A recent BDO survey revealed the growing expectation among companies for audit firms to utilise advanced technologies such as artificial intelligence (AI) to improve the audit process.
While acknowledging the potential for higher-quality audits, finance leaders emphasise the irreplaceable value of human expertise in the field, the report said.
The inaugural 2024 BDO Audit Innovation Survey, polling 200 finance leaders from middle-market companies, aimed to shed light on the impact of technology on the audit experience.
The survey explored investments in technology and identified the primary challenges to a smooth financial audit.
Results indicate that advanced technology, when effectively applied, is anticipated to enhance the audit experience for both finance teams and external auditors.
Despite acknowledging the benefits of technology, companies recognise challenges such as compatibility issues between auditing firm technologies and their own financial systems.
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By GlobalDataThis misalignment can hinder audit engagements.
Moreover, while companies see the potential for technology to make audits more efficient and transparent, they are not prepared to compromise on the expertise of auditors with a proven track record, especially amid difficulties in sourcing ‘high-quality’ in-house accounting talent.
Finance leaders cited technology alignment as a significant challenge when collaborating with audit firms.
As per the survey, 80% of respondents find compatibility issues between an audit firm’s technology and their financial systems a frequent hurdle.
A majority (77%) also struggle with extracting and merging data from disparate systems during external audits.
These challenges prompt finance leaders to reassess their auditors’ technological capabilities.
The survey revealed that while technology is a key factor in selecting auditors, it must be complemented by trust.
More than 60% of leaders believe that the use of advanced tools by auditors somewhat or significantly enhances trust among key stakeholders and 84% anticipate an improvement in audit quality with greater technology integration.
However, 62% of the respondents expressed concerns over external auditors’ technical expertise and their ability to interpret technology outputs.
For successful adoption of new audit technology, a strong data foundation and consistent data governance are necessary.
Yet, data maturity is a common obstacle, 69% of the respondents identified it as a barrier to a smooth audit experience.
Almost half (45%) of finance leaders reported that their data governance is immature or only somewhat mature.
The accounting talent shortage has led leaders to adopt various strategies to address critical gaps, with 68% recruiting experienced accountants, while 61% are turning to AI and focusing on upskilling and reskilling.
Hiring non-accountants, like data scientists, is another strategy being employed to bolster the finance function.
Amidst the shift towards advanced technology, an educated and adaptable workforce is crucial for the successful implementation of these tools and managing the complexities of modern audits.
BDO national managing principal of assurance operations Demetrios Frangiskatos said: “We know that innovations like AI are reshaping the audit landscape, but it is essential that we understand finance leaders’ top priorities and challenges in this shift.
“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.
“By understanding these needs and expectations, we can help ensure that audit quality and trust remain at the forefront as the profession evolves.”
