Future trends in the audit profession
Updated: May 17
THE Greek philosopher Heraclitus is credited with the saying "Change is the only constant in life." The world is always changing and so are people. The audit practice is not exempted. Not only is change always happening, it is also unavoidable.
The future of the auit profession will involve the increased use of technology. Additionally, the profession faces the prospect of increased regulatory scrutiny and pressure to improve audit quality and integrity. The demand for audit services may also change as the business environment evolves, with greater focus on areas such as sustainability and governance. Overall, the audit profession will have to evolve and adapt.
I can clearly remember when I started working as an auditor: we still used columnar journals to perform audit procedures. I was very excited when we were issued laptops and taught how most of our procedures could be documented digitally and calculations done instantly (through Microsoft Office). We only needed to print and file hard copy documents for the audit supervisor's review. A few years later, an online audit documentation tool was introduced, and we could now upload files, synchronize and share these for review. In most cases, we did not even need to print stuff, and our hard copy piles shrank.
Covid-19 forced audit firms to accelerate technology adoption toward new ways of operating. Virtual meetings have become the normal way of collaborating and online inspections of supporting information is done through access to the client's accounting systems. These changes will outlast the immediate effects of the pandemic.
Audits have gone online. Aside from virtual meetings and remote inventory counts, bank confirmations have also gone digital, and digital signatures have become legally accepted even for critical documents such as audit reports. We have moved to paperless audits through the use of the cloud, which provides simultaneous access for all engagement team members.
The future of the profession will involve increased use of advanced technology such as data analytics and artificial intelligence (AI). This may lead to more efficient and accurate audits but will also require auditors to develop new skills.
Aside from technology, audit reform is also a growing area of interest across the region. Stakeholders are demanding more from company executives and auditors to strengthen corporate governance. A series of headline-making corporate failures in Europe and elsewhere have raised questions about the exact role and objective of audits.
With this, the demand for audit reports is continuously growing, spurred by the need to create a healthier, more competitive market. Joint audits are an example of audit reform. Corporate collapses have reinforced the call to restore the public's trust in audits.
Audit firms can be ready for the future of the profession by investing in technology and training staff on how to effectively use it. Companies here can invest in data analytics software and tools that can help automate and streamline many processes, making them more efficient and accurate. Training programs, meanwhile, will help staff develop new skills and also help in retaining talent.
Audit firms should establish a culture that encourages innovation and continuous learning by promoting an open-minded attitude toward new technologies and encouraging staff to experiment. They should also focus on building a diverse workforce, including individuals with expertise in fields such as data analytics and AI.
Finally, audit firms should stay up-to-date with the industry's latest developments by joining professional organizations, attending industry conferences and events, and regularly reviewing regulatory requirements and guidance. The Philippine Institute of Certified Public Accountants and the Board of Accountancy are the governing bodies that implement regulations and guide the profession in the Philippines.
Expectations from the stakeholders are rapidly shifting. Technology is changing the role of auditors and creating new opportunities. To be successful, it is important that auditors take time to understand and develop the necessary skills and know-how to keep up with future trends.
Jonathan John L. Maglaqui, CPA, is a partner and head of quality and audit business development at Yu Villar Tadeja and Co. — Mazars in the Philippines. He is the former chairman of the Acpapp website development committee and an incoming Acpapp director. The views and opinions in this article are his own and do not represent those of the above institutions.