What do audit clients think about audit?
Source Global Research has put the question to audit clients and has received some interesting responses
Source Global Research recently released their report looking into the client viewpoint of the audit process. It is currently “one of the most vertically integrated services left in today’s market,” Source has stated.
Following the release of the CMA review looking into audit processes back in December 2018, change is finally on its way.
Audit is starting to be broken down into separate parts by audit clients, a method that is now creating huge opportunities for technology firms to enter the market.
As it stands, Source Global Research’s report has revealed that a third of audit clients are now breaking down the audit process into separate parts, 44% are thinking about doing so, and 45% believe that this change will lead to more areas of audit work going to technology firms.
The report continued: “The two front-running technology firms in the eyes of audit clients are IBM (40%) and Accenture (18%). However, just over half (52%) of clients identified Deloitte as the audit firm best positioned to deliver the technology components of an audit, followed by KPMG (22%), and then EY (18%).”
The report involves surveys taken by CXOs, CEOs, CFOs, and senior finance executives from a large array of organisations. For example, 49% of organisations employ more than 5,000 staff, 39% have worked with the same auditor for more than five years, and 58% have been or are audited by the Big Four.
“If you assume that some parts of the audit process will require more technology, and more technology know-how, than others, then, provided an auditor retains control of some part of the process, it would be logical to turn to technology specialists,” said Fiona Czerniawska, director at Source Global Research.
Their report has further revealed that 64% of audit clients expect the amount of reliance on outside help to increase on the next decade. 23% of those who voiced this concern said that there was a need for access to innovative new tools, and 36% of these clients said this was because they would need more access to specialised skills.
Czerniawska continued: “In short, it’s clear that breaking the audit process down will significantly change the rules of engagement for traditional audit firms. This simple change creates opportunities for non-audit firms to become involved.”
According to Source Global Research, one finance director told them: “We’re looking to our auditors to give us tools that will help us carry out our own analysis.”
The director concluded: “Technology companies that might never have considered entering this market will be paying a lot of attention to the significant changes that our research has revealed are taking place right now in the audit market. When we consider the potential size of the new market that could be carved out of the existing one, it’s clear that this will be a huge opportunity for new entrants.”
