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December 2, 2022

Now That Auditing Is Joining The 21st Century, What Will It Be Like?

Recently the Washington Post interviewed new Deloitte & Touche CEO Joe Ucuzoglu about how he has always liked numbers and stuff.

We don't necessarily recommend that you read it, as that's one of the services we provide around here — reading horrible interviews with Big 4 bigwigs — but there's one topic of discussion mentioned that the opiners in the room might find interesting: the future of auditing.

Yes, we all know independence is a pile of rubble, but Joe U has big plans:

What do you hope to achieve in your new role?

We have an ambitious objective to lead the profession. The way in which we are going to do that is by bringing the audit process into the 21st century. The audit plays a crucial role in the economy. We provide an independent voice [Ed: Don't make me laugh.] that’s critical to the effective functioning of the capital markets. But prior to this recent period of technology innovation, our core service had not really evolved at the same pace as the business world. We want to be innovating and evolving as fast or faster than our clients. We’re putting a lot of investment into deploying these rapidly cutting-edge technologies, advanced data analytics, artificial intelligence. We’re also going to continue driving the profession toward being more transparent about what we do so that the public has a better understanding of the nature of our work, and hopefully that will engender a higher level of trust in the quality of our service. We’re going to need to get outside of our comfort zone and become more involved with market-moving information like key performance indicators that aren’t necessarily contained in the basic financial statements that we audit but that are top of mind for investors as they evaluate various investment options.

In case you were distracted by Joe's buzzy vocab, he said, Deloitte will be, "bringing the audit process into the 21st century." That's exciting! Since, you know, the rest of the world has a 15-year head start.

But really, it's interesting to think about what might be possible to jazz auditing up a bit. 

How is technology transforming the audit process?

It’s enabled us to do higher-quality work. In the past, when the audit process was more manual in nature, you couldn’t look at everything. You were confined to looking at samples. Now we’re able to run analyses on very large populations of data, narrow in on the most-significant risks, focus our auditors not on manual routine tasks but on more high-value-added areas where they can apply their professional judgment and then take and deliver greater insights to our clients. It’s fundamentally changed the game.

Okay, he doesn't get too specific other than the testing of big populations of transactions, but since sampling has been the SOP since the dawn of the auditing man, 100% testing of large populations truly is some Jetson-level shit.

But what else should the auditing of the future include? Could absolute assurance happen? Designing audits to detect fraud? Audit partner's signature in blood? Alternatively, what aspects of auditing make you pray that Elon Musk gives up rocket science?

This is an area of business that's in desperate need of some excitement, so no idea is too crazy. Please share your wildest dreams for auditing below.

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