Brian Miller uses a dental analogy to describe the changes digital technology is bringing to the process of auditing by accounting firms.
“Many people will remember having braces fitted as teenagers and the dentist who struggled to twist and turn combinations of metal parts in their mouth with perhaps only modest outcomes anticipated,” says Miller, who is based in San Francisco and is BDO USA’s national partner – audit data analytics & emerging methods.
“Today, clear aligner technology makes improving one’s smile a relatively painless process and is almost invisible to see,” he adds. “Not only that, but today’s dentist uses touch screen technology to show the patient the position of the teeth and animated forecasts of how and where they are going to move over the period of treatment. For both the dentist and the patient, this is a vast improvement.”
Being audited, he says, can be likened to a trip to the dentist. And today’s digital tools are similarly enabling far more seamless and streamlined interaction between auditor and client.
Improving audit quality
With today’s data and automation solutions, the auditor can access the information they need from the client’s systems, aggregate, and analyze it. As a result, they can complete the process much more efficiently than in days gone by.
New technologies, particularly around automation, are doing much of the manual work audit professionals historically did. It leaves people more time to focus on work that’s most strategic, difficult, or requires the most cognitive ability because of the perceived level of risk.
The result is that accountants are now better able to validate what has happened in the past in new ways and are increasingly able to anticipate the future with more clarity.
“Armed with higher quality audits through technology, our clients are drawing better insights and more value from the audit process,” says Miller.
“For example, consider audit data analytics (ADA). ADA starts with extracting the data we need from the clients’ systems,” he explains. “Extraction ordinarily occurs through service applications, the installation, and running of customized extractions scripts, or through traditional manual methods. More often than not, there are multiple ways to do it, but each has its own cyber and integrity considerations that our clients are mindful of.”
Using advanced data science
BDO’s clients use a variety of accounting systems, so the solution on the service provider side consumes client data in various forms. It then translates the data into a common language that BDO’s analytics can understand.
These tools and workflows must talk to each other to the maximum extent possible. Integrations between different platforms must take place in a predictable and seamless manner.
“We believe deeply that most engagements have DNA; they have an ancestry, and that genome is rich with value,” says Miller. “We’ve therefore created multiple logic-driven templates based on size and corporate structure profiles, as well as sectors — from municipal bodies and pension plans audits to large multinational retail to manufacturing clients, to large private natural resources clients, to boutique asset management funds.”
“Understanding the DNA of those industries and the ancestry of those specific opportunities allow for leveraging standardized profiles to baseline the audit process while expediting the always necessary level of further customization.”
BDO is also experimenting with more advanced applications of data science.
In the U.S., for example, any municipality that receives federal funding is subject to compliance audits that focus on the eligibility and permissibility of what the proceeds are used for. Since the rules that govern the requirements are stringent and predictable, BDO can use machine learning techniques to test large quantities of data on expenditures with greater precision.
You can’t replace humans
However, says Miller, the audit business is ultimately a people business, which is why the client experience must emphasize progress and transparency.
“When our professionals log on to their computers or phones in the morning, they can access heat maps and the day’s tasks, illustrating granular progress on every item,” he says.
“The distributed nature of the technology and geographic spread of our talent means that we can access and route technical subject matter to trained professionals, where needed. These tools have been especially helpful during the era of remote work.”
Transparency has also driven accountability. Across the firm, BDO can see who is doing what on any job, who might need additional support, and who is driving efficiencies. In addition, insights into individual workflows allow them to optimize how they support clients and mitigate any issues.
“My dentist used to promote oral hygiene by telling his patients to only brush and floss the ones we wanted to keep,” says Miller.
“These days, digital hygiene for auditors has become the very essence of continuous improvement. Digitization continues to drive considerable improvement in the audit process, making it more modern and joyful for the client and auditor than ever before.”
Lachlan Colquhoun is the Australia and New Zealand correspondent for CDOTrends and DigitalWorkforceTrends, and the editor of NextGen Connectivity. His fascination is with how businesses are reinventing themselves through digital technology and collaborate with others to become completely new organizations. You can reach him at [email protected].
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