The Future of Auditing According to Big 4 Firms
The Audit firms EY, KPMG, and PWC published reports on the future of audit having concepts of digital transformation, digitization, the role of technology in shaping the future of audit and auditors with more advanced skills.
I — KPMG
REPORTS AND PUBLICATIONS
1. Future is Now
- A survey conducted by KPMG and Forbes with CEO, CFO, and other financial experts to their views about Future of Audit and published a Report “Audit 2025: Future is Now”.
- According to the survey report, an auditor must have technology, communication and critical thinking skills followed closely to investigative financial skills.
- As per the survey report, the biggest challenges to enhancing the role of audit/auditor are regulatory environment, budgets, data security, litigation environment, and career tracks in audit and current skills.
2. KPMG Digital transformation
- According to a survey conducted by KPMG on “Digital transformation: how advanced technologies are impacting financial reporting and auditing”, 99% of respondents says that advanced technology can expand the external audit.
- 89 % of respondents believe and use the cloud for financial reporting.
- 81 % of executives believe that they could use more advanced and latest technologies to make more informed and relevant decisions.
- 26 % of respondents said advanced technologies will be a must in upcoming years.
3. Shaping the future of Audit Through Technology
- KPMG is reshaping its audit techniques by using data analytics and a proprietary platform called KPMG Clara with a clear mission and vision to adopting avant-garde technology in auditing.
- KPMG redefining audit approach with two principles — to provide an audit with focused and insightfulness and to add value to the clients.
- KPMG has partnered with IBM In 2016, to adopt cognitive techniques and Artificial Intelligence techniques towards attaining audit assurance.
HIGHLIGHT OF WHAT KPMG IS DOING OR HAS DONE IN RELATION TO THE FUTURE OF AUDIT
- A fresh program KPMG James Marwick professors-in-residence focused on evolving understanding challenges and innovation opportunities in the audit profession.
- Two professors from the accounting profession are working with KPMG LLP as the first-ever KPMG James Marwick professors-in-residence.
- According to a combined report published in 2018, KPMG disclosed a commitment in 2014 to allocate US$100 million to their investment for new audit technology development involving several technology companies.
- According to published white papers from the KPMG audit firms in 2015, digital transformation of the audit means that enabling the auditors to be updated with the advanced technologies.
- According to the report, KPMG 2017, audit firms are forced to be digitalized and innovative to enhance and expand their business to stay relevant in the future.
- As per the report, audit firms are more focused on digital auditing for example Klara in KPMG.
- According to the report, KPMG publicizes that their technology could perform 80 % of an audit, but with an argument that the challenge is whether the processes follow the current audit standards.
II — PWC
REPORTS AND PUBLICATIONS
1. Roundtable discussions on the future of audit
- An article published on roundtable discussions started by PwC on future of audit stated that the company sent a letter to announcing a roundtable discussion to its investors and shareholders on the future of audit.
- Pwc has set up a separate web page of its portal and the company will publish their suggestions on audit industry that how can audit industry can move forward.
2. A framework for debate
- According to a report published by Pwc on a framework for debate for the future of audit, a framework for debate on the future of audit focuses on exploring ways in which auditing can evolve in order to keep pace with constantly changing expectations from society. This report provides details of all questions and the scope of auditing for the future.
- As per the report, a framework for debate on the future of audit contains:
3. Confidence in the future: Human and machine collaboration in the audit
- An article on human and machine collaboration in the audit has been published by Pwc on the future of Audit stated that emerging technologies like AI (artificial intelligence), VR (Virtual reality), and natural language generations have potential and will accelerate the audit which help industry to deliver more benefits to the companies.
- A collaboration of machine and human can provide much greater results and comfort in processing data.
HIGHLIGHT OF WHAT PWC IS DOING OR HAS DONE IN RELATION TO THE FUTURE OF AUDIT
- According to published white papers from the PWC audit firms in 2015, digital transformation of the audit means that enabling the auditors to be updated with the advanced and latest technologies for changing in the business environment.
- According to the report, audit firms are more focused on digital auditing for example Halo in PWC.
- By using big data and analytics, the future of audit as a digitized process can be much more informative in their processes.
- According to PWC 2018, the attestation of tax statements is an Internal quality control.
III — EY
REPORTS AND PUBLICATIONS
1. How technology is helping audit committees to see the bigger picture
- An article published by EY on how technologies are supporting audit committees to see a large picture of the future of audit provides details of the discussion of 5 experienced members of the audit committee on the impact of technologies advancements of their companies.
- Technology transforms by adopting artificial intelligence (AI) and other technologies provide much better results in data analytics, fraud detection, high-quality audits, It also allows audit committee and auditor for a high-quality discussion.
2. The future of auditing: where to now with a statutory audit?
- A report published by EY on the future of auditing provides details of 6 different articles published on key topics of UK policymakers and regulators, investors and Board of the company on future of audit.
- New technologies in the audit industry allow auditors to provide much better results and assurance. It also helps auditors to extend their areas.
3. How artificial intelligence will transform the audit
- An article published by EY on artificial intelligence and the future of audit.
- AI technologies are interlinked with other technologies like sentiment analysis, speech recognition, data mining, image recognition, and machine learning. AI can be used for automated code accounting entries, fraud detection, analysis of unstructured data such as social media conferences and emails.
- AI will help auditors to optimize their time and deep analysis of data.
HIGHLIGHT OF WHAT EY IS DOING OR HAS DONE IN RELATION TO THE FUTURE OF AUDIT
- EY company welcomed the announcement of the new independent review by Donald Brydon on the future of audit which provides details of what should be future requirements and standards of audit in the UK.
- The company will support measurables that help to improve audit strength and quality. These changes help to rebuild society trust in business.