The future of auditing will involve more than just number-crunching.
Whether they’re considering cybersecurity threats, artificial intelligence, or big data, auditors need to be aware of the emerging risks and opportunities for future business success.
At an Ivey Idea Forum called In the public interest: Expansion of the audit mandate in Toronto on October 11, CPA Ontario’s President & CEO, Carol Wilding, introduced Bonnie Lysyk, the Auditor General of Ontario, and a panel of leading CPAs. The speakers discussed how audit mandates have expanded both inside and outside organizations and what this means for the profession and business in general. Panellists included Stacey Nagle, Partner, Audit & Assurance at Deloitte Canada, and Diane Sinhuber, Senior Vice President and Deputy Chief Auditor of TD Bank Group.
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Expansion of the audit mandate
In a little more than a decade, Lysyk said her office’s mandate has expanded to include among other things:
- Special audits on topics such as Ontario’s autism services, the charitable bingo and gaming industry, and the Fair Hydro Plan;
- Pre-election reports analyzing the province’s fiscal plans; and,
- Scrutiny of government advertising for partisan elements.
But Lysyk said recent changes to both Ontario’s Advertising Act and the Election Act have created challenges. The new political advertising rules remove the auditor’s discretionary power to approve or reject ads, and Lysyk’s office will be squeezed to produce a pre-election report in time for the new June election date.
Focus on the future
Looking ahead, Lysyk outlined potential future opportunities, including:
- Restoration of the auditor’s authority on government advertising;
- Auditing private companies that receive provincial funding;
- Interjurisdictional collaboration on audits;
- Working with academia to drive thought leadership on the profession; and,
- An accountability mechanism.
“Accountability is really important. We need to have a mechanism in place that calls people to task when things don’t go as well as they represented in their projections,” she said.
Evolution is key
Sinhuber stressed the importance of assessing emerging risks, including cybersecurity and disruptive technology.
“We are always watching for the headlines out there,” she said. “We have to look at what are the bigger themes out there and how do they affect the way we do business and our mandate and our plan?”
Balancing access to data with security measures is also a priority.
“Access to data is critical in the auditing profession. The real challenge, big challenge these days is getting access to data,” said Sinhuber. “Hopefully, in the next few years we’ll get that sorted out so we can have much more freedom to get information, but get it appropriately with the right checks and balances.”
Nagle said artificial intelligence is one emerging risk that has potential to improve the profession.
“Adoption of technology is important. We have to move with the times,” she said. “We utilize artificial intelligence to teach a system to read contracts and extract relevant information into a worksheet. That way my team doesn’t have to spend hours populating a worksheet. They can spend their time on something more meaningful: analyzing what the data means, talking to clients about what is relevant in the business and how we can help them solve challenges. It becomes less about the administration of the audit and more about getting to the heart of what’s underlying the business and the risks.”
And at a time when firms are relying less on financial statements to make their decisions, Nagle said auditing needs to include a forward-looking component.
“We’re driving forward, by looking in the rearview mirror,” she said. “We need to find a way to evaluate what the metrics are that are indicators of future success and future performance instead of being so rooted in what the historical GAAP financial statements say. As a profession, we need to remain relevant, and if we are auditing information that investors don’t value, then how can our work be considered valuable?”
The event was organized by the CPA Ontario Centre for Accounting and the Public Interest, which is focused on the development of breakthrough research and contributes to the leading accounting and management journals.