Integrity and collaboration key features at ICAS/CPA Canada audit symposium
ICAS staff James Barbour, Director, Policy Leadership, and Anne Adrain, Head of Sustainability and Assurance, presented at a joint event with CPA Canada, in Toronto, on the Future of Audit to discuss the biggest issues facing the profession.
The symposium comprised three sessions that summarised pressing issues in today’s increasingly complex business environment.
Audit data analytics
Session 1 considered the use of audit data analytics and how they promised to be a key driver for audit quality. The expert panel in this session featured representatives from the regulators, standard-setters and the firms. Some of the key messages emerging from the session were:
- While many of the largest firms have invested in audit data analytics, there is still a need for experimentation to understand what can be done and where any gaps exist.
- Many audit tenders now expect the firms to demonstrate and explain how they will use audit data analytics in the audit process.
- Although the current ISAs do not prevent the use of audit data analytics, they could do more to encourage the use of innovative techniques to enhance audit quality.
- There is a need for everyone involved in this space to work together and share their knowledge and expectations to ensure that the solutions that are developed, and the techniques applied, meet the needs of all.
Enhancing investor confidence
Session 2 focused on the use of Key Performance Indicators (KPIs) and how they could enhance investor confidence. The panel included representatives from the professional bodies, standard setters and the US Center for Audit Quality (CAQ).
There might be a need for auditors to provide some assurance on reported KPIs and alternative performance measures.
In today’s world, investors have access to information from a wide variety of sources and no longer fully rely on the information in the financial statements when formulating their investment decisions. Increasingly, this information is unaudited.
In response to this change, there might be a need for auditors to provide some assurance on some of this information, for example the reported KPIs and alternative performance measures. Some of the key messages emerging from this session were:
- Investors regularly voice concern about the inter-period consistency, the comparability and the reliability of KPIs and alternative performance measures.
- The expectation gap still exists in so far as it is not clear to the audit committee and investors what involvement, if any, the auditor has in relation to the KPIs.
- Feedback from investors indicated that they wanted assurance that the KPIs used internally to measure performance and to inform the decision-making process were the same as those being reported externally.
- As more emphasis is placed by investors on the non-financial information about an organisation’s activities and performance, there may a demand for some assurance over this information to enhance its credibility and reliability.
Future skill sets of auditors
Session 3, the final session of the day, was on the subject of the skill set required by the auditor of the future. This discussion was informed by the ICAS/FRC joint research in this area and featured a panel representing the professional bodies, the firms and the regulator.
We might need to reach out to individuals at an earlier stage of their education to make them aware of the variety of opportunities.
The key messages that emerged from this session were:
- The business environment is changing at a faster rate than we can keep up with, so one of the factors that future auditors will need is adaptability to respond to a changing environment.
- The incorporation of a more formalised structure of continual mentoring, conversation and simulation within the firms' training models might help develop the business acumen skills required by auditors in the future.
- It was suggested that we might need to reach out to individuals at an earlier stage of their education, for example, at an earlier stage of their high school career, to make them aware of the variety of opportunities available for those entering the profession.
- Some of the softer skills and a sceptical mindset could be developed and enhanced at an earlier stage in an individual’s career.