By Ian Lavis on behalf of Praxity Global Alliance
Quality audit can add real value to your business – from strengthening a brand to improvements in data analytics and sustainability.
Audit is becoming an increasingly important tool to help drive business transformation, thanks to advances in technology and more comprehensive reporting.
While quality audit is inextricably linked to accurate reporting and carefully prepared financial statements, the scope to add value to an organisation goes far beyond this.
In today’s technology-driven, climate-conscious world, auditors can help drive positive change and transform business operations throughout an organisation.
“The future of audit is really exciting,” David Herbinet, Global Head of Audit at international accounting firm Mazars, declared in a recent video for Accountancy Europe.
His optimism is based on the widening role of auditors to include ‘big data’ capture and analysis, and sustainability reporting.
Auditors are increasingly focusing on understanding innovations such as robotic process automation, blockchain, algorithms and artificial intelligence to deliver better value, David says. Moreover, accounting firms are adopting technology to be “more relevant and efficient” and “look deeper” into the way companies operate through data analysis.
The use of enhanced analytical tools is improving the quality, speed and value of audit. It can provide better insights to clients and free up more time for clients to focus on day to day business activities.
Advanced data capture techniques, in particular, can significantly reduce the time a client needs to devote to supporting the audit. Digitising the audit process also provides more time for auditors to exercise professional scepticism and provide independent feedback on risk management and business processes.
Data analytics is especially useful in helping auditors to spot potential issues earlier in the audit process so they can be investigated as soon as possible.
The added value of audit doesn’t just lie in technology. Auditors are playing an important role in the drive towards sustainability by helping organisations address the impact they have on the environment and society. This is being done through various tools such as non-financial reporting and renewed efforts to combat financial crime.
Where the value lies
In a recent article published by the Institute of Chartered Accountants for England and Wales, David explains: “For most large businesses, the vast majority of their value lies in their intangibles; be it their brands, customer relationships, other forms of intellectual property and their corporate culture. However, where these are internally generated, they are generally very inadequately represented in the financial statements, and often only fairly patchily so in narrative reporting.”
A better narrative
He argues that by focusing the assurance process on targeted, high priority parts of narrative reporting, or by strengthening narrative reporting in its entirety, users of corporate reports will benefit from higher quality information on the value drivers of the business. Examples include disclosures related to corporate culture, intangibles, climate change or an organisation’s main KPIs.
Auditors can also add value through better viability statements and by requiring assurance on the statements to reduce future failures. “Auditors are uniquely positioned to provide early warning systems and ‘red flags’ which, if acted upon, will allow those running the business to take corrective action,” David adds.
For organisations to maximise the value of audit there needs to be a willingness on the part of directors to provide assurances that internal controls are in place and working effectively.
There also needs to be a willingness by auditors to adapt to new ways of working and fully understand how to utilise new technology for the benefit of their clients.
Knowledge and expertise
Leading the way in this field is Praxity Global Alliance, the world’s largest alliance of independent accounting and consulting firms.
Praxity facilitates the sharing of knowledge and expertise among its participant firms around the world, including latest advances in auditing, technology and reporting.
Through international collaboration, Praxity participant firms, including Mazars, enable auditors, accountants and consultants to improve their understanding and share best practice on anything from big data and artificial intelligence to analytics and sustainability.
Auditors at Praxity participant firms are able to connect with fellow professionals in more than 100 countries to ensure clients benefit from specialist expertise where they need it most.
David comments: “There are a lot of interesting examples of sharing best practice on technology and new assurance offers between the Praxity participant firms. This bodes well for an exciting future.”