How can data and technology help deliver a high-quality audit?

Resiliency is foundational in a radically shifting landscape.

In brief

• The right technology can help us with project management.
• Analytics can help audit teams focus on key issues.
• A data-first mindset sparks better questions.

Knowledge is power, learning is everything, and the challenges of auditing in today’s challenging economic and regulatory environment have taught us some very important lessons that we are applying to drive continuous improvement in audit quality while also creating a better experience for our clients and our teams.

The data-driven audit – one that relies on the analysis of full populations of our clients’ data rather than on statistical sampling – is resilient. And resiliency is something we’ll need a lot more of as we continue to work on driving improvements in audit quality. 

While the foundations of the audit profession – independence, objectivity and professional skepticism – are unchanged, audit teams are harnessing the digital audit to get a fuller picture of the data, using full populations of the data to understand key business processes and identify risks in real-time. As we brace for the impact of a radically shifting landscape, auditors are applying data analytics and technology to the audit to innovate and deliver quality audits that promote trust in the capital markets and investor confidence.

Looking back, looking forward

Over the last few years, a number of factors have caused disruption in accounting and reporting cycles for companies everywhere. The COVID-19 pandemic, ongoing economic turbulence and uncertain geopolitical conditions underscore the critical importance of trustworthy and readily available financial information for investors and other stakeholders. As the world continues to brace against the headwinds of change, our capital markets have to remain transparent.

The EY Digital Audit, powered by our EY Helix analyzers and connected technology platform, equips our auditors with the infrastructure they need to deliver high-quality audits. Our teams leverage visualization tools for complex analytics.

Still, factors like a global pandemic, inflation and geopolitics underline the need for our people and technologies to work together to maintain high standards for audit quality, performance, reliability and security when disruption abounds. As we look ahead, we are building on the lessons we have learned over the past several years to strengthen the data-first mindset in our teams to drive quality audit execution. 

Lesson 1: The right technology can streamline project management and enable real-time communications.

In an environment where the economic and business landscape is shifting, executing an audit requires agility — the ability to adjust our audit approach to address risks.

With EY Canvas, audit professionals at EY member firms around the world are trained to work with the same technology and use it every day to manage their audits consistently.

The platform also enables our auditors to communicate a centralized plan for the audit and to monitor progress in real time. The project management capabilities built into EY Canvas empower teams to continue meeting important milestones during the course of the year. As one Global Client Service Partner put it, “In the past, I would have to be sitting in a room with 40 people to truly understand where we are. Now, I can refer to my EY Canvas dashboard, take a quick inventory and, without our having to huddle up next to each other in a conference room, get the same insights.”

Our technologies also improve the audit experience for our clients, allowing them to monitor the status of audit requests and respond quickly to queries from our professionals. Some of our clients are increasingly concerned about how their most sensitive financial information is safeguarded in a hybrid or virtual environment. Our EY Canvas Client Portal provides the necessary safeguards that allow companies to upload files securely so that they can be easily accessed by the audit team. The EY Canvas Client Portal has also eliminated one-off emails and has reduced repeat requests and duplicate work for clients. Consequently, teams are able to focus on the issues that matter.

Lesson 2: Analytics help audit teams – and audit clients – focus on key issues and emerging risks.

EY Helix is a powerful data analytics platform.

Our teams lead with a data-first mindset, and we have a finetuned process for global data capture and extraction. Grounding our audit procedures in the data and analytics enables EY teams to better identify potential risks. Hidden patterns and trends in our clients’ financial data that wouldn’t be apparent in a traditional audit are more readily revealed. This allows us to direct our follow-up efforts to the right areas and enable our clients to consider new ways to improve their business processes and controls.

Our teams’ ability to capture full populations of data and use them in our analyzers is critical.

The advanced analytics underpinning the digital audit can inform new strategies as well as pinpoint risks. This is a compelling proposition as organizations everywhere shift course.

Lesson 3: Confirmed: a data-first mindset sparks better questions

Our digital audit approach deepens our understanding of the companies we audit and helps us fulfill our responsibilities as independent auditors. The question is: how can we use this experience to propel us into the future and drive the evolution of the independent audit?

Data helps our audit teams bring objectivity and a skeptical mindset to the audit – a commitment to see old processes with new eyes. They use first-quarter or early-year data to develop a comprehensive audit plan that focuses on the risks that matter.

For example, incorporating the Helix Analyzer reports on general ledger and subledger data into risk assessments helps audit teams to better understand the sources of and flow of transactions. This allows EY teams to ask probing questions about areas where there are risks of material misstatements and the controls that are designed to prevent them. Using a data-first approach can inform walkthroughs and make sure that our teams capture all the critical risks. A data-first audit enables the audit team to develop a more holistic view of business processes by enabling teams to see the correlations between multiple accounts.

We know that data can challenge assumptions and present insights and inspiring new perspectives. Building that in at the front end allows the auditor to deliver value in real time throughout the audit cycle. 

What comes next?

Like everyone, we are continuously absorbing and applying the knowledge gained from working through today’s business and regulatory environment. Our clients are addressing the complexities in accounting and corporate reporting resulting from these shifting cycles. But one thing is certain: a data-first approach is the key to delivering an audit that is responsive to the ever-changing risk profile of our clients. 

At Ernst & Young LLP (EY US), our clients and our audit professionals alike meet change with a new appreciation for the technologies that enable the digital audit. We are seeing that data-driven procedures can bring insights to management and audit committees that enable them to be proactive in investigating issues and addressing risks.