Back in February, a group of audit firms met at Chartered Accountants’ Hall. Their agenda was to discuss how technology – particularly data – could be harnessed to improve market collaboration, and ultimately improve the quality of audit and the efficiency with which it is delivered.
The use of data in audit has increased dramatically in recent years, but gathering and analysing it is becoming ever-more complex.
Discussions and workshops have continued over the past few months, around a new concept called ‘Engine B’.
The underlying premise is that a set of Common Data Models (CDMs) be used across the industry, consisting of a standard dictionary of common terms for business data that everyone can use. CDMs will cover structured data – such as that held in the general ledger – and unstructured data – such as PDFs, e-mails and texts. These CDMs will be open-source and available to anyone.
The name ‘Engine B’ originated within KPMG – where the project started – but it is fast-becoming a standalone entity, supported by the largest firms. IBM and Microsoft have also been involved and are keen to continue, and others are interested in joining.
Standardising data requests for the delivery of audit services has a number of benefits; it opens up access to data, making it easier for software developers, start-ups and other new entrants to engage and to innovate – with the requirement to provide support for the ‘long tail’ of smaller firms very much in mind. Industry-wide terminology will also help deliver better accuracy and completeness of data in the first instance. The system of audit rotation will also benefit, as a new auditor will be adequately equipped to access and interpret the data in the same way as the previous one.
Ultimately, ‘Engine B’ has the potential to make life a lot easier for auditors, firms and, most importantly, their clients. While initially focused on access to data for audit, the longer-term plan is to open up access to all company data – which could prove to be ground-breaking.
Collaborating for the future
‘Engine B’ is now being planned in more detail, with firms working on the creation of the CDMs. The application of technology to gather and process data is still under discussion.
I’m highly encouraged, not just by the prospect of improvements in audit quality, but by the collaborative and inclusive nature with which this project is being taken forward. Working collectively – and being seen to work collectively – for the greater good is an important step in restoring some much-needed trust in our profession.
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It would be very exciting if one could create a standard model for decision models as well. In a combination with CDM´s, decision models would really make a difference for law firms, tax advisors, auditors etc., since any legal ruling can be interpreted using standardized decision models. Setting up industry standards across many countries, could really leverage business automation. In fact one could also redefine the role of regulators as well, because by using industry standards, the transparancy will significantly go up and allow a completely different collaboration and cooperation.