Audit’s evolution is overdue: collective conversation and action needed 

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global survey of audit users reveals a market reality at odds with received wisdom. Audit, like any service or industry, has to keep up with a changing world. It is only by meeting new demands that audit can play its integral role in ensuring trust and integrity are built into financial markets.

However, misconceptions surrounding who delivers an audit, how it is carried out and what it provides have led to its stalled evolution. Audit, as a result, is in danger of losing relevance and being of poorer quality than that which the market requires – the public interest is at stake. It is time to challenge the status quo and act on what we know the market wants.

To increase understanding of the market, Mazars recently commissioned independent research into the expectations of 500 audit users in 12 countries concerning audit’s future direction.

The data dispels common myths, shedding light on how: respondents expect technology to empower auditors, not replace them; companies welcome broader, not narrower, services from their auditor; appetite for joint audit is higher than frequently assumed; and a disconnect exists between the “mission” of auditors and the benefits companies expect from an audit.

A vast majority (96%) of respondents welcome the use of technology, with the most cited benefits being that technology: saves times (93%), enables auditors to focus on more added-value tasks (92%) and gives auditors more time to analyse and challenge the data (92%). Importantly, these benefits empower the auditor, they don’t replace them.

We see technology relieve auditors every day of low value-added tasks, freeing them to focus on adding value and developing trust with the audit user. It has transformed audit schedules, making it easier for companies to know what information is necessary to provide and when – leading to greater accountability.

Auditors can also use technology to access pre-qualified analyses that highlight potential points of failure. This allows for more relevant and higher-quality exchanges than previously possible, and boosts compliance efforts. Thirdly, auditors can use technology to perform in-depth benchmarks and evolving analyses, which develop the audit user’s knowledge of their own sector.

The assumption companies only want a traditional financial audit is outdated. Some 96% of respondents want auditors to broaden their services and 87% welcome an extension of audit into new areas, such as non-financial reporting on climate risk.

Services that audit users welcome include training (78%) and assurance that covers: data privacy or security (59%), sustainability (53%) and internal controls (52%). We know it’s no longer relevant to focus only on financial information to communicate the performance of companies, which explains this call for broader assurance.

Any expansion in the scope of services must be considered alongside conflicts of interest: expanding into assurance services should be compatible with statutory auditing but it’s important to apply rules based on local guidance.

Another myth dispelled is that companies don’t want joint audit. In reality, joint audit is called for and clearly understood. Some 93% of respondents say the audit market should be reformed and 87% are favourable (50% ‘strongly favourable’) to joint audit carried out by more than one statutory auditor. Some 91% of respondents have experience of joint audit and 88% of those are in favour of it.

The top three expected benefits of joint audit are: ‘increased stakeholder confidence’, ‘reduced risk of corruption or human error’ and ‘enabling companies to benefit from a broad range of technical expertise.’

Audit often receives most attention around corporate failures when questions are raised about possible instances of fraud. The survey findings reflect that: the most popular response for the “mission” of auditors is ‘detect fraud and fight corruption’ (42%). However, identifying all possible frauds is not, at present, part of an auditor’s mission. In fact, fraud detection and investigation require a different scope of work and skillsets than audit is currently asked to deliver..

Meanwhile, according to the survey, the most popular expectations of what an audit will provide are: ‘an objective and independent opinion on the financial statements of my company’ (74%), ‘assurance and confidence for investors, stakeholders and regulators’ (61%), and ‘support to improve business performance’ (52%). Just 34% answered ‘detection and prevention of fraud.’

This highlights the findings’ importance: the market holds misconceptions about audit, and auditors have a role in improving clarity and exploring how audit can evolve for its future applications and purpose.

The survey shows global appetite for audit’s evolution is high. Collective conversation and action are now overdue on how to rethink our profession and, together, reconsider audit expectations and realities to achieve major service improvements for audit firms, the public and the market at large.