A new report from the Pennsylvania Institute of Certified Public Accountants (PICPA) underscores an urgent need for audit modernization, urging CFOs to push audit firms to adopt advanced technology, enhance workforce quality, and adapt to evolving regulatory demands.
Kimberly Ellison-Taylor, a technology and finance executive, emphasized in the report, “Technology will get to trust before the profession understands technology,” highlighting the need for auditors to stay ahead of the curve.
The report highlights a rapidly changing landscape where traditional auditing methods struggle to keep pace with technological advancements and investor expectations.
The PICPA survey reveals that 49% of auditors still view financial accuracy as the most critical aspect of their work, while 40% emphasize transparency. However, the report notes growing pressure to incorporate nonfinancial metrics, such as sustainability, and leverage technologies like artificial intelligence, blockchain, and cloud platforms.
These tools enable real-time data analysis and continuous assurance, with 56% of auditors expecting technology to transform their work within five years, up from 43% reflecting on the past five years.
The report warns of risks when companies overstate their sustainability or technological capabilities, citing scandals like Theranos and Volkswagen as cautionary tales. Such misrepresentations underscore the limitations of audits focused solely on historical data.
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Regulatory frameworks are also under strain, with oversight from the PCAOB and SEC often prioritizing compliance over innovation. The report suggests regulatory sandboxes as a solution, allowing firms to test new methods under controlled conditions.
Meanwhile, rising costs are pushing smaller firms away from public company audits, limiting CFOs’ options and exacerbating workforce challenges.
The audit industry faces a critical talent shortage, driven by complex standards, new technology demands, and fewer professionals entering the field. Retention is a growing concern, with Jerry Maginnis, a public company audit committee chair, noting it as his top priority. Larger firms like PwC are using AI to shift auditors’ focus to high-judgment tasks, but smaller firms struggle to compete, losing talent to bigger rivals.
CFOs are advised to ensure audit partners adopt scalable technologies while preserving independence and skepticism. The report advocates for training programs to equip auditors for data-driven tools and a shift toward real-time assurance addressing both financial and nonfinancial risks. With 44% of respondents supporting full AI adoption and 46% favoring a limited role, the path forward involves balancing automation with human expertise.
