Companies and investors believe that audit reports should provide more clarity and insight into the company’s potential risks and future prospects and on how well-equipped the auditor thinks the company is to manage them, according to PwC’s Survey The Future of Audit – Perspectives on how audit could evolve.
Most of those interviewed appreciate the quality of the present audit activity, but believe it can be improved, including through automation and artificial intelligence (AI), which could allow auditors to eliminate repetitive tasks and focus more on understanding the business.
”The audit matters and needs to evolve. If a company is getting into difficulty, the consequences impact both the shareholders and the specific market or other sectors. In this context many questions have arisen about the future of audit, and the PwC survey is a starting point in this approach, which requires a fundamental overhaul of the entire reporting system to give stakeholders the confidence that the information is reliable,” says Kenneth Spiteri Partner, Assurance Services Leader at PwC Romania.
- Both the investment community (68 percent) and business leaders (80 percent) think today’s statutory audit serves the needs of companies.
- 41 percent of the investment community and 68 percent of the businesses surveyed feel that audit meets the needs of investors.
- 72 percent of investors and 79 percent of businesses are in favour of more information about a company’s future prospects and risks as the central scope of a statutory audit.
- 76 percent of investors and 84 percent of business leaders believe the use of technology such as AI, automation, data analytics would increase the efficiency with which the audit is performed.
- While there is a consensus that technology will increase the level of scrutiny and overall quality of audits, only 37 percent of businesses and 36 percent of investors think technology will enable auditors to better understand a business.
- There is also broad backing for strengthening the quality of reporting by bringing a company’s internal controls within the scope of the audit and strong appetite amongst investors (64 percent) and businesses (82 percent) – large and small, listed and family-owned – for the scope of the audit to be flexible and tailored to the type of company being audited.
“Even though by its nature, auditing refers to the past, investors and other stakeholders are more concerned about the future. For this reason, the survey showed that they want from the audit a single coherent report based on which they can make informed decisions. Auditors are expected to have a deeper understanding of the business and provide them more information about the company’s perspectives and scenarios in which the business model might fail,” says Kenneth Spiteri.
PwC recently announced a new package of measures designed to increase the quality of the audit, mainly targeting investments in training, people and technology.
The survey was conducted in the first half of this year among over 600 investors, business leaders, representatives of the public sector and the academics in the UK on how auditing can and should evolve.