Auditors prioritizing tech for fieldwork phase of engagement says Thomson Reuters

Auditors are looking for technology that helps them in the execution and fieldwork phase of the audit engagement, which also stands as the area where they are most likely to use AI. 

This was one of the findings of a recent survey of audit professionals from the U.S., U.K. and Canada by Thomson Reuters. While auditors were considering new software or digital tools for every step of the engagement, the biggest priority was in the execution/fieldwork phase, according to 46% of survey respondents. In second place came planning, at 37%, followed by the pre-engagement phase at 29%, and then reporting/wrap-up at 24%. However, 32% of survey respondents said they were not considering adding any software or digital tools at all (this was most pronounced in the U.K., where 45% of auditors said this.) 

In terms of what, specifically, auditors would like new technology to do in the execution/fieldwork stage, their answers tended to revolve around various kinds of automation, which also aligns with the main use cases auditors cited for artificial intelligence, generative or not. Auditors said AI systems could “increase the speed and ease of executing the audit by automating such tasks as data processing, data management and data extraction,” as well as “automating audit testing and basic audit procedures, using AI systems to run compliance checks,” and “automating sample selection, testing entire populations, and having AI systems review all relevant client documents.” 

Outside automation, auditors also said a major benefit of applying new technology to fieldwork was the ability to use data analytics to process large amounts of information, extract all potential insights and compile all data anomalies. Data extraction and entry, in fact, was the most commonly cited use case for AI among auditors, named by 57% of respondents. 

When it comes to planning, auditors seemed to primarily want technology for risk assessment and management, a central part of audit planning. They would like AI systems to better identify pertinent trends, locate anomalies, fully assess any high-risk areas, and to do so in a streamlined, automated manner that would give firms greater consistency in predictive analytics which, in turn, can lead to more in-depth risk assessments. 

Similarly, auditors also want to use technology to stay abreast, in real time, of changes in audit and accounting standards, as well as regulatory issues that could potentially impact an audit. This could be a regulatory change with implications for a client’s business practices or a standards change affecting a client’s accounting treatment. 

Technology priorities for the pre-engagement stage pertained mostly to client integration matters. This includes assistance with collecting audit-related data and other critical information, as well as handling clerical tasks as well as data input and analysis. 

“At present, this can be a laborious process entailing multiple phone calls, email exchanges or face-to-face meetings,” said the report. “By using an AI interface, audit professionals could on-board clients at their own pace and time, with no staff intermediary needed.” 

For the wrap-up portion of the engagement, audit firms regard technology as a means to make their post-audit analysis more coherent, informative and timely. They want AI to help them produce well-designed, relevant and accurate summary reports for clients at the audit’s conclusion. For instance, AI could check preliminary drafts for accuracy and consistency to help ensure stated conclusions are supported with evidence. Auditors are also intrigued by AI’s potential to enhance, or even automate, financial statements and related note disclosures, as well as provide new visual tools to better understand the data. 

Challenges

As for why certain audit firms are not using technology in these ways, staffing concerns were cited overwhelmingly as the primary obstacle. Attracting and hiring skilled professionals was cited by 58% of auditors, followed by retention of staff at 41%. “What makes this more difficult is that many audit firms aren’t merely looking to fill a chair,” said the report. “They need a specific type of professional, someone who has substantial technical knowledge and the mental agility to handle unexpected situations that arise.”

Specifically, firms want auditors who have critical thinking and problem-solving skills, as well as those with technical audit and regulatory compliance knowledge. 

Firms also were concerned they didn’t have time to implement new technologies while keeping up the same level of service for clients. Price pressures were also cited as a major challenge by about a quarter of respondents. 

“So, if a firm sees that its fee structures are being challenged by aggressive competitors, and that overall client revenue looks to be stagnant or in decline, this situation may have a domino effect on investment decisions. Devoting a substantial portion of a firm’s budget to a new technology rollout could become a hard sell to an embattled firm’s management during this time,” said the report. 

The Thomson Reuters survey polled 180 audit professionals who took part in a 10-minute survey between February and March of this year. Participants were screened to ensure they were decision-makers or influencers involved in purchase decisions in their audit firms, are involved in performing or managing audit work for clients, and use digital tools for performing and managing audit-related tasks. All 100 U.S. respondents were from firms with more than 30 employees. Other regions’ respondents were split between midsize and large firms: Canada (30 respondents, roughly equally divided) and the U.K. (50 respondents, 30 of whom were from large firms).