What do you consider to be the most exiting changes in the audit industry?
I am very interested in understanding the changes and developments auditors and audit firms are facing right now and will be facing in the near future.
Answers (8)
Hi Paul,
The biggest change and challenge that I see for auditors and audit firms is GRC convergence.
When I speak to my prospects (I work for a company developing software for Audit & GRC departments), I see an awakening of the needs to use appropriate technology and thinking to converge all of the different profiles that make up the audit and compliance landscape of that company.
This is sometime a tremendous challenge for organizations more often used to thinking in "silos" and who have developed processes and tools that often don't communicate well across GRC functions .
I find the Audit department very much the power broker in this development and I postulate that their willingness to work closely with their colleagues in risk and compliance to be a good barometer for a company's maturity relative to GRC convergence.
These are my personal observations and due to my relative inexperience in this domain, I would urge you to visit the site below for expert opinions on GRC convergence.
Please drop me a line or email me if you would like to share with me what you think are the changes and developements you see happening in your profession
Regards,
Manuel (manuel [underscore] boissiere [at]hotmail[dot]com)
Links:
a few thoughts....
The culture within the auditing firm will change due to the changes our envirrement and consequently, also the profile of people who will work at the auditing firm will change.
Auditors are ''knowledge'' workers and should treated in that way; so less procedures and directives and a drastic change in management.
Parttime working is key, but not for all of us.
The board of directors and the professional (auditor) will be not the same person (but there are always exceptions Paul ;).
Billing will not be based upon hours, but on performance
IT auditor and financial auditor will merge in the future and become one profession.
What is the real added value of the auditor?
The juridical play field will be more dominate than before.
audit is not a commodity anymore
Hello Paul,
The globalization of businesses poses an interesting and exciting new challenge on the profession. This especially true for the internal auditor.
In the new world with various sourcing solutions such as smartsourcing, outsourcing, nearshoring and offshoring, business processes are spread accross different locations and organisations. In assessing controls this clearly has an impact. If processes are completely offshored and/or outsourced, the question is on how to organise the assurance over the controls in these processes.
In cases where the offshoring is done into a captive processing center (e.g. in India, China or Poland), the audit on these processes can be organised as an extension of the audits planned and conducted onshore.
In the case of outsourced processes, there could be a SAS-70 type of assurance, provided by the servcie provider or a contractual clause with the 'right to audit' would give clients of the outsourcer the opportunity to conduct audits on these processes.
In all these cases, integrating the planning and execution of the assurance function and the result sof the audit work becomes more complex and, in my view, increasingly interesting and exciting.
Speaking from my own experience as a head of audit of a 4500 FTE captive BPO in India, I have experienced several ways of organising the assurance function, ranging from head office auditors flying in to a full fledged local audit team. Much of the setup of the audit function depends on the governance structure of the offshoring/outsourcing model.
If you want to know more, don't hesitate to contact me.
Marcel
RAJAT M
Manager-Control Assurance, Risk Management, Audit & Compliance at HCL Technologies CA, CIA, CISA (rajatmehtag@gmail.com)
Hi Paul,
I think the changes in audit industry (Internal Auditing most typically) is happening at following lines
1. Prior to 2001 (Pre-Enron era), there was a time when we used to talk about value addition but not given much thought by line managers. The auditors were focussed on management auditing, value addition, process improvement and all. The communication with management was not so great
2. Immediately after 2002, the focus changed from Management auditing to Compliance, Assurance, Control Assurance. The focus shifted from value addition to Control Assurance.
3. After 1 / 2 years filing, the focus again shifted from rigorous mad-focus on Control testing to newer service offerings wherein you reduce the time, effort and cost being employed in continuous control assurance
4. Currently, there is big tide in favour of Integration and Convergence. All related functions of auditing (Risk Management, Compliance, Control Assuracne, Internal Control over Financial Reporting, IT Security, Application Control Assurance) are all converging into each other. The integrated products (SAP-GRC) and fast replacing stand-alone products. Multi-skilled auditors having Business sense are more in demand than Hard-core Specialized consultants.
