Auditing in the future: Highlights from the CPA Canada and ICAS symposium

Chartered Professional Accountants of Canada (CPA Canada) and the Institute of Chartered Accountants of Scotland (ICAS) hosted a symposium with North American stakeholders to discuss auditing in the future.

“With changes in the business environment taking place at such a rapid pace, the audit profession must keep up by providing assurance on information that is most relevant for its users,” said Tashia Batstone, senior vice-president, External Relations and Business Development, CPA Canada, in her opening remarks at the audit symposium hosted by Chartered Professional Accountants of Canada (CPA Canada) and the Institute of Chartered Accountants of Scotland (ICAS) on November 2, 2017 in Toronto.

Auditors, educators, investors, audit committee members and academics participated in panel discussions, polling questions and breakout sessions on:

  • audit data analytics
  • the profession's role in the reporting of key performance indicators
  • the skillset of the future auditor

Enhancing the value and relevance of the audit

Canada’s Auditing and Assurance Standards Board (AASB), the International Auditing and Assurance Standards Board (IAASB), the U.K. Financial Reporting Council (FRC) and firm analytics leaders discussed how audit data analytics (ADA) may be used in audits of the future, ways to prepare the workforce, and the needs of the profession relating to standards, research, guidance, and education.

Here's what we learned:

  • Clients expect auditors to use ADA in the audit today.
  • Firms are investing in ADA and are rolling out methodologies for their use, but there is still a need for experimentation to understand what can be done.
  • Data acquisition is one of the largest barriers to using ADA.
  • Current auditing standards do not preclude the use of ADA, but they don't support or encourage their use either.
  • Expanding the use of ADA requires a collaborative effort from management (including roles not traditionally involved in the audit process, such as the IT department), the auditor, and the audit committee. This is imperative to ensure that the solutions developed and the techniques applied meet everybody's needs.
  • With new technologies such as blockchain and artificial intelligence, ADA will have a critical role to play in the audit of the future.

While only 30 per cent of participants noted they use ADA today in all areas of an audit, 94 per cent expect to be using them in all areas of an audit going forward.

To help practitioners on their journey with ADA, CPA Canada has developed free guidance that includes how to engage management and audit committees.

James Barbour of ICAS making opening remarks at podium

The profession's role in earning investor confidence

Investors no longer solely rely on financial statements to make their investment decisions. In fact, audited financial statements only account for 20 per cent of the information they use to make their decisions. The rest—management discussion and analysis, press releases, analysts’ calls with management, and investor packages--are largely unaudited.

A panel, including representatives from ICAS, CPA Canada, the U.S. Centre for Audit Quality and the Canadian AASB, provided an update regarding developments in the different jurisdictions. It attempted to define the role the profession plays in the public interest in order to address investor concerns over the reporting of KPIs.

The panel also discussed with symposium participants the role the profession plays in addressing investors’ concerns, including:

  • concerns about the inter-period consistency, comparability across companies in the same industry, and reliability of KPIs contained in unaudited information
  • the expectation that KPIs reported externally should include those used by management to measure performance and make decisions
  • investors' and audit committees' often-limited understanding of the auditor's involvement with KPIs
  • meeting increasing investor demand for information about an organization's activities and performance, and the increased attention paid by regulators, audit committees, and others to the information's credibility and reliability
  • the fact that auditors are not performing additional procedures on KPIs, as reported by 63 per cent of participants, and the profession's need to be ready to expand into this area

Business men sitting at a table taking a break

Auditor skillset: Responding to a modern and complex environment

So, how do we ensure that the future auditor is equipped with the right skills to meet these evolving demands?

A panel discussion focused on three skills of the future auditor as identified by ICAS/FRC joint research: technology, business acumen, and soft skills. Key takeaways from that discussion include:

  • Sixty-four per cent believe all three skills are equally important.
  • The ability to adapt will be important, and life-long learning will be required to keep up with the fast-changing business environment.
  • Going forward, Continuing Professional Development (CPD) will be required to learn new topics.
  • Ninety-eight per cent of participants noted that a change in the auditor training model would be required in the future.

The future of auditing is a strategic area of priority for CPA Canada. This symposium was the start of an ongoing dialogue that will help the profession evolve.

symposium attendees participating in a panel discussion