Opportunities for Innovation: It's Time to Change the Way We Think
Auditors, and others in the accounting profession, think logically. We have to in order to do our jobs. However, as the world changes, so must we – and logic only gets you so far. Aside from logical thinking and reasoning, we also must be creative. It's that creativity, which can often be found in your existing staff, that can provide us with opportunities for innovation.
Take a look around and you'll see that the world is simply moving away from, and beyond, how CPAs have traditionally practiced. While CPAs still give an opinion on a set of historical financial statements, real-time technology is here to stay. People want information now, not later – and there's a big difference in providing one versus the other. That's where our profession, and the future of auditing, must change. It means taking a closer look at technology, standards – and people. I recently filmed a video for the AICPA addressing these issues.
- Standards. Certain current auditing standards may have outlived their time and usefulness. While some can be facilitators, others have definitely become barriers. It's important to realize that just because certain standards have been in place for years, it doesn't mean they still work well. In fact, auditing financial statements and giving an opinion three or four months after the fact is simply becoming less useful in our fast-paced world.
Some of those standards were developed many years before Big Data and Data Analysis even existed. Recognizing that the standards may be inadequate is half the battle. While gaining consensus on needed changes is a bit of challenge, it's critical to see the opportunities available to the profession as a whole once we do. So, how do we make those changes? Technology is likely the answer.
- Technology. Let's face it, there's a lot of technology out there that can help auditors and companies they audit do a better job. So, why don't we use technology more effectively to create a win-win situation? The answer likely boils down to two reasons: 1) we simply don't have all the data in the form we need it, and 2) while technology can certainly be helpful, it can also hurt us if we fail to think through all of the risks involved. If you have any doubts to the second, just check out the AICPA's Top Technology Initiatives Survey for 2013 which shows that managing data, IT risks and securing the IT environment are the three top concerns for many organizations.
- People. Reviewing current standards and looking at new ways to do things through the use of technology is great. However, there's a “people” element in there that must be part of that equation as well. Providing companies with information in “real time,” bring your own device practices (and the risks associated with those) and cloud computing are simply parts of everyday life for some financial professionals. However, they're a long way off for others. The key is not to get too far ahead of people, but to have open discussions about looking at better ways to do things, tapping into creativity and moving our profession with us – over time and as a whole.
What do you think auditing will look like in the next five years? Ten years?
William R. Titera, CPA, Partner - Professional Practice - Auditing, EY.