How auditors can prepare for reform now

Published On : 10/25/2022

By Jack Skov, Chief Financial Officer, Konsolidator 

The auditing industry has been under a lot of scrutiny of late. So much so that high profile scandals saw the UK’s audit watchdog hand out a record £46.5m in fines last year. The UK industry has spent a long time waiting for the UK government to introduce an audit reform bill to tackle existing issues. This bill would also ensure that the auditing profession complies with standards and that it protects investors and employees from malserverance. However, after much speculation that the reform bill would be planned for this year – it has been put on hold for now.

However, regulation is coming – this just means auditors have more time to prepare and fewer excuses if mistakes are made when it is enacted. As such, auditors still need to ensure that processes are running efficiently and that standards are improved. While we may have to wait for a regulatory bill to be passed in the UK, auditors can start by self-regulating through adopting the use of automated technology.

Moving away from manual processes

Financial and auditing professionals are under tremendous pressure and required to ensure that data and complex tasks like financial consolidation are accurate and precise for their clients. One small error can have a significant impact on a business’ performance and completely derail a budget. This was the case for JP Morgan in 2013, where one small mistake in calculation cost the business $9bn.

JP Morgan’s mistake was that it relied on archaic systems like Excel to make its calculations. While Excel is a popular software for accounting and auditing firms – it is widely used and available – it is no longer enough to rely solely on this programme for complex data handling and financial consolidation. This is because it is prone to human error – most of the time, Excel is used by a handful of employees who are responsible for a particular spreadsheet and understand how it works. There is no means for effective collaboration or to avoid a manual miscalculation.

For auditors and accounting professionals, there is no margin for error. In order to improve the way the auditing industry is working, it is imperative for auditors to lead the charge and move away from such manual processes and adopt automation to avoid errors. This is more important since the recent accounting scandals – a simple mistake can not only cost a client’s business billions, but also your own credibility as professionals and your reputation in the industry.   

By moving away from programmes such as Excel and adopting automated technology, auditors can swerve needless risk and improve processes. It can have a huge impact on improving and enhancing the reporting and auditing process, and provide a full audit trail, guaranteeing reliability at every hurdle, thereby ensuring confidence in employees and clients, in addition to staying compliant. For businesses looking to scale up for investment, they need robust finances – automation can carry the heavy load. What’s more, moving to Cloud-based software creates an additional layer of security for data storage and increases efficiencies in computing costs for the organisation.   

Planning ahead for change

While there is still uncertainty over when audit reforms come into effect, finance and auditing professions must plan ahead. The industry needs to focus on how to minimise risk of inaccuracy and, thereby, potential scandal. 

By harnessing sophisticated, automated technologies, firms can be comfortable in the knowledge that their calculations are risk-averse. These systems ensure data is accurate and secure and leave behind a full audit trail that means there is a source for every calculation. By moving towards automated, cloud-based software, key players in the market can change the future of audit and teams can access all key data points with ease. When a business requires nothing less than efficiency, technology will step in to create lean and efficient processes. 

Automation can help auditors prepare for reform now.  Firms need to be looking to the future and incorporating technology into their business. Not only will it maximise efficiency and accuracy, but it  will prove an effective solution to re-instilling that much-needed confidence within our industry. 

Uma Rajagopal

Uma Rajagopal has been managing the posting of content for multiple platforms since 2021, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune. Her role ensures that content is published accurately and efficiently across these diverse publications.