The auditing profession needs to embrace new, rapidly-developing analytical and data mining technologies, according to Professor Miklos Vasarhelyi, the inventor of continuous auditing technology used by many of the largest companies in the world.
Professor Vasarhelyi’s comments were made at the inaugural Evolution of Auditing Forum, hosted by CPA Australia and the International Governance and Performance Research Centre (IGAP), and held in Sydney on19 March 2014.
Vasarhelyi evoked Steve Jobs’ radical approach to consumer electronics – “how can we make auditing something people use twice a day – like toothpaste”, “how can we simplify our messaging to equate to the ethos of our customers ‘being able to do everything in three clicks or less’”.
In addition to Vasarhelyi, the panel saw audit leaders from Australia, including Valerie Clifford of PwC, Doug Niven of ASIC, Caithlin McCabe of Deloitte and Jon Tyers of Perpetual in a Q&A discussion with an audience made up of key players from the profession, as well as regulators and government.
The Q&A, which I facilitated, identified a range of fundamental shifts and challenges on the horizon for the auditing profession, including how to attract the right talent into the profession and translating the profession’s capabilities to the evolving needs of investors and other stakeholders. Some of the themes highlighted in the panel’s discussion included:
- Making audits more relevant and usable for stakeholders in the markets calls for the profession to seek out and listen to stakeholder’s views. The other side to this is that stakeholders may not always know what they need or want, or how the profession could fulfil those needs – sometimes there is a need to be normative and put forward the product.
- A key attribute for talent coming into the profession is the ability to adopt “professional scepticism” – extending our knowledge on this vital skill and how it can be trained and fostered in teams is critical.CPA Australia is currently working with psychologists and behavioural scientists to develop a set of insights for training programs and the wider profession.
While there is agreement on the need for evolutionary, or even revolutionary, change, the real challenge seems to be finding auditing’s next big goal.
- The audit professional firms’ typical “pyramid structure” may evolve to more of a ”barrel structure” to fit with how the audit role and companies are developing – an experienced management employee level, with the knowledge to contribute to key professional judgements is becoming more critical and hence in-demand, while some of the work previously done at the entry-level is being offshored or automated.
While there is agreement on the need for evolutionary, or even revolutionary, change, the real challenge seems to be finding auditing’s next big goal – that thing that will push through the challenges and shifts needed to meet the changing needs of investors and markets in the future.
In 2012, CPA Australia’s chief executive, Alex Malley, interviewed Commander Neil Armstrong for the organisation’s 125-year anniversary. The ‘60s, as many have noted, were marked by vigorous and creative activity propelled by the goal of “landing a man on the moon”.
The auditing profession needs a “moon landing” goal – a simple, big, audacious goal – to push through challenging and evolutionary shifts toward greater relevance in the capital markets.
Amir Ghandar is CPA Australia's policy adviser for auditing and assurance.
Join the conversation by posting in the comments below. What do you think is the auditing profession’s “moon landing” – its simple, big, audacious goal – to push through the challenges and shifts needed to meet investors’ and markets’ changing demands into the future?