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Auditors are leveraging technology to drive quality in today’s business environment
Over the last few years, a number of factors have caused disruption in accounting and reporting cycles for companies everywhere. This underscores the importance of trustworthy and readily available financial information for investors, financial executives and boards as companies seek to address emerging and ongoing business risks.
As financial executives evolve to thrive in the current business landscape, auditors are evolving alongside them. While the foundations of the audit profession – independence, objectivity and professional skepticism – are unchanged, the analytical tools audit teams use are becoming more powerful every day. Technology enables audit teams to harness the digital audit to streamline and simplify the audit experience for companies, spark better questions to drive a greater understanding of the business, and zero in on key risks. Auditing in today’s economic and regulatory environment has taught us some very important lessons about how we can apply technology to drive quality and create a better audit experience at the companies we audit.
Lesson 1: Technology unlocks greater transparency and effectiveness at every step
The right technology can make it easier for audit teams and management to communicate with each other and access up-to-date information on project deliverables. New tools and processes have made it possible for management to easily access an updated snapshot of the audit’s progress, offering greater transparency on demand.
Seamlessly connecting audit teams and companies to each other is a significant enabler of the EY Digital Audit. For example, the EY Canvas platform supports project management capabilities and streamlined communications. This includes real-time monitoring of audit status and the completion of tasks on a global basis, as well as shared visibility into audit requests, ultimately elevating management’s experience. As one EY Global Client Service Partner I spoke to recently put it, “In the past, we would be constantly gathering as a team and scheduling update meetings and calls with management to make sure we all knew where we were in the process. Now, I can refer to my EY Canvas dashboard to take a quick inventory and be able to communicate up-to-date insights to management.”
Lesson 2: Technology offers a deeper focus on the risks that matter most
Research from the EY CIO Imperative finds that we are entering a new era of data centricity, with over half of senior executives now identifying data and analytics as their top investment priority, an increase of 50% since 2020. At the same time, the rapid pace of finance transformation is modernizing many aspects of the business processes for companies, resulting in changes to risk assessments that are relevant to the audit and causing regulators to impose new requirements for reporting and assurance that are likely to challenge companies.
As the business world adapts to the unfolding data-first generation, auditors are harnessing analytics to mine full populations of data and discover new insights that enable companies to remain proactive and agile. With just a few clicks, auditors can now drill down on a financial statement account balance to a single transaction, identifying the trends that point to risks and revealing hidden patterns and trends in a company’s financial data that wouldn’t be apparent in a traditional audit.
At EY, companies and auditors both benefit from the EY Digital Audit, which is supported by our Digital Global Audit Methodology and powered by world-class talent and technology that integrates data, advanced analytics and an optimized user experience. Our auditors use the EY Helix suite of analyzers to harness enormous volumes of a company’s data and bring important insights to management and audit committees. For example, at a time when many companies are seeking to respond to the challenges of the economic environment, one of my EY colleagues recently shared with me that our analytics flagged key instances of noncompliance with company policy at a manufacturing company, informing their efforts to increase operational resiliency.
Lesson 3: Technology enables a nuanced understanding of the business from day one
Auditors who use a data-first mindset to ask better questions develop a nuanced understanding of the business from the very beginning of their careers. In response, companies have more opportunities to learn from these pointed questions and may rethink their own processes and operations because of them.
At EY, our early-career auditors have the same visibility into the data as the engagement partner, and they are leveraging technology to ask more insightful questions and drive audit quality. One EY senior explained to me how this is empowering their execution of the audit: “It gives me greater confidence in my understanding of the company’s processes than I had in the past. It has allowed me to ask better questions, and the company’s accounting managers have noticed.”
Technology sparks better questions and greater insights
As companies look to continue investing in technology and data analytics, audit firms are following suit to deliver quality audits that respond to the needs of the capital markets. At EY, we are using our next-generation assurance technology platform – funded with a $1b multiyear investment by our global organization – to drive continuous improvement in audit quality. Recently, this investment fueled the launch of an AI methodology framework that gives our audit teams guidance on auditing companies that use AI in their financial reporting processes.
I am excited to see how we will continue to sharpen our technical capabilities and data-first mindset to further deepen the insights we can provide. This helps us fulfill our responsibility to deliver audits that promote trust in the capital markets and facilitate investor confidence.
Visit the EY Digital Audit page to learn more about how our audit teams are using the EY Helix analyzers to drill deeper into the data, ask better questions and drive audit quality.
The views reflected in this article are those of the author and do not necessarily reflect the views of Ernst & Young LLP or other members of the global EY organization.
Cale Whittington is Americas Assurance Digital Leader at EY.