Five ways to improve audit efficiency

Audit quality is at the heart of audit. It helps ensure an organisation’s financial reporting integrity, accuracy and compliance. However, in today’s business landscape, we’ve all come across tales of financial audits gone awry, leading to unnecessary stress and time consumption within departments. For instance, recently the FRC’s enforcement committee sanctioned Grant Thornton £40k after it was found that the firm failed to comply with the regulatory framework for auditing in its audit of a local authority’s pension fund for the year to 31 March 2021. According to the committee, it found failures in the reviewed audit, which it considered represented “a significant departure from the standards expected of a registered auditor”. Auditing can be complex and challenging. With the rising expectations of investors and other stakeholders – including employees, customers, suppliers and pension-holders, the purpose, scope and practice of audit need to keep pace. However, there are ways to minimise stress and improve the audit process. Listed below are five ways accountancy firms can improve their audit efficiency. Curating a plan and sticking to it A common complaint about the audit process is the time it takes and the tendency for agreed timings to overrun, according to Menzies. This can be an area of frustration for the audit team and for clients alike. Menzies suggests that if a realistic timeline is set at the start, this can allow for an open channel of communication to be established, which should make it possible to avoid situations where deadlines, whether Companies House or otherwise, are at risk of being missed. Moreover, it is also important to prepare a clear and concise plan to guide the audit team’s progress. To facilitate this, the auditor should start by asking the right questions in order to scope the audit process as precisely as possible. A well-managed audit will involve an auditor who spends some time getting to know the way the business works, its processes, systems and controls. Once the audit has started, this planned approach should be followed. The audit team should provide a ‘request list’ to the finance team well ahead of each visit, so the applicable documentation can be made available. Working in this way will help to prevent last minute surprises and streamline processes, whilst ensuring relevant information is highlighted at the right time, to the right people. Using tech to enhance audit Large audit firms have been using technologies such as robotic process automation (RPA) and data analytics for a number of years, but data analysts managed the tools while auditors continued to carry out the traditional audit work. But today's audit teams have changed too, their make-up and skill set have evolved even before the pandemic. Teams now consist of almost as many data analysts and digital specialists as auditors. Some audit firms are now training their entire workforces in how to use tools such as data analytics. Ian Pay, head of Data Analytics and Tech, ICAEW, says: “There’s a democratisation process going on. It's not just the preserve of the data specialists – everyone has access to tools that can be used to do some pretty powerful stuff. You still have data specialists to do the very complex tasks, but that accessibility reaches down right across the spectrum now.” Additionally tech can also help automate repetitive tasks such as data entry and extraction, report generation, or calculations. According to PWC, about 45% of auditing tasks in your workforce can be automated. For example, you need to collect and evaluate information from several sources, such as system logs, financial statements, expense reports, and invoices, in order to conduct an educated audit. Manual data collection will take longer and be more prone to input errors. However, audit management software like TeamMate+ or AuditBoard will help you effectively collect data from different sources. Communicating effectively Effective communication of audit results is vital in fostering a constructive relationship between management and internal audit. Clear and concise reporting, supported by relevant evidence, helps to provide a comprehensive understanding of the audit findings. Additionally, the ability to convey these results in a professional and constructive manner is crucial in fostering trust and credibility between the auditor and the stakeholders. To achieve and maintain audit efficiency, set up multiple communication channels such as emails, calls, memos etc to facilitate information flow in your audit engagements. The KPMG/Forbes Insights report “Audit 2025”surveyed 200 respondents, including audit committee chairs, CFOs and controllers. Collectively, they named communication as one of the top skills they seek in an auditor. In fact, it’s core to an attribute that clients value most: the ability to articulate a clear point of view on the issues (picked by 62% of respondents, compared with 46% just two years previous). In fact, communication skills (66%) were ranked virtually as important as technology skills (67%), making it one of the two top-ranked qualities auditors of the future must possess. Client relationships To achieve audit quality, firms have to manage their overall client base and work with individual clients day to day. According to ICAEW, managing client relationships includes clearly defining the responsibilities of the auditor and the management, understanding whether the audit partner and the firm is objective and independent and managing communications with the client management and audit committee so that issues are dealt with in a timely manner. Each firm should ensure that it only accepts and continues to work with those audit clients where it can deliver a quality audit. Auditors need to have in place client assessment procedures to help in identifying whether a client is acceptable to the firm. Managing high risk clients requires more time and more experienced people. Good working practices Good working practices are an intrinsic part of the firm’s quality control procedures and must be embedded in the audit process. To achieve audit quality, strong teamwork, effective communication and knowledge sharing are essential. Team members have to have a clear understanding of their roles and responsibilities as it is crucial that audit work is carried out with alertness of mind, professional scepticism and rigour. Additionally reviews of audit files should be performed on a timely basis by people with appropriate experience. Firms also need to ensure that an audit has proper completion procedures, that all necessary evidence has been obtained and that the audit conclusions have been carefully considered.