THE FUTURE OF AUDIT IS ASSURANCE

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”.

Azmin Mohd Khalib

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.