.