Today’s article in Accountancy Today ‘EY acquires UK technology business’ (May 11th, 2021), serves to reinforce the importance of adding new technological capabilities to audit advisory and consulting services.
EY has purchased Pythagoras Communications Holdings Limited, which provides professional services and solutions using technology platforms. The objective of the purchase being ‘To increase the range of technology services the organisation provides to clients, bringing additional capabilities.’
There is no doubt that the audit industry is witnessing changing customer behaviours.
The digital audit
A digital audit is a much-talked-about phenomenon. Auditors are indeed exploring and implementing digital innovation to drive efficiency and automate key processes. However, many are under the misleading impression that automation and paperless audits tick the box for ‘digitisation’. Many audit firms have taken into account that while the medium may have changed through the adoption of technology, nothing about the audit process itself has altered with it. This means that the same systematic inefficient and time-consuming practices still exist. And to compound this issue, many auditors are not getting to grips with the technology that ensures more accurate audit results, faster, less exhaustive ways of accessing client data, and understanding their client and their business. Essentially, auditors are not yet using technology as a way to enhance decision-making, but more as the next step up from a pen and paper!
Regulatory factors driving audit transformation
Regulatory factors are also driving change in the audit profession. Regulatory bodies, such as the Competition and Markets Authority (CMA), are calling for improved quality of services and increased competition. The choice is too limited with the Big Four audit firms conducting 97% of the audits of the biggest companies.
The new business secretary, Kwasi Kwarteng, also recently announced new audit reform, that included significant changes to the audit industry after the accounting scandals of companies like Carillion and Patisserie Valerie.
These highly publicised scandals served as an urgent wake-up call to auditors and regulators to re-think the purpose and scope of audit, certainly within the context of greater availability of data and technology to augment professionals.
It’s time for change
There is a need for a more intense drive for innovation and the rapid implementation of technology across all firms. It’s time for a change. Audit firms must get to grips with regulatory changes and data challenges and open their minds to new, empowering ways of working.
If you would like to find out more about Engine B’s audit technology solutions, access a recording of our recent Future of Audit event with the ICAEW.