rather than rely on sampling, you’ll use technology to find all the needles in the haystack.

by alan anderson, cpa
transforming audit for the future

most auditors have grown up their entire career with a balance sheet orientation. “i can audit any balance sheet,” is a common defense against making any of the changes needed to move into the future. it is not an easy task to think about a data-driven orientation.

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but the amazing part of moving to a data orientation is that it deepens your understanding of your client. you understand how data moves through their systems, a perspective you cannot have if you just look at the balance sheet. you start asking your client deeper questions, so you understand what these transactions do. i’ve had partners tell me that after they work with this data-driven approach, they’re embarrassed by how little they previously knew about their clients. conversations with your client are more profound, more valuable and more relevant when they focus on the kpis specific to a client and their industry.
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hint: jumping in with technology is not the solution.

by alan anderson, cpa
transforming audit for the future

“if i had an hour to solve a problem, i’d spend 55 minutes thinking about the problem and five minutes thinking about solutions.” – albert einstein

innovation means doing things differently and doing different things. but what does that mean in practice?

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i see audit firms around the country who set up “innovation teams,” or appoint someone to be the chief of innovation. the problem is that if these are home-grown teams, or if no one on the team has ever had any experience working with anything other than a traditional audit firm, at best, their efforts will be like moving around deck chairs. many of these chiefs of innovation don’t have an innovative bone in their bodies, and they don’t know what they don’t know. all they know is the old way of doing things.
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technology is moving quickly. are you keeping up?

by alan anderson, cpa
transforming audit for the future

auditors, like most accountants, tend to be conservative in nature. we tend to be reluctant to change unless we’re on a burning platform.

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as i’ve said before, audit is at a crossroads. we can continue the way we’ve been doing audit and will likely go extinct. or we can make changes that will keep audit relevant and valuable for the next generations.
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and how to rethink client service.

by alan anderson, cpa
transforming audit for the future

“we cannot solve our problems with the same thinking we used when we created them.” – albert einstein

when most auditors hear the word “innovation,” they think it has to do with getting more technology. but that’s only a small part of what innovation means. innovation isn’t just throwing more technology at your audit processes. that approach is often just replicating with technology what you have done in paper for decades.

more: how to advance from audit to advisory | create a culture of audit quality assurance | what quality in audit leadership means | business-minded approach helps build a better firm | are you looking at the big picture? | meet your client all year, not just during audit | give your audit teams tasks that increase business acumen | are you using the right business model? | give advice while remaining independent | stop mixing up your v’s and losing your best people | empower your team by dumping c and d clients | the new formula for an accounting business
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according to an article in forbes, “innovation is the rethinking or reimagining of a business process that already exists.” applied to audit, innovation is reimagining what audit is and what audit can be. it’s the transformation of audit from a commoditized compliance-only function to a sought-after and highly valued service that produces benefits to the clients who use that service and to the firms who provide that service.

innovation is the spark that gets you to a new state. it’s the a-ha moment that drives the action to change. innovation can lead to transformation, but only if done with the intention of transformation. it means being willing to try doing things differently and being willing to try doing different things.
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moving from quality control to quality assurance lets you advance from auditing and accounting to assurance and advisory.

by alan anderson, cpa
transforming audit for the future

for decades, a&a has stood for audit and accounting. it’s been focused on compliance. but sooner than we may want to believe, business owners and stakeholders will be using technology to provide the assurance they need.

this is already happening. to remain viable, we need to move a&a from audit and accounting to assurance and advisory.

more: create a culture of audit quality assurance | what quality in audit leadership means | meet your client all year, not just during audit | give advice while remaining independent | the new formula for an accounting business | don’t risk losing good employees for bad clients | four questions to make your firm more successful as a business | say adios to audit fee pressure | deliver more audit value by getting out of the conference room | six essential elements in audit planning | before the audit: more than just planning | five crucial attributes for successful audit leadership
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now all auditors take the quality control standards of our profession seriously. but quality control that only happens at the end is more about satisfying the minimum requirements for compliance. it won’t let you move out of providing the commodity service that clients need to keep their stakeholders happy. quality at the end doesn’t provide an opportunity to really look under the hood and think about what the client really wants.
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get a better result in less time.

by alan anderson, cpa
transforming audit for the future

for way too long, many firm leaders have equated quality in their audits with making it through the peer review process. peer review is important, but making quality all about that is like the american car executives whose production lines needed a guy with a rubber mallet at the end of the production line to make sure the door fit right. that’s quality control.

more: what quality in audit leadership means | business-minded approach helps build a better firm | are you looking at the big picture? | meet your client all year, not just during audit | give your audit teams tasks that increase business acumen | are you using the right business model? | give advice while remaining independent | stop mixing up your v’s and losing your best people | empower your team by dumping c and d clients | the new formula for an accounting business | how to upgrade c and d clients | eleven types of audit clients and which to fire | don’t risk losing good employees for bad clients | can a service center model solve audit staffing shortages? | don’t take on audits in an industry you don’t understand
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quality assurance is making the guy with the rubber mallet irrelevant. the first-time right mindset is taking the japanese approach and making sure the door is designed so it fits correctly from the beginning.

