The call for audit transformation is not new but it is now being driven by a host of powerful global imperatives and trends.
Think, for example, about the constant and fast-paced evolution of organisational structures. Business processes and governance are evolving as well; and crucially, demands for more insight and analysis from organisations, regulators and the wider capital markets are only intensifying. Cap this with recent advances in technology that are nothing short of revolutionary, and you have an entirely new business landscape to contend with.
Building people skills is key to future business success
Auditors must continue to respond to all these changes if they want to remain relevant, and there is a lot to think about. I recently moved, from Istanbul to London, and while the process of setting up a new home is dwarfed by any global business transformation, it got me thinking. Just as when moving home there are decisions to be made around how to adapt to your new space, how to get settled, and what appliances to buy, changes in the audit profession are compelling us to think about how to adapt to a new environment.
Stripping away outdated fixtures, knocking down walls and installing modern appliances are the home-mover’s equivalent of refreshing outdated methodology, building specialised skillsets and implementing cutting-edge data management and technology. Of course, an audit firm’s aims are very different – to enhance audit quality, provide deeper insight, sharpen risk identification, and improve the experiences of auditors and organisations.
Race for new skills
As with any change in business, the biggest impacts are on individuals. As technology changes and stakeholder demands grow, an organisation’s capacity to adapt depends on how well it helps its people develop new skills.
The new generation of auditors are actively demanding development support
What is interesting when looking at the new generation of auditors is that they are not standing on the sidelines, waiting for training and development opportunities, but are actively demanding support and are as much a catalyst for transformation as technological change or evolving regulatory demands. No auditing business that wants to stay ahead can afford to overlook the demands from its people to stay current and personally competitive.
The auditing profession stands out because it has a young workforce – almost three quarters of EY’s auditors are young professionals with just three or four years of experience. They are also incredibly open about what they want from an employer: career opportunities; skills development; and a workplace that innovates, provides personal competitive advantage and prepares them for future leadership. In addition, they want job satisfaction, purpose and the ability to add value and deeper insight, not just compliance checks. They are looking for a supportive and immersive environment which fosters collaboration.
The next generation
Audit firms have always been good at providing technical accounting, audit process and technology training, as well as coaching in project management, ethics and professional scepticism, and interpersonal and teamwork dynamics.
These bedrock skills – as wide-ranging and non-negotiable as they are – form just one part of a longer vital list. Audit transformation – coupled with the professional demands of auditors – means that the a number of other skills are becoming even more indispensable.
People skills will be augmented – not replaced – by emerging technologies
For example, with the expanded scope of an auditor, the ability to be transformative leaders and communicate complexity is more important than ever, and skills such as negotiation, persuasion and conflict resolution are critical. Auditors also need strong interpersonal skills to collaborate with a greater range of stakeholders and in more diverse teams. People skills, in other words, will remain crucial and will be augmented – not replaced – by emerging technologies such as artificial intelligence (AI).
As businesses generate more and more data, auditors also need to make extensive use of data analytics tools. It is a skill vital for risk assessment, fraud detection and providing valuable business insights, and its importance is only set to increase.
A deep familiarity with the latest technology in the finance and accounting sectors, including AI, machine learning, blockchain and robotic process automation, is becoming increasingly crucial. Understanding how these technologies impact auditing and financial reporting is key. In addition, the increase in cyber threats means auditors need to understand cybersecurity principles and how to assess the effectiveness of an organisation’s cyber defences.
Even greater critical thinking will be needed
Auditors will need to apply even greater critical thinking to analyse complex situations and develop solutions to emerging challenges. This means having the ability to question assumptions, evaluate evidence and consider alternative perspectives.
The growth in sustainability and the requirements for additional reporting that this has given rise to means auditors will need to work hard to keep pace. Not only will they require a firm grasp of fast-developing issues and trends, such as climate change impacts, but they will also need in-depth knowledge of the many new reporting standards being implemented around the world.
Essential role
On all fronts – technological, economic, geopolitical, social – we are seeing huge upheaval, and it is these forces that are reshaping the profession’s skills.
As with any large-scale change, audit transformation will require huge investment, but by moving quickly to address the new challenges, including the need and demand for new skills, the profession will continue to demonstrate its essential role in bringing confidence and trust to businesses and the broader capital markets.
It is a complex challenge, but one that I know our profession – particularly the next generation of leaders – is ready to take on.
More information
ACCA's annual virtual conference Accounting for the Future addresses a number of the issues covered in this article. Register to watch live or on demand
