Embracing the Future: How Audit Firms Leverage Technology to Enhance Trust and Efficiency

In a rapidly evolving business landscape, finance leaders are increasingly turning to technology to transform the audit process. A new report from BDO USA, one of the top six accounting firms, reveals that company finance leaders are now considering the ability to leverage new technologies, such as artificial intelligence (AI), as a crucial factor when selecting an audit firm. This shift underscores the growing importance of technology in the audit industry and the need for audit firms to adapt to meet the evolving expectations of their clients.

Unlocking Efficiency and Transparency: The Allure of Audit Technology

The Rise of Technology-Driven Audits

According to the BDO Audit Innovation Survey, 64% of finance leaders say they look for audit firms that utilize AI before engaging with an auditor. This trend reflects the growing belief that technology can unlock a more efficient and transparent audit process. Companies anticipate that the integration of advanced tools, such as AI, robotic process automation, and data analytics, will lead to higher-quality audits, greater efficiencies, increased visibility, and a better understanding of risk.

Balancing Technology and Trust

While technology is shaping the audit selection process, the survey respondents emphasize that trust remains a critical factor. In fact, 63% of leaders say that the use of advanced tools by auditors enhances trust in their auditor and key stakeholders. This underscores the importance of striking a balance between technological innovation and the traditional hallmarks of a quality audit, such as professional skepticism and judgment.

Addressing Regulatory Concerns

As audit firms embrace new technologies, regulators have expressed concerns about the potential for over-reliance on emerging tools and the need for appropriate controls to mitigate non-compliance. The PCAOB, for example, has voiced concerns about technology-assisted analysis within the audit, leading to the approval of new rules that provide clarity to auditors on the use of technology-assisted analysis. Finance teams must be aware of these regulatory developments and ensure that their audit firms are adapting to the changing landscape while maintaining compliance.

The Importance of Auditor Talent and Culture

While technology is a crucial component of the audit process, the survey findings emphasize that the people behind the audit are equally important. Finance teams should seek out audit firms that prioritize auditor training, user adoption of technology, and a culture of compliance and professional curiosity. It is the combination of skilled professionals, robust processes, and innovative technology that will drive audit success and enhance stakeholder trust.

Navigating the Evolving Audit Landscape

As companies navigate the changing audit landscape, they must be proactive in their approach to selecting external auditors. The report recommends that finance teams "triangulate" their approach to audit quality, considering technological efficiency, regulatory compliance, and talent. Additionally, companies should ask in-depth questions about their auditors' technical capabilities, including their use of automation, data-driven analysis, and emerging technologies like AI and generative AI.

Aligning Audit Technology with Client Needs

BDO's national managing principal of assurance operations, Demetrios Frangiskatos, emphasizes the importance of aligning audit technology with client needs. "What we learned validated the critical importance of aligning audit technology with client needs and underscored the demand for auditors who can skillfully leverage these tools to maintain and enhance audit quality," he said. By understanding the evolving needs and expectations of finance leaders, audit firms can ensure that audit quality and trust remain at the forefront as the profession continues to evolve.