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The Brain Drain of Audit Quality
The Brain Drain of Audit Quality
For decades, audit quality, in general, has failed to prevent audit failures. Upgraded audit standards, and stricter independence requirements have been implemented in an attempt to address the challenge. In my opinion, there are a number of environmental factors being overlooked in the formal structures that set audit standards and educational standards, causing a drain on knowledge and experience in the profession, (the so-called ‘brain drain’). I am listing a few:
- Computer skills
In my opinion, the brain drain started when personal computers were introduced into audit. Many manual calculations, and the sorting of documents into sections were taken over, causing audit teams’ mathematical skills to diminish, along with their understanding of the overall audit process. The audit process has become a sequence of events, supported by templates. Auditors are no longer thinking on their feet, and are less sensitive to information and circumstances of the entity being audited, and their relevance in the audit file.
- Business knowledge
Business news and sharing information have moved online, and auditors are no longer reading their newspapers. Information is only shared if requested – and youngsters do not necessarily know what to ask for.
- Communication skills
Because auditors are able to document very efficiently, the documentation requirements have started increasing dramatically and, gradually, time spent with clients has decreased. Conversing with client staff and getting a feel of what can go wrong are seen as unnecessary.
- Generation gaps
As generations have changed, their ability to solve problems has changed. Parenting and school systems are solving more problems for their children and they have become less exposed to risk-taking, working part-time, and having role models in business. Trainees start their contracts at a disadvantage, as they do not have any context for the material they are learning.
- AI
I left this one for last, as it is the one factor that encompasses all the mentioned factors. Not only is AI able to tell us about business, draft our emails, and design and populate our spreadsheets, but it also proposes solutions to our problems. It is able to do our work for us. Auditing has always been the profession which can address and solve any problem, due to the variety of experiences encountered during audit, and the different people and characters, and business models dealt with. Auditors would assess a situation, and identify areas where things can go pear-shaped, or where errors or fraud may be present, because they knew the people who might be responsible.
If the profession crosses the last threshold of automation, without addressing the human element of problem-solving, the future is very unsure.