The future of audit lies at a point where assurance and advisory services converge, according to CPA.com president and CEO Erik Asgeirsson -- with technology driving the two together.
“It’s all about assurance and advisory,” Asgeirsson told attendees at the Digital CPA Conference in Washington, D.C., last week. “It’s about delivering trust plus insights.”
In his keynote, Asgeirsson described a new audit model that leverages the cloud to use automation, artificial intelligence and even blockchain to improve the audit and deliver more value to clients and markets.
“An AI-driven audit is going to provide greater assurance around the integrity of data,” he continued. “It’s going to provide great value to the capital markets.”
The cloud, and the ability to share information instantly and accurately that it provides, is fundamental to much of this change. “You couldn’t have cloud auditing until you had cloud accounting,” he noted, and reminded attendees, ”We’re only in the third inning in the cloud accounting transformation.”
More power for accountants
In many ways, the technology has only just begun to enable the kind of convergence Asgeirsson described.
“We’ve just reached the point where the technology is allowing us to fully realize the CAS vision,” said Aaron Harris, senior vice president and head of engineering and technology at Sage Intacct, who joined Asgeirrson on stage at the conference. “CFOs and accountants have been held back by periodic repetitive tasks. All of that is not giving them enough time to work on what we got into the profession for in the first place – helping organizations to thrive.”
What’s more, there’s now an unprecedented amount of raw horsepower being applied to handling basic tasks and freeing up accountants and finance professionals. “The idea of unlimited computing power is driving a lot of what we’re doing in technology,” he continued. “Of the 10,000 CPUs we have running, only about 30 percent are devoted to humans – the rest are dedicated to automation.”
All of that has allowed technology to develop systems that do more than just handle the basics. “The last generation of finance products was about making sure you had enough information to work on,” Harris said. “Now we want systems to optimize performance – to find the answers you need. The future is about what you do in situations where you don’t know what questions to ask. That will give us the opportunity to look to the future, to identify risks and opportunities, and to help leadership prepare for those.”
These kinds of technology-enabled solutions will offer firms the ability to move many of their services up the value chain.
“Audit can become a strategic value-add for organizations, whereas today it’s mostly viewed as something I have to do for compliance,” Harris concluded. “The $40 billion the Big Four make on audits will become $100 billion in added-value audits.”
The AI-driven audit
Focusing on audits, Asgeirsson described a new model where data flows automatically through the cloud into an advanced platform for an AI- and data-driven audit.
To create that platform, the American Institute of CPAs has raised money from the top tier of accounting firms and partnered with audit software developer CaseWare to build a Dynamic Audit Solution.
The DAS will take advantage of enhanced data flows, the use of artificial intelligence to make predictions, and improved methods for continuous auditing to make audits more efficient, and more valuable to clients.
“We don’t want to automate the audit to the point where people aren’t involved,” said Karen deSouza, head of product at CaseWare, who joined Asgeirsson during his keynote. “We want AI to point out risks and help.”
With the vast amounts of data currently available, AI systems can learn to identify data and how it’s usually classified.
“We’re looking at using AI to tag client information as it flows into the audit system – that will save a lot of time and improve quality,” said deSouza, “but risk is where AI can really deliver value – learning from all transactions where the risk lies.”
By tagging data appropriately, recognizing patterns in data and comparing them to millions of previous situations, smart audit systems should be able autopopulate engagement documentation and identify areas of risk for human auditors to concentrate on.
“The AI-driven audit should improve audit efficiency and improve the quality and the value we bring back to the client,” said deSouza.
For accountants who embrace these technologies and focus on bringing them to their niches, there are tremendous opportunities, Asgeirsson told conference attendees.
“It’s never been more important to specialize and to deliver insights, value and trust,” he said.
