The future of auditing in public companies

A study conducted by PwC in the UK on a representative group of investors and company managers shows that both groups agree on the new expectations of the auditor profession. They want better information and greater insight into the future risks to which the company is exposed. About 72 per cent of investors and 79 per cent of executives are in favour of extending the scope of auditing of financial statements with information about the company's future prospects and key risks.

At what stage of building the audit of the future are we at today? New technologies are increasingly used in the work of auditors. They streamline and accelerate many processes, but still, due to regulatory and legal conditions, we are in a situation where we examine only some of the financial data of companies, mainly historical ones, the value of which devalues ​​over time. This was clearly demonstrated by the outbreak of the pandemic, when in April 2020, the companies, already facing its effects, prepared mandatory financial statements for 2019. Their annual reporting was completely inadequate to reality, and the audit of this information was of limited value without addressing the current context. For years, the market has been talking about the so-called expectation gap, i.e. the difference between the expectations of stakeholders towards auditors and what is actually covered by the audit of financial statements and what auditors are obliged to perform in accordance with audit standards. This is also confirmed by our survey of 5,000 stakeholders related to the City of London.

The expectation gap will only disappear if all stakeholder groups are involved in the audit transformation: starting with the audited companies themselves, audit firms, shareholders, investors, audit committees, supervisory boards and regulators. The so-called real-time audit, with an extended role of an auditor, is possible and necessary, but it cannot take place without the transformation of companies' financial reporting systems and processes. Additionally, improving the competences and organization of supervisory boards and audit committees must come to the rescue in order to increase the credibility of financial information. Without this, market confidence will continue to be a scarce commodity. It is important that the representatives of audit committees in Polish supervisory boards of companies, especially public companies, also look at these realities. It may be important for decision-making bodies to look at the technology, its use, and not only the analysis of resources and the number of teams in the final assessments. Without this understanding, the very process of transformation in companies will simply go relatively slowly.

The future - perhaps even not far away - could be that large sets of data (financial and operational) would be gathered in a single system. The tools that auditors have largely at their disposal today, allow for their trouble-free acquisition, standardization and automatic and in-depth analysis, the conclusions of which are presented on understandable and interactive visualizations, enabling immediate transition to details if necessary. What's more, with the use of appropriate applications and systems, it is possible to combine virtually any databases and information collected from various sources so that, after appropriate transformation, we can reach information that interests us, and be able to draw conclusions, observe trends, and identify any anomalies or deviations from the norm.