The way company invoices are being documented has been varying from company to company. Therefore, companies started to develop software to standardize and generate electronic invoices. This saves time for the internal accountants but also generates more accurate digital information.
As more and more accurate information about company transactions is being automatically generated, we will enter in a new era where external auditors will have to be able to deal with Big Data.
Every year the Big Four are the biggest employers for new graduated students specialized in financial audits. The toolkits these students use during their studies and at their employer is mostly similar to these 50 years ago. Current auditing methods are still relying on sampling invoices of a specified book year to eventually have a confidence level about the firm’s financial situation. When a company is publicly listed you can imagine that you prefer to have one hundred percent transparency.
According to a report of KPMG on the future of audit, it is argued that big data and analytics is impacting every aspect of our lives and will also affect the way audits are performed. The report mentions that in 3-5 years auditors will use big data to test one hundred percent of the transactions in a specified book year. According to EY, the process of integrating the use of big data into the audits is coming with challenges as experienced recourses to analyze these data are scarce.
In my opinion we are entering a new era within audit where the use of big data into audits will result in much more automatization of the current audit process. Subsequently this might change the traditional way of how the Big Four companies operate. As the Big Four continue to hire students with the traditional accounting toolkit this might soon become a strategic disadvantage for the Big Four. The Big Four should be quick in adapting a digital environment by employing graduates with a background in big data as it is the next phase of audit. If the Big Four lacks to do so, new opportunities will arise for companies to step into digital audit and might even change the names behind the Big Four.
I am wondering if some of you already have some experience within the Big Four and can agree with me about the fact that the Big Four is now focusing on the IT side of audit.
Student:
434102BS
Sources:
http://www.ey.com/GL/en/Issues/Managing-finance/EY-cfo-need-to-know-future-of-audit#introduction
http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.464.1416&rep=rep1&type=pdf
Click to access ACI-Audit-The-Future-of-Audit.PDF
Click to access ey-big-data-and-analytics-in-the-audit-process.pdf
