Data Analytics: coming to an audit near you

I recently attended a panel event looking at the impact of data analytics on the future of audit. The panel included representatives from both small and medium size accounting firms, as well as a vendor of software aimed at helping auditors in that segment automate their audits and make use of data analytics (Inflo). What was impressive from the outset was the size and interest of the audience – this is obviously a subject that is going up the agenda – as well as immediate feedback given through the interactive presentation application used called Slido.

ICAEW CEO Michael Izza opened the session by stating that the subject that occupies his thinking most at the current time is the impact of technology on the profession; this set the tone for the evening. Following discussion about what data analytics is and what tools are available, the audience was asked to vote (using Slido and their mobile devices) on what had stopped them using the technology so far. Over 100 responses in the room were gathered through the app, with the top four reasons given as costs, skills, appropriate technology and clients. The cost issue reflects the real concerns of an audience of smaller practitioners in delivering value for money.

The representative from the smaller firm talked about how she had used the application and how she had been able to provide dramatically better insights for her clients. She even stated that looking at the data was fun! The audience was then asked for the biggest opportunities they saw flowing from the new techniques: the top four items given were improved client service, better audit quality, improvements in efficiency and cost savings. The phrase ‘real time audit’ was mentioned a few times with suggestions that we are moving in that direction.

In the discussions that followed a few common themes arose. The word that was used consistently throughout was ‘judgement’ – you can automate the process, eventually you might use bots to gather the data – but judgement/empathy will always be needed to make sense of and extract meaning from the data. This led onto a discussion about the skills that accountants will need in the future, with a slightly surprising suggestion from the vendor – rather than statistics or maths, they suggested double-entry bookkeeping was the main requirement.

The other item that surfaced a few times in the panel, as well as in discussions after the event, was the thought that clients eventually might do this themselves, once the technology is available to them. Will they not then have access to the insights, analysis and issues that their auditors are currently reporting to them? That then circled back to the importance of judgement and the particular insights and extra value that auditors can surface from the data for their clients (as well as a knowledge of double entry bookkeeping!).