The Future of Auditing in 2023

Auditors play a critical role in ensuring the integrity of the financial reports that issuers prepare and that the investors rely on when making investment decisions. They also ensure that businesses conduct their affairs following internal governance and external regulations. No change there.

That’s how it’s been most of our collective audit career lifetimes. The ends remain the same. But the practices are changing, as is the environment we work in.

Auditors need to take charge of what the future may bring and not be in reactive mode. The industry can work to embrace the future and stay in front of the curve.

But what does the future require?

Here are some predictions for 2023 and beyond.

Specialisation

Effective audits now require specific knowledge of a variety of industry specialties. Auditing service providers will need to extend their reach to global sources of support to meet these requirements. Firms with quality partnerships, no matter their location, can be relied on to meet what is required to provide a quality audit.

Companies will expect levels of expertise that might not be available locally, so audit service providers will be expected to have an international network of professionals who can be relied on to provide proficiency in a variety of financial areas.

Cybersecurity

Recent major data breaches are further evidence that no matter how important financial data integrity may be considered in an organisation, the security levels that protect  that data are even more important.  

The damage to reputation and revenue caused by a data breach or identity fraud is foremost in any company’s mind. Auditors who can work effectively to eliminate risk in these areas will be highly sought after.

Audit firms will need to ensure that no matter their focus or service offer, assurance around cybersecurity will be a number one priority for every major client. They will also need  to prove their own high level of cybersecurity, as they will be working with a company’s financial and other data.

Interpersonal Communication

The persona of the buttoned-up arms-folded scrooge looking for every missing cent has long left the auditing culture. Still, those who persist with an authoritative cloistered view of their work are likely to find themselves marginalised by the business community that need them to work collaboratively.

Businesses need a critical partner who works side by side and face to face or zoom to zoom. The auditor is an arm’s length intelligent observer of a business and has a valuable contribution to make to a company’s growth, so it will want to make use of that knowledge.

Consistent with maintaining their independence, auditors will need to have more timely contact with  their clients to give and receive feedback. This means that a high level of interpersonal engagement is expected and will continue to be important in the future. 

Audit firms will need to increase their investment in people as most companies expect a long-term relationship. There is some considerable outlay for a company to dedicate resources to establish an audit relationship, and the company would rather not repeat the efforts each period. The relationship needs to be considered a long-term one with a strong, professionally beneficial connection for all involved.

Non Financial Elements

There is an emerging expectation of audit and assurance service providers to offer assistance around non-financial elements such as climate change, sustainability, and renewables. Carbon Offset Programs and National Greenhouse Reporting assessment requirements are now requested from audit firms.

With the financial world becoming more closely connected, auditing service providers that can seamlessly engage with international partners to provide a global view of these non-financial elements will win out over those who cannot rely on such a network.

Technology

We know that changes in technology will impact our future.

Cloud-based technology is now the norm, allowing for speed of access and retrieval as well as being location agnostic. The cloud allows for real-time and anytime access by those who need to have that access. This, in turn, increases the speed of the service to respond to requests and execute the tasks at hand.

It allows for instant access to the specialists in the network.

Auditors who have yet to transition to 100% cloud-based technology by 2023 will be seen to fall short of a minimum requirement in performance.

There’s sure to be more revealed in the future – whatever it is, it can’t be avoided. Firms that are positioned with strong networks and skilled people will be best positioned  to respond to the changing demands of the future.

Getting ready for 2023

All the changes in store for auditing in 2023 and beyond can seem overwhelming. 

LNP Audit + Assurance is one of Australia’s largest specialist audit and assurance firms. We assist a variety of  businesses – start-ups, financial services, large private groups, companies wishing to list and smaller listed groups – with their audit and assurance needs. 

Contact us to find out how we can help you.