Fall 2017 issue of Horizons

Alan W. Anderson, founder of ACCOUNTability Plus LLC, believes the question to ask isn’t “What is the audit firm of the future?” but “What is going to be audited in the future?” Auditing today is frequently a mad dash against the clock from planning to fieldwork to wrap-up to the final set of financials. It can become such an exercise in filling out forms and checklists that “those that like to think and learn, leave,” Anderson, who presented a session on the audit firm of the future at the AICPA ENGAGE conference in Las Vegas, said during a preconference telephone interview. Anderson discussed new audit methodologies that will help firms transition from the current state of audit to the audit firms of the future. The basic methodology for auditing hasn’t changed significantly in decades. Today’s auditors essentially create paperless versions of what they have done with paper and pen since auditing began. In the future, there will be more opportunities for practitioners to provide insights that will help clients build better businesses. “When the firm is not using any of that knowledge to provide insight about the business, it is no wonder the audit is seen as a commodity. Because how valuable is a December 31, 2016, financial statement that is issued on May 24, 2017?” Anderson said. In Anderson’s vision of the future of audit, “we’re making time and room for insight. And insight, by the way, not only adds value to the client, it actually results in a better audit.” The Virtual Audit A virtual audit turns the practice on its head: The work that’s usually done in the field is done virtually in the office, and the wrap-up phase, which is normally done in the office, is done in the field. Rather than traveling to a client’s offices, the auditors perform the routine work of examining the client’s documents in the auditors’ office using information uploaded to a secure portal. Once the routine tasks are completed, engagement leaders visit the client for the wrap-up phase. Questions raised during the in-office portion of the audit are answered, and issues that require judgment are resolved. Anderson described two models for performing in-office fieldwork. One model is the team approach, where staff members are assigned to one audit at a time and work together as a team in an office with multiple desks. Another model is the service-center model. Staff members are assigned a particular task to be completed for several clients. For example, one person’s job may be to audit cash for multiple clients. These employees need not be degreed accountants; people with experience as billing clerks might be a perfect fit for this repetitive and detailed work. Hiring dedicated employees for a service center locks in efficiencies lost when experienced accountants move up the ladder into more challenging tasks. Continuous Auditing Continuous auditing involves frequent monitoring throughout the year to ensure that transactions are captured properly and are flowing correctly to the income statement. The balance sheet serves as an anchor at the end of the period. A few firms are implementing this by performing quarterly mini-audits. Frequent, smaller audits level the firm’s workload and reduce the busy season time crunch.

Fall 2017

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