“I think potentially audit technology could be a barrier to some of the reforms, particularly in shared audits,” said Richard Spofforth, audit and assurance partner, Kreston Reeves.
“What we’ll find is if you’ve got a shared audit with PwC, from a regulatory point of view they’ll probably want you to have the same audit methodologies, as will the insurers no doubt.”
Jon Wedge, audit and financial services partner, BKL, agreed, adding that technological improvements could further complicate the field.
“One of the reasons why there aren’t so many joint audits is because they’re absolutely impossible to agree. Where does one firm’s liability start, another one’s start and where do both end? They’re logistically a nightmare to organise, so the tech is not going to make that any easier. It’s probably going to add another level of difficulty to what is already a really difficult negotiation process,” he said on the panel.
The lack of standards in audit also adds room for complication. According to Wedge, a lack of guidance or auditing standards clouds the effectiveness of audit advancements, particularly those surrounding artificial intelligence (AI).
“Tech is not the silver bullet that is going to improve [audit quality]. We’ve got to be better at questioning the answers that we receive,” said Wedge.
“Personally I’d like to see the corporate governance code tightened up a bit, maybe but it more into statute law rather than it being a code of conduct, or guidelines about the way you should act. There are different levers that can be pulled here, not one of these is the sole solution – it’s a combination.”
Other panellists emphasised the importance of professional scepticism in audit when utilising AI. Kyle Gibbons, managing director, Europe, Confirmation said tech should be a complementary role in the profession.
“In terms of technology and how that applies to improving audit quality, I would say it’s a supportive role in terms of allowing that professional scepticism the air and the space to be exercised. If you’re still relying on paper-based processes, highly manual labour intensive processes – you’re not really going to have much time to exercise professional scepticism and judgement, question the client in the way you really do need to in order to provide that robust audit report that’s been looked for,” he said on the panel.
Arbinder Chatwal, audit partner at BDO said the practice of professional scepticism must evolve along with the technology.
“What’s going to be absolutely key … is the importance of having professional scepticism. If a lot of these basic tests, that journey that you have in the first few years is automated, how is that professional scepticism going to develop? That’s one area that’s very important – you’ve got to evolve that part of it,” he said.
Watch the full discussion here.