KUALA LUMPUR, April 14 — The COVID-19 pandemic has exacerbated many existing challenges faced by organisations and exposed them to new sources of risk.
It also influenced the external audit process across four themes, namely stakeholder expectations, audit efficiency, technology adoption, talents and skills, according to a joint study by Deloitte Southeast Asia (Deloitte) and Nanyang Technological University, Singapore (NTU Singapore).
In a statement, Deloitte noted that in today’s complex and volatile environment, audits play an increasingly important role in enhancing transparency across and between stakeholders to bring integrity and trust to the financial reporting ecosystem.
It added the future of audits will likely involve expanding the scope of financial reporting.
Meanwhile, the traditional approach to financial reporting — which provides a historical view of financial information — is still important, and stakeholders will expect more from financial audits.
“Besides informing and assuring stakeholders, financial audits must also extend their scope to broader areas of public interest such as corporate culture, sustainability practices, ethical standards and cyber risk,” it said.
As stakeholders’ environmental, social and corporate governance (ESG) expectations become more apparent, organisations would need to increase their communication and transparency levels in their ESG reporting.
“To this end, significant efforts are underway to promote a more comprehensive and uniformed framework for corporate sustainability performance such as proposals for a new International Sustainability Standards Board (ISSB) that would be responsible for setting IFRS Sustainability Standards.
“Beyond honing their technical knowledge of the latest ESG standards and its evolution, auditors will also need to develop interdisciplinary capabilities to understand the impact of ESG goals on financial statements and disclosures,” Deloitte said.
For audit efficiency, the increasing use of remote and cross-border audits presents several efficiency improvement opportunities for auditors.
“They should look into re-thinking and re-examining their processes — such as the use of cloud-based technology — to benefit from cost-effective expertise while achieving efficiencies and economies of scale in their deliverables.
“To accelerate the digital transformation and cognition of audit processes, auditors would need to invest in their own continuous learning and develop playbooks that will boost their capabilities,” it said.
On talent and skills, Deloitte noted that the emergence of artificial intelligence has also brought into sharp focus the long-term viability of many professions, including audit.
“Critical thinking and judgement will become increasingly vital skillsets for auditors of the future as stakeholders will no longer be solely interested in an auditor’s technical expertise alone, but also their ability to make appropriate judgement calls in complex situations,” it said.
— Bernama
