Trends shaping the future of audit

The one constant is change: The audit profession is undergoing significant transformation. The COVID-19 pandemic accelerated key trends within the industry and pushed auditors everywhere to innovate to continue to deliver a better audit experience.

Audit Chief Strategy and Transformation Officer John Farrell recently participated in an Accounting Today panel to discuss the impact of the pandemic on the profession and the future of audit. Here are some insights from the conversation:

 

The pandemic's impact on audit

The pandemic impacted the entire audit profession. It created increased urgency to adopt new ways of working, evolve our culture and adopt the latest technology.

  • Ways of working: Virtually overnight, auditors adapted from going to client sites daily to working from their living rooms. Teams found novel ways to get work done and interact as a team. At KPMG, among other tools, we took advantage of virtual audit rooms, which encouraged teams to better communicate, share and collaborate to solve client challenges and replicate dynamics that previously would have taken place in person.
  • Culture: Our profession functions on an apprenticeship model; our young talent learns from coaching and doing, both of which are more difficult to do remotely. The virtual environment led to finding new ways to coach, manage teams and provide feedback. It also encouraged the creation of virtual training modules, offering on-demand learning and credentials through systems such as badging.
  • Technology: The digital transformation is not new, but the pandemic expedited the experimentation with and rollout of next-generation technologies. At KPMG, we sped up the release and implementation of key technologies such as smart glasses, a real-time communication tool that empowers auditors to conduct inventory observations and process walk-throughs remotely.

Trends that are here to stay

The degree to which the virtual environment and other changes continue after the pandemic will be driven by client needs and technological capabilities. Yet we know certain trends are here to stay. 

  1. Technology and data will continue to be major disruptors. From training opportunities to risk assessment and modeling, leveraging new technologies and big data will continue to drive transformation.
  2. Operating models will continue to evolve. As we increasingly automate and deploy emerging technologies, consistent procedures to uphold our standard of excellence will be especially important. We expect to keep moving toward a more efficient business model, with more work done in centers of excellence rather than in the field.
  3. A total upskill of the audit professional is essential. The next-gen auditor needs technology acumen and to understand our clients' technology. Technology has become, and will remain, a core skill.
  4. Demand for assurance services will expand. Auditing originated from the need for an objective view of financial statements. Today, the amount and variety of data being assured has broadened, and so have the standards to assess them. Environmental, social and governance (ESG) is just one example.

The auditor of the future

The role for auditors is evolving based on the need for trust and assurance. Auditors are being called on to assure ESG issues, non-GAAP metrics and technologies — the digitized controls — that collect, process and store data, such as blockchain ledgers. Trust and the increasing use of technology are driving changes in the work we do, how we do it and how we upskill our professionals.

As the audit profession evolves, so must auditors. Next-gen auditors should focus on key growth skills and opportunities. First, understanding accounting and auditing standards of excellence remains critical. Second, professionals need to understand novel and emerging technologies. Finally, knowing how to interface with clients and other team members and using new techniques to solve challenges will set them apart as the profession continues its transformation.

 

Media Contact:

Elizabeth Lynch

Elizabeth Lynch

Manager, Corporate Communications, KPMG US

+1 201-505-6316

 

 

John Farrell

John Farrell

Audit Chief Strategy and Transformation Officer, KPMG US

+1 212-872-3047

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