Raymond Doherty 11 Feb 2019 03:30pm

Clients eye technology businesses for audit work

Major technology businesses could muscle in on the audit market as clients separate their processes

A third of clients are already breaking down their audits into separate parts, some of which will require more tech specialism than others, while 44% are considering it, according to a survey of CEOs, CFOs and senior finance executives from Source Global Research.

Almost half (45%) said this siloing of processes will lead to parts of the audit being farmed out to technology businesses. The two preferred tech businesses for those surveyed are IBM (40%) and Accenture (18%).

The Big Four, however, with strong tech capabilities and no shortage of resources, remain popular. More than half (52%) named Deloitte as the firm best positioned to deliver the technological components of an audit, followed by KPMG (22%) and EY (18%).

“It’s clear that breaking the audit process down will significantly change the rules of engagement for traditional audit firms,” said Fiona Czerniawska, director at Source Global Research.

“If you assume that some parts of the audit process will require more technology, and more technology know-how, than others, then – provided an auditor retains control of some part of the process – it would be logical to turn to technology specialists,” she added.

The future of audit, competition in the market and how it is regulated are currently topics of fierce debate in the UK.

Recent high-profile business failures such as Carillion and BHS sparked a wave of criticism for auditors and the Financial Reporting Council. Two landmark reviews – from the Competition and Markets Authority and Sir John Kingman – were published recently, while the profession’s stakeholders have been called to give evidence in front of MPs.