Letter: Auditors must embrace technology to reduce fraud
Updates to the letter
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The news that Grant Thornton has been fined by the Financial Reporting Council for “serious lack of competence” in its audits should remind us of the multiple audit failures at other firms and the sectoral nature of these problems. The fine imposed in this case is a logical step forward as the UK tackles historic wrongdoing and revises its corporate governance and audit oversight (“Grant Thornton was fined 2 , £ 3 million for the Patisserie Valerie audits ”, September 28).
Holding audit firms and individual directors accountable is an important step forward, but we also need to encourage auditors and regulators around the world to rethink the purpose and scope of audit in the context of more high availability of data and technology.
Nothing less than a complete transformation of the business models of accounting firms is needed for them to become fit for purpose. The future of accounting and auditing is no longer about transactional calculation, but about solid judgments that can only be made from better data.
We need to see a greater effort for innovation and the rapid implementation of technology in all companies, regardless of their size. Unfortunately, this does not happen quickly enough and in many cases it does not happen at all due to cultural and structural issues in the industry.
The audit industry is entering a period of intense and profound transformation, driven by digitization, new regulations, innovation and the intelligent use of data. Companies cannot continue to throw more and more people at the problem as they have tried in the past, with predictable impacts on their profitability and quality. Part of the solution to the problems associated with auditing must therefore be to adopt the technology to implement a risk-based approach as a standard.
Over the next 12 months, the use of artificial intelligence to eliminate and reduce fraud will increase. Smart tools like this will create the context and visibility necessary to help firms ensure audits cannot fail.
Technology is not a panacea, but audit firms will never be able to solve the problems they face unless they embrace technology to help detect fraud and errors and prevent them from happening. other scandals damage the reputation of the sector.
CEO, Engine B,
London N1, United Kingdom