How COVID-19 is Spurring Digital Transformation in Audit
The impacts of COVID-19 on audit firms will have long-lasting effects. From a dramatic rise in remote work to increased health and safety measures in the workplace, the pandemic has altered the audit landscape permanently, and will continue to do so.
It’s crucial for audit leaders to understand the impacts these changes will have on their operations and how to capitalize on new digital technologies at the heart of this unprecedented transformation. Let’s look at some of the key benefits and challenges that lie ahead.
A World Transformed
Our relationship with the office has likely changed forever. Disinfecting UV lights, four-person limits on elevators, and antimicrobial film on touch surfaces are either planned or in place in large offices and office towers in some major cities. More advanced steps like ‘healthy building check’ apps and even airlocks to prevent contaminated air from entering a building are being considered.
This altered state of the physical office is just one reason that digital transformation — already underway in audit before the pandemic — will become the primary driver of change in the profession in the near term.
Additionally, face-to-face meetings and document reviews have been replaced with virtual interactions and digital transactions. Handshakes may be a thing of the past entirely.
From an audit perspective, a new, digital-heavy, post-COVID world will represent a dramatic change in the culture of audit work. Audit processes that were considered low-risk before the pandemic will now require more attention to detail.
The culture of auditing will need to adapt to incorporate risk assessment and audit plan considerations. Internal audit departments will also need to retool their staff and skills to better meet these new audit challenges. And new technological solutions will need to be found to accommodate the nearly 80 percent of auditing firms that plan to permanently expand their virtual work policy in light of the pandemic.
New Challenges, New Opportunities
Auditors will need to meet the challenge of how client relationships are changing in the age of telecommuting and videoconferencing. Many firms build rapport with clients through personal meetings and interactions of trust and ethical conduct. Alternatives in a more virtual working environment include digital icebreaker sessions, remote catered lunches, or, given the ease of setting up remote interactions, shorter, smaller, more frequent check-ins to build the relationship.
And auditing as a practice may itself need to change.
With so much auditing relying on in-person visits, the practice of auditing becomes challenging when offices and worksites are closed or have limited or restricted access.
Some attempts at remote audits have already been made, including using drones to aid in inventory counts. Additional changes, such as the opening of client systems to remote access by auditors, may become more routine.
The Benefits of Culture Change
Accompanying these challenges are notable ways that accounting and auditing culture changes can benefit the industry and clients.
One of the most significant culture shifts in audit may be putting to rest the notion of the profession as slow to change. Indeed, at least one study done in the wake of the first months of the pandemic found that very few firms furloughed or permanently laid-off employees. The same research suggests that the transition to remote work went so well that nearly 80 percent of accounting firms plan to permanently expand their virtual work policies.
Many firms have also begun offering flex-time hours. Such flexibility allows employees to work hours that better suit their personal and family needs, such as addressing urgent personal matters that might otherwise interfere with a standard 9-to-5 working day.
Such flex hours can also have unexpected side benefits. Some firms have noted that their VPN and cloud systems run faster when staff are on flex hours because not every employee is trying to log on and use systems simultaneously.
These changes combat the potential for burnout when working from home, where there is often a blurring of distinctions between work and personal time. After all, there is always just one more email to send…
This lack of firm boundaries makes it harder to unwind, relax, and take one’s mind off work. This is bad for employees, bad for clients, and bad for the firm. Initiatives like flex hours and a renewed emphasis on using holidays, vacations, and sick days has been one culture change that is important to improving both morale and productivity.
Talent Sourcing and Development
Recruiting and developing talent may also change in the post-pandemic audit profession. As the economy recovers from the downturn, the role of audit and accounting is being transformed from accounting and compliance to advising. Increasingly, auditors are being called upon for their insight and expertise in consulting around operational efficiency, intelligent tax planning, and the modernization and digitization of billing practices.
In this environment, recruiting auditors with strong critical thinking skills who can analyze data and process it without bias to provide rational, meaningful results for clients will be more important than ever.
Building this kind of accounting team will require an investment of both time and money. It is crucial to invest in training and education for your team, while at the same time helping them develop an understanding of the businesses they audit. This will be imperative for firms looking to shift from a compliance to a client advisory role.
Technology Investments For the Future
Investing in change will largely mean investing in technology.
One might wonder where the world would have been during the pandemic without the benefit of telecommuting and internet technologies developed over the last 25 years. These advances in connectivity allowed many white-collar industries to rapidly shift their workforces to remote work with only short-term disruptions to their business.
The pandemic has hastened what had been a gradual transition to the long-promised “paperless office.” Out of necessity, not only did companies have to rapidly build the infrastructure to allow their staff to continue their work from remote locations, but the scanning of essential paper documents (long a goal for many companies) sped up as well. Important physical files normally kept in an office cabinet needed to be accessible in real-time by anyone who needed them.
The move to cloud-based computing has likewise found new urgency for many firms during the pandemic. While not a one-size-fits-all solution for many firms, even modest investments in cloud computing or the addition of a client portal has facilitated easy remote access to files, systems, and programs and allowed business to proceed as normal during these highly disrupted times.
CaseWare and Change Management
CaseWare is helping auditors embrace digital transformation to ensure they deliver the types of services required in today’s economy. Learn more about how CaseWare IDEA can help you successfully manage change in your organization.