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Tax & AccountingJuly 19, 2021

Utilize An Automated Workflow for a More Successful Remote Audit

By: Wolters Kluwer Tax and Accounting

Prior to the COVID-19 pandemic, only 17% of firms conducted over 50% of their audits remotely, while 65% performed less than 25% remotely, according to Convergence Coaching’s 2020 ATAWW Survey. One year later, 61% of firms projected that more than half of their audits will be conducted remotely post-pandemic. That's a 44% increase – but how are auditors moving from onsite fieldwork to remote audits?

To make the transition from fully onsite to a remote audit, firms must leverage new tools and advanced technologies. New tools such as drones or webcams for inventories, and advanced technologies such as AI and RPA to help guide where to test. These tools and technologies reduce or remove the need to be onsite while ensuring the firm can provide the same high-quality, efficient audit results – and maintain client cost-effectiveness, too.  

Simply implementing these new tools and technologies isn’t enough, however. To support staff in performing remote audits effectively, these tools and technologies must be integrated into the firm’s processes and supported by an optimized, streamlined, and automated workflow solution. And while the benefits of a streamlined, automated workflow can be seen firm-wide, these benefits are especially apparent when considered through the lens of scheduling, data analytics, and client experience and communication.

Decrease the Time Spent Scheduling

The struggle to balance time, billable rates and expertise often results in significant non-billable time and lower job profitability while reducing the firm's ability to make changes on the fly. When the firm can allocate the right resources to the right engagements at the right time, turnaround decreases and job profitability increases. But without clear visibility into staffing and resource capacity, how do you know who to send and when to send them? Without effective processes, partners and administrative staff end up spending hours scheduling meetings to allocate the right resources. The most effective way to solve for this lack of visibility and flexibility in resource capacity and availability is with workflow automation software. While there are stopgap measures that your firm can take to solve for these scheduling issues, such as making sure that staff are logging their time and updating their records, those are only band-aids. They don't solve the underlying problems with your process. Moving away from paper or spreadsheet-based scheduling to an automated workflow solution with calendaring capability solves those problem by simplifying processes and increasing visibility. There's no longer a need for multiple meetings between partners and administrative staff when your Admins can log into a cloud-based system with a calendar that clearly shows each staff member's current capacity and allocation. Much of the manual labor is removed, freeing partners to focus on billable activities and enabling administrative staff to better support auditing staff.

Increase the Integrity of the Data-Driven Audit

Advanced technologies such as AI and RPA are being implemented to help auditors determine where and what controls to test, where to apply substantive testing, and where physical inventory counts may need to occur – be they by drone or webcam. But remember the saying, ‘Garbage In, Garbage Out’? It holds true here. Without effective processes to ensure that the data being analyzed is accurate, relevant, and timely, the effectiveness of these new tools and advanced technologies is sharply reduced.

During Audit Talks Live 2021, Wolters Kluwer's Colleen Knuff, Stefan Davis, and Andrea Hearn, along with Ann Glenz, Partner at Eide Bailly, and Christopher O'Neal, Partner at Rödl, discussed how automation plays a vital role in the data-driven audit. The entire discussion is worth a listen (read the summary article and watch the entire discussion here), but the key point they made about automation is that “with effective processes that have been optimized and streamlined, an automated workflow solution will ensure data integrity”.

In short, automated workflows will flow data through the audit, from providing risk assessment insights and helping auditors define controls or identifying which substantive testing to perform, to linking those procedures to the risk assessment. Using automation to support analytics and advanced technologies such as AI and RPA will reduce the amount of onsite fieldwork that auditors will need to perform.

Decrease the Back and Forth of Requesting Documents

Client interaction – and the client experience – matter. We know that clients want proactive engagement updates and communication; however, only 43% of firms are actively communicating with clients to keep them informed. Moreover, within firms, each partner has their own method of client communication, making consistent and effective client communication across the firm difficult to achieve.

When clients have regular communication that is clear and consistent, regardless of who they are working with, engagement updates and document requests can be automated and standardized, resulting in less time onsite hunting documents down or having in-person meetings about the status of the engagement.

Consistent client service doesn't mean each client receives the same level of service. Your firm may have 2-3 client service categories, and tie service levels to each category. The importance is that there are minimum levels of service for all clients and that, within each category, your processes support the same type and frequency of communication to each client.

With clear workflows that encourage consistent communication – and define at what milestones in the engagement clients should receive updates – it’s easier to maintain the client’s trust while working remotely. And when an automated workflow solution is paired with a client collaboration or portal tool, there’s now a way to share client documents safely and securely, whether those documents are financial statements, employees’ personal information, or inventory manifests.

As auditors consider shifting more of their work from onsite to remote, utilizing data analytics and new technologies to help identify controls and perform risk assessments, a strong foundation is needed to ensure that data integrity remains strong. By ensuring that these new tools and technologies are built on the foundation of an automated workflow, your firm will be better prepared to perform audits - remote or onsite - while maintaining the same quality and cost-effectiveness that your clients need and expect.

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