5. As of now, with the Treasury frauds (Societe General) and rampant risk and credit exposures most of the financial institutions are facing will again make people question the efficacy of Risk Management program. This is similar to Post-Enron phenomenon wherein all big accounting firms and accounting regulators were questioned on the statutory reporting and disclosure framework.
However the reality is slightly different this time since much more is at stake (Recession is no more a remote fear; this is nude-on-your-face reality threating to derail the entire world economy) and Risk executives and Auditors are not the only guys to be blamed. SEC / Fed. Bank and IMF all equally share the public questioning.
But the message is out LOUD and CLEAR - This cannot continue in this manner.
Coming back to issue of Audit industry, I think future will belong to professionals who will not see auditing as separate from Business line functions. There will be more convergence amongst Business-line functions, Control Assurance Professionals and Process Improvement consultants - rather it shall become unified process; making it part of organization's DNA.
Hubert T
Deputy to the group CIO & consulting director at STIME - Groupement des Mousquetaires
When you leave it? (sorry, just kidding! I couldn't resist seeing the spelling of your question)
I see accounting and financial reporting happening faster. Technologies that are being developed now will create the possibility of near real-time financial reporting.
This will create a situation where after-the-fact auditing will become less useful to the user of financial information and where continuous audit strategies and controls-based audit will be vastly more meaningful. This in turn will create a stronger need for auditors to be even more IT capable than ever before.
There will also be a glut of financial information available--I see the strong need for new auditors (and business people in general) to be able to handle information sifting and filter at increasing rates.
Link is to a video on how much data is out there and will be out there.
Links:
Steve R
SEC Reporting, Management Advisory, and Valuation Consulting
Best Answers in: Auditing (9), Tax Law (4), Accounting (3), Risk Management (2), Corporate Taxes (1), Economics (1), Financial Regulation (1), Business Analytics (1), Corporate Governance (1), Personal Taxes (1), Using LinkedIn (1)
Significant changes in SEC rules allow 10% more of public companies to follow new small business reporting rules. PCAOB AS5 and SEC management guidelines allow top down risk based SOX self audits with focus on high level controls and greatly reduced detail testing. The cost of compliance will be significantly reduced, and SOX-404 compliance will soon be required by all filers.
Jim K
AuditNet President and CEO, CIA, CFE, 2007 IIA Bradford Cadmus Award Recipient, and Internet for Auditors Pioneer
Best Answers in: Auditing (3), Accounting (1)
Paul,
In my opinion the following represents some of the key exciting changes in the audit industry:
1. The Internet has provided auditors with research capabilities that have not been fully realized. Service provider consolidations have improved the types of resources and tools available which greatly benefits small and medium internal audit functions. Internal auditors can now tap into templates for the audit process 24/7/365. The global audit network is available to answer questions and share information at a level never before experienced.
2. Business failures and the resulting mandated legislation such as Sarbanes-Oxley have highlighted the importance of internal controls and accountability for all organizations. These have cast internal audit in a new light that has raised the status and recognition of the function as a key component of the risk management system within organizations. While the legislation was directed at large publicly traded corporations the effects have filtered down to small and medium size companies, not for profits, and governmental entities.
3. There are more opportunities for jobs and career advancement in auditing than ever before. According to the Occupational Outlook Handbook; Strong growth of accountants and auditor jobs over the 2006-16 decade is expected to result from stricter accounting and auditing regulations, along with an expanding economy. The best job prospects will be for accountants and auditors who have a college degree or any certification, …
4. There still seems to be an emphasis within the higher education system to direct students to public accounting rather than internal auditing. Internal audit practitioners should get involved in teaching a future generation of auditors that the public accounting and CPA track may not be for everyone and that there are other options. A greater emphasis needs to be placed on fostering integrated auditors that are comfortable with available and developing CAATTs.
Jim Kaplan
AuditNet.org
The Global Resource for Auditors
