ready to innovate? ask these six questions first
about to jump in with technology? hold on.
by alan anderson, cpa
transforming audit for the future
audit & assurance
don’t let tech fears slow you down
audit requires innovation.
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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use innovation to rethink client service
six roadblocks to avoid.
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.
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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.
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rethinking audits: shift to advisory
move from quality control to quality assurance.
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.
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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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how empowerment boosts your firm and team
bonus: turn your clients into loyal fans.
by alan anderson, cpa
transforming audit for the future
“if you’re afraid to fail, then you’re probably going to fail.” – kobe bryant
i do a lot of work with firms to help them improve their project management, where everything is color-coded as red, green or yellow, depending on how the project is going. frequently what i initially see is that everything is green for weeks on end, but still no nearer completion.
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my instinct tells me that those projects that were green four weeks ago really weren’t green then. but out of fear of retribution, the staff were all afraid to tell the partner that something wasn’t going as well as expected. it takes about three to four weeks before people start being sincere about the job status.
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develop an alternative to the traditional cpa career track
how about lending new hires out to your best clients?
by alan anderson, cpa
transforming audit for the future
i’m fortunate to have two great former auditors working with me in accountability plus – my son tyler anderson and corey schmidt, who met working together as auditors. but that firm – like most firms – was focused on total hours worked and realization rates, and had no tracks for auditors who didn’t fit in the normal staff to senior to supervisor to manager to partner progression.
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as corey told me, “tyler and i were good with workflow management and managing processes, and that’s what our firm should have had us focus on.” corey demonstrated that when he was assigned the employee benefit plan practice at that firm, and through his leadership, improved fee realization from 60 percent to 100 percent.
create a culture of empowered staff
empowerment in audit has become an oxymoron. it doesn’t have to be that way.
by alan anderson, cpa
transforming audit for the future
i don’t know if it was luck or by design, but when i started out at mcgladrey, i landed on a team that was already doing the kinds of innovative work that i coach teams today to try out. i’ve never been a status quo type of person, so that resonated with me. i was always trying to find a better way to do things.
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in my first six months, we were already working with data, using the primitive data software tools available back then, or, more likely, that we built ourselves. i was in an environment that created the art of what’s possible. we were willing to try new things. i didn’t have mentors or co-workers who would tell me “that’s not the way we do it here,” so i was able to actually do the things i thought about.
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what will innovation in audit do for your firm?
ai, blockchain and other technologies elevate our responsibility to understand what these tools are telling us.
by alan anderson, cpa
transforming audit for the future
“the only thing we know about the future is that it will be different.” – peter drucker
a big challenge for firms has always been change management. we’re all used to doing our work the way we’ve done it for years. many auditors learned to audit by looking at last year’s workpapers and repeating that approach, but with this year’s numbers. so when i tell groups of auditors that the way we’ve been auditing since the dawn of time will have to change, there’s pushback.
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change is hard. no one wants to change unless that change will bring significant, measurable results. implementing just one or two of the ideas i have discussed in my posts can be uncomfortable and unfamiliar. innovation takes most auditors way outside their comfort zone. but change is also essential, unless we’re all willing to see our profession go the way of the dinosaur.
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put people without degrees on your audit team
plus best practices for year-round and remote audits.
by alan anderson, cpa
transforming audit for the future
firms these days are throwing technology at audit and calling it innovation. but if you try to roll out too much at one time, that’s a disaster. your people won’t have any time to talk to the client and figure out what’s going on in the business if they’re too busy trying to figure out how all the pieces of technology all work together.
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a better approach is to prioritize the technology rollouts and cut those in half. focus on the two or three that are the most important. if you try to do too much, your implementation will fail. a partial implementation won’t get you anywhere. partial implementations tend to result in complicated workarounds, so the new tech not only doesn’t save time or effort, but it actually makes it harder to get the work done.
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alan anderson: applying jit concepts to the audit process
reduce audit time by 20% without reducing quality.
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by alan anderson, cpa
transforming audit for the future
for most audit firms, the concept of “just in time” means that the audit was completed and the financials were delivered “just in time” to meet the deadline. but in this webinar, alan anderson explains how concepts from just-in-time manufacturing can be applied to make audits more efficient, reducing time by at least 15-20% while also improving quality and customer service.
more alan anderson: are you using the right business model? | 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 | put the ethics code to work for your clients and your firm | is audit in crisis because of definitions?
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just-in-time manufacturing was devised to reduce inventory costs, downtime, and waste by following four sequential steps for every manufacturing process: design, build, inspect, and delivery. by analogy, the four steps of jit manufacturing correspond to the four audit phases of planning, fieldwork, review, and delivery. the raw materials of an audit consist of the trial balance and schedules supplied by the client, and the final deliverable is the audit report.
make the best use of technology
two questions to ask when choosing new tools.
by alan anderson, cpa
transforming audit for the future
for years, as i go around firms all across the country, i ask them, “do you honestly feel that you’ve achieved a substantial return on your investment of technology in the audit?” and they tell me, “well, we’re now at three monitors in the field.” i remind them that i didn’t ask about their use of computers and peripherals. every firm is using technology, but few evaluate the return on investment they’re getting.
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i’m a huge believer of embracing technology, but i think we need to think differently about how we use it. in my view, the current state is nothing but tremendous opportunity for all of you to learn what all these new tools, from mindbridge to inflo and everything new that we haven’t even conceived of yet, can do. they all accomplish an objective. it’s just a matter of figuring out which one you want to do, and go and dive in.
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move from a balance sheet orientation to a data orientation
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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six questions to ask before innovating
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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