KPMG: the future of audits and assurance

Understanding the difference between audits and assurance

Speaking with Emilio Pera, Partner and Head of Audit, KPMG Lower Gulf, he explains that “Audits are conducted in accordance with the International Standards on Auditing (ISA) on financial statements as a whole […] assurance, on the other hand, will provide different levels of comfort on specific elements of the financial statements and could include non-financial information as well. Assurance is a much wider concept with a wider application.”

Initial impact of COVID-19 for audits and assurance

Since the outbreak of COVID-19, Pera reflects that “the most significant change is rapid digitalisation.” While prior to COVID-19, “the winds were already changing,” comments Naveen Kalia, Partner, Audit, KPMG Canada. Auditors have had to adapt to new ways of working at a much quicker pace, harnessing remote tools and methods to deliver adults and connect with clients to review documentation, inspect evidence and engage in a secure environment. “As a result, information technology and data security have become key,” adds Pera.

The future for audits and assurance and the core priorities for 2021

“One of the priorities in 2021 is to understand how we can leverage what we learned during the pandemic to further enhance audit quality. For instance, technology has been widely adopted to improve audit quality, by driving efficiency and greater coverage of a client’s portfolio,” comments Pera.

It is important for the accounting industry to remain a step ahead of businesses transforming the way they collect and process data. As a result “continuing to invest in cognitive, machine learning and artificial intelligence capabilities to provide organisations with data-driven business insights as well as evolving reporting and regulatory requirements,” will be vital going forward, explains Kalia.

“Audit firms are also using data analytics and in-house technology to effectively audit data held and processed in clients’ IT systems, to better identify risks,” adds Pera.

While KPMG states that investments in technology are critical, there is no one-size-fits-all solution. With new technologies and expectations evolving rapidly, auditors need to constantly upgrade their skills and approach to bridge the skills gap. “The emergence of cutting-edge tools and innovation transforming audit has accountants thirsty for the knowledge to keep pace and thrive in the future of audit,” notes Kalia.

Another benefit for the future is remote working, Pera explains that such workplace models “provide more flexibility and agility in both the delivery and connection with clients. Looking at a market such as the Middle East for example, specialist resources can operate virtually across geographies rather than being restricted through physical presence. This has also benefited work-life balance as teams are not required to travel extensively and be present in office or at the client site all the time.”

Reflecting on the future for audits and assurance, Pera comments that “moving forward, auditors will be expected to exercise extraordinary judgement while evaluating asset impairments, valuations and estimates, even as they operate within uncertain markets exacerbated by the pandemic. The challenge ahead is to leverage technology without compromising data security and audit quality.”