quality control is at the end. quality assurance starts at the beginning and continues throughout the entire process. it’s not a one-time event.
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you can’t build it in at the end.

by alan anderson, cpa
transforming audit for the future

“it takes less time to do things right than to explain why you did them wrong.” – henry wadsworth longfellow

many audit firms think about quality as a task carried out at the end of the audit by the quality control reviewer. the problem with that thinking is that sometimes the qc reviewer misses major problems. for example, i was working with the new qc reviewer at one firm who spent most of the review time looking at the superficial details of formatting and punctuation, but almost disastrously missing a $3 million error that i spotted right away because the relationships between the numbers didn’t make sense.

more: business-minded approach helps build a better firm | are you looking at the big picture? | meet your client all year, not just during audit | give your audit teams tasks that increase business acumen | are you using the right business model? | give advice while remaining independent | stop mixing up your v’s and losing your best people | empower your team by dumping c and d clients | the new formula for an accounting business | how to upgrade c and d clients | eleven types of audit clients and which to fire | don’t risk losing good employees for bad clients
exclusively for pro members. log in here or 2022世界杯足球排名 today.

quality in audit shouldn’t be just an extra step at the end of the audit, but it should be an approach woven into the fabric of the firm. quality is an attitude of “first time right” that permeates every task and every step in the audit. if you leave quality for the end, you’ll be challenged at delivering quality in your audits.
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how this one attribute strengthens others.

by alan anderson, cpa
transforming audit for the future

“far and away the best prize that life offers is the chance to work hard at work worth doing.” – theodore roosevelt

when you think about business leaders like bill gates or reed hastings, the founder of netflix, it’s clear that these people did not create their empires by focusing on narrow measures like realization rates or increasing their profit margin. neither of these organizations would have become the household names they are if their founders had had such narrow views, and if they had not been able to move these very large companies in new directions in response to changes in the world.

more: are you looking at the big picture? | meet your client all year, not just during audit | give your audit teams tasks that increase business acumen | are you using the right business model? | give advice while remaining independent | stop mixing up your v’s and losing your best people | empower your team by dumping c and d clients | the new formula for an accounting business | how to upgrade c and d clients | eleven types of audit clients and which to fire | don’t risk losing good employees for bad clients | can a service center model solve audit staffing shortages? | don’t take on audits in an industry you don’t understand | four questions to make your firm more successful as a business
exclusively for pro members. log in here or 2022世界杯足球排名 today.

business-mindedness in audit has deeper dimensions than making a reasonable profit and delivering an audit report on time. even if you’re not concerned about the future of audit, strengthening the attribute of business-mindedness in your firm will strengthen your firm and make it more attractive to clients and team members. let’s talk about some of the tangible benefits.
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reinforce the teaching in every experience.

by alan anderson, cpa
transforming audit for the future

another method for ingraining a business-mindedness attitude into the culture of the firm is to treat every experience as a learning opportunity. partners take staff accountants to lunch with clients all the time, and the three of them talk business. but most partners never do anything with that experience. a better approach is to have a follow-up meeting where the partner asks the staff accountant questions about what they heard and what they learned during the conversation. this could even be on the car ride back to the office.

more: meet your client all year, not just during audit | give your audit teams tasks that increase business acumen | stop mixing up your v’s and losing your best people | how to upgrade c and d clients | can a service center model solve audit staffing shortages? | move to advisory and assurance with relevance | use eight audit exit items to deepen client relationships | know your three audit w’s | planning lays the foundation of audit relevance | are you correctly identifying the relevance intersection? | traditional audits don’t deserve premium billing
exclusively for pro members. log in here or 2022世界杯足球排名 today.

business-mindedness means we take seriously the development of the talent in our firms so that what we reward is business acumen, having great conversations with clients and with the team, and coming up with valuable advice for the clients. but instead, what many firms value is the chargeable hour. they don’t want to take the time out of chargeable hour budgets to have those conversations or to reinforce the learning from meetings with clients.
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will there be more work? most likely.

by alan anderson, cpa
transforming audit for the future

when you’re a client-serving firm, the service doesn’t end with delivery of the financial statement audit. client service should be perceived as a continuous, ongoing process that is supported by the culture with accountability measures. client service is a relationship that is developed by habit.

more: give your audit teams tasks that increase business acumen | are you using the right business model? | empower your team by dumping c and d clients | eleven types of audit clients and which to fire | don’t take on audits in an industry you don’t understand | how ‘business expert cpas’ get their own business wrong | exceptional audit client service demands effective communication | five ways to prevent audit bottlenecks
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cpa firms tend to get bogged down in the work, so i developed a process for developing those relationships. i would sit down with the team and tell the senior accountant and the manager that they needed to meet at least quarterly with their counterpart at the client. the senior would meet with the controller. the manager would meet with the cfo. my responsibility would be to meet with the ceo or the business owner. these meetings could be phone calls but at least one of those meetings would be for lunch. if they desired, the senior and manager could have a joint lunch meeting with the controller and the cfo.
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