But the basics
still apply
The phrase that gets
bandied around all the time these days where auditing is concerned is
“value-add”. In this case, your audit services must add more value to the
customer. It’s why you now have items such as Key Audit Matters, why you now
place emphasis on Other Information, why you now have Sustainability Reporting.
It’s not just management letters these days.
Traditional audit is
dead, long live audit.
That’s not to say that
everything changes. The objective of an audit remains the same as defined under
International Standards on Auditing ISA 200, as do the ethical principles
governing an auditor’s professional responsibilities, and the core skillset an
auditor should have still needs to be utilised.
Using a good example, in
the Malaysia context, one could argue that the audit lapses with regards to 1Malaysia
Development Bhd (1MDB) center around the use of that same core skillset, those
same ethical principles. This is the case regardless of the fact that the
nature of audit isn’t really designed to identify fraud.
However, it is widely
acknowledged that today’s audit process continues to evolve. Technology
advancements and changes in the information needs of financial statement users
has meant that audit methodology and output must also adapt and an auditor’s
skills must expand beyond what they ‘traditionally’ spend time doing.
For example, where
previously you had to do manual sampling, now, depending on the software
infrastructure, you could actually run software that would extract samples for
you that is best representative of the population data as a whole. So instead
of using up precious time picking samples, an auditor’s time will be freed up
for more analytical work, more “value-add” work. There’s that phrase again.
So is the traditional
audit really dead? I’d prefer to use the term transform. Just like most other
professions, the processes have been disrupted thanks to ever-changing
technology and ever-changing requirements or needs.
No doubt, users of
financial statements still look for that open-shut audit conclusion, where
there’s either a clean opinion or there’s a qualification. But assurance is
coming more to the fore, and even real-time at that.
Locally, the Malaysian
Institute of Accountants has been extremely active in encouraging local audit
firms to at least looking at ways to transform their audit services, if they
are not already working on it. Their 2018 conference tagline reads as “Riding
the Digital Wave, Leading Transformation”. It’s an active acknowledgement that
accountants must move with the times, and where this article is concerned, the
overall idea of an audit must move with the times as well.
Regardless, as
mentioned earlier, the core skillset of an auditor remains the same. The basics
still apply, and you need to get those right first before you “value-add”.
Senior Editor
Wolters Kluwer Malaysia
The Malaysia Audit Manual, 4th Edition is designed
specifically for preparers and auditors of financial statements, to confidently
execute a proper conduct of an audit for a variety of reporting and
non-reporting entities with the necessary documentation and working papers to
support the eventual audit opinion. It has been updated to incorporate all the
latest requirements brought about by the changes in auditing and accounting
standards as well as the Malaysia legal framework.
The Malaysia Audit Manual, 4th Edition provides a comprehensive compilation covering:
- detailed explanations on each step of the entire audit process,
- references to standards,
- pro-forma worksheets and engagement letters,
- practical audit checklists,
- audit programmes,
- schedules, and
- sample auditors’ reports.
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