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How will the auditing profession look in the future?

The pandemic has accelerated new ways of working across various industries, including the auditing profession. However, new ways of operating for audit firms and the companies they audit, including the sudden shift to flexible and remote working, are expected to outlast the immediate effects of the pandemic. According to the EY article, How the auditing profession is transforming to meet future challenges, this adds new dimensions to the existing challenges that audit professionals face in adapting audit to a rapidly evolving corporate world now and especially after the pandemic.

With digital transformation driving companies to adopt more complex business models, the audit profession has the opportunity to transform itself by adopting an agile mindset capable of embracing disruption, further exploring the flexible working shift with hybrid working models and operating effectively in diverse, more technologically aware teams.

EMBRACING DISRUPTION AND MULTIPLE DISCIPLINES
As the audit process becomes increasingly dependent on digital technology and data analysis, audit firms will require a more diverse skill set from their people. Though firms traditionally recruit auditors with business backgrounds with an emphasis on personal integrity and professional skepticism, all auditors will need to possess an increased level of technological understanding and an agile mindset that embraces disruption.

As business models grow in complexity, firms will require professionals with the ability to leverage a wider specialist expertise across multiple areas of business. By directly accessing technical expertise through the multidisciplinary model and the resources of a broader firm, auditors can leverage knowledge such as cybersecurity, fraud, sustainability, and corporate finance expertise to provide high-quality audit services.

While the article cites this as a necessary trend moving forward from the pandemic, it is interesting to note that we in SGV have been doing this kind of multidisciplinary talent development for a long time, with our professionals not only gaining strong audit competencies, but also acquiring related skills in business transformation, sustainability reporting, law, forensics, corporate governance, IT security, data analytics, business strategy development, digital transformation, workforce services, and many others.

EXPLORING FLEXIBLE WORKING AND HYBRID MODELS
The pandemic has also proved that when the situation demands it, audit firms are capable of making rapid and significant changes to how they operate, particularly given the inherent challenges in mobility, interaction and collaboration due to quarantine and other restrictions. This shift has brought with it the reality that flexible, remote working has become the current norm for audit professionals who have both successfully adapted to using digital technology to perform audit work away from a client’s business premises, and learned to collaborate and support each other virtually.

The sudden changes forced by COVID-19 not only helped accelerate cultural change in organizations — they also made them more open to different ways of working. This increased flexibility also brings with it other significant benefits, such as audit firms placing more emphasis on performance in terms of output and productivity.

It should be noted, however, that such a rapid shift to flexible working also produced challenges that audit firms will need to address. Practical issues in remote working include audit teams having to hold their discussions over chat rooms or less personal virtual meetings, rapidly developing proficiency in using specialized digital platforms, and others. Moreover, there are also challenges with conducting sensitive conversations remotely, as well as helping new colleagues understand the firm’s organizational culture and receive proper coaching and mentoring. Building remote trust and rapport may be one of the new challenges for audit professionals in addition to needing to manage expectations from audited companies regarding onsite attendance.

Firms can address these issues by shifting to a hybrid working model based on the requirements of the audit firm, its teams, and the companies they audit. This setting will involve determining the ideal proportion between flexible, remote and onsite working, and will depend on circumstances such as the need to build professional relationships. For example, teams will need to consider when they need to meet to increase team cohesion, receive training, or travel onsite to meet company management and establish trust and gather evidence. Auditors can also explore further applications of technology, such as the use of blockchain and drones to enhance audits, which professional firms like EY have been developing since even before the pandemic. As a member firm of EY, SGV has been able to leverage a number of technological applications that have enabled our audit teams to conduct remote audit.

FOSTERING TEAM DIVERSITY
The move towards remote working further necessitates the need to build strong audit teams. The ideal audit team will have people who possess a wide range of personal and technical skills, diverse experiences, and viewpoints. This will mean recruiting people from wider backgrounds as well as providing opportunities for them to broaden their horizons to accommodate various interests and aspirations. The traditional linear and hierarchal career progression will not necessarily suit everyone, and it will be important to offer alternatives to those who do not want to go down this path. Promotions must also focus on skill instead of tenure, with career progression occurring once the individual is ready versus waiting for them to reach a certain number of years.

However, fostering diversity will only be effective if the firm can create an appropriate environment where people can contribute and add value. Supporting a more diverse workforce that needs to operate in a rapidly evolving business environment will require continuous training, but with the new ways of working, such training will likely need to adopt a hybrid model based on the needs discussed previously. Long-term models will combine classroom-based and virtual setups to deliver training even beyond the pandemic.

WORKING IN TRANSITION
The working models brought about by the pandemic accelerated the transition towards a more flexible, diverse and technologically aware auditing profession. Auditors work in a continuously evolving space, with digital tools and data playing an increasingly significant role in the audit of tomorrow. While this process will pose an inevitable challenge for some, others will welcome it. If audit firms can navigate this change effectively, it gives audit professionals the opportunity to flourish.

Digital transformation and the resulting new environment can give auditors not just more effective ways to perform their work, but a more purposeful profession that can better serve the public interest.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.

Martin C. Guantes is the Assurance Leader of SGV & Co.

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