Rebecca Archer
Welcome to Beyond the Numbers with Grant Thornton – a podcast exploring marketplace and business trends.
I’m Rebecca Archer, and today we’re diving into technology and AI in audit. The adoption of technology is positively impacting the audit process, allowing auditors to perform more complex and deeper analysis for their clients. They’re able to leverage the power of machine learning for repetitive tasks, also assisting with analysing large volumes of data.
To speak about the benefits as well as guardrails you need to consider when using this technology, I’m joined by Liam Te-Wierik – Partner and Head of Digital Assurance. Liam has an extensive background in professional services across external, internal and IT audits. With a passion for new ways of working disrupting traditional business models, he’s a supporter of technology being able to empower auditors in their work.
Welcome, Liam! Thanks so much for your time.
Liam Te-wierik
Good morning, Rebecca.
Rebecca Archer
Before we begin, I wonder if you can explain your role and how you help clients at Grant Thornton.
Liam Te-wierik
I've been at Grant Thornton for 15 years now. I began with a firm as a trainee, so spent my early years doing my university alongside working. I've always had an interest around technology and so my role in the firm is around how we use technology and support both the audit teams, but also the clients in getting a good delivery experience through their audit processes.
Rebecca Archer
And in relation to that technology, how are you currently seeing these specific tools help auditors?
Liam Te-wierik
Yeah, I think it's been a really interesting landscape for us, particularly over at least my time Technology certainly moved at a very fast pace even in the most recent years and one of the real challenges for us or opportunities is around the adoption of these technologies to really improve that experience and process.
There's a lot of compliance-related tasks within audit and it's really important we do meet the objectives, but at the same time, technology has certainly allowed us to streamline how we go about those efforts rather than, I suppose, some of those more traditional ways that have existed for some time.
Rebecca Archer
And what can you tell me about the specifics of the tools that are being used? What are you currently using and what features help to do the work that would otherwise have been a little bit time consuming.
Liam Te-wierik
One that's really interesting for me and you know, we've spent a number of years now refining the process is particularly around sampling. So, there's quite, I'll call it a mundane effort within the audit of validating transactions that exist within a client's accounting ledger, and so often this would be done with sampling based approaches, which can appear quite random in the selection identification of transactions to examine.
With the benefit of data analytics and the technologies there, we can actually now take more, what we call a risk-based approach to that process, which means we really think about how we understand the client's business, what's going on around in the client's ecosystem as well, and then using that information and understanding to really identify what would be the transactions of interest or those that are likely to cause maybe challenges for the client. So, that's really beneficial because as I said, rather than larger sample sizes that, you know, we are certainly meeting the audit standard requirements, but are we truly getting value and benefit back to both the client and the audit process?
So, this risk-based transaction scoring as we call it, is quite a beneficial method to really honing in on what could be of more value and interest in the process, and some other pieces there then certainly more recently with how artificial intelligence has evolved....so, without going into definitions, what artificial intelligence was five, ten years ago is certainly different to what we call artificial intelligence today, and so, there's other means there that are I suppose more efficiency driven, but they do help give a more complete perspective.
So even simply transcribing meetings between a client and then using tools to summarise those conversations, you get much more complete perspective of what's been said. You also allow both individuals or the teams of individuals to have a more engaging conversation because they can apply their full minds to the conversation as opposed to someone sitting there trying to scribble down notes at the same time as listening in to what is actually being said.
Rebecca Archer
I suppose the one thing to consider about the automation of a lot of these procedures is maintaining that ethical and that real integrity around the process. How can we sort of assure people that while things might be helped by machine learning and going to an automated process, that there still is that really stringent regulatory environment happening?
Liam Te-wierik
Yeah, absolutely. The auditing standards themselves are not prescriptive in how you can actually go about the conduct of an audit. So, we're constantly thinking and the beginning step for us, whenever we're solutioning what could be the next technology or how we're looking to adapt is how will we fit and comply with those auditing standards, along with, as you say, other regulations around ethical behavior and privacy as well.
So, for me, these principles, especially from our technology specialists, those principles are baked into how they think about the design and the support that goes into these solutions. When we do talk about the artificial intelligence side, of course there are guidelines there around appropriate uses of data, being on the lookout for any biases, et cetera, that may be there.
Again, these things to an extent have always been part of the auditor's mindset anyway, particularly looking out for bias in how they conduct – whether that's the professional judgment of the auditor themselves or yes, as we say, technology is introducing a different perspective there.
Rebecca Archer
So, what are the guardrails that really need to be considered when utilising this technology?
Liam Te-wierik
It's about making sure that the data is being kept secure. It's absolutely important as a professional services firm that we're holding, you know, those safeguards to the highest standards that we can.
Secondly, is how then we are using that information and the access to it. So, you know, making sure there is segregation of that client's data from other clients. The confidentiality certainly needs to be maintained all the way through the audit process as well.
Rebecca Archer
Something that you mentioned earlier, the idea of how far and how much technology has changed in the last even five years, particularly when it comes to what we call artificial intelligence. Is there ever a point, do you imagine that we will just have a fully automated process?
Liam Te-wierik
Yeah, it's an interesting thought around where the technology may take us. To be honest, I do think we'll get to some point of general artificial intelligence which may be very close to replicating, I guess, that human element, as we say. Now, whether that can happen in three, five, 10 years, who's really to say? Certainly, the interest that has taken up by large language models and the likes of OpenAI, how rapidly that moved. I think the main thing now is yet the veracity at which technology is moving is just being comfortable with this uncomfortable environment that I think all of us are going to find ourselves in from a, you know, from a working perspective.
But also, yes, I absolutely believe at some point audits and majority of what is conducted in an audit will happen from automated or supported by technology, yeah.
Rebecca Archer
Now, as auditors, you obviously deal with plenty of quantitative data. How do you see the intersection of quantitative and qualitative data happening with the integration of technology?
Liam Te-wierik
I think this is really where we are getting to that crossroads. So, a lot more data sources that are reliable externally in the business environment are coming to light and also how we can adapt those.
So particularly from, I'd say like a risk assessment, understanding a client's industry, where do they really fit within that industry? Being able to collate all those different information sources and then having the assistance of tools to kind of map those patterns, I certainly think is more coming more and more to light today than it might have been even, yeah, three to five years ago.
Rebecca Archer
And I would imagine sort of automating the data analysis side of things will give auditors the time and the ability to provide a lot more insight into the actual business itself. Would that be a fair assessment?
Liam Te-wierik
Yeah, absolutely, and that's probably the thing I'm most passionate about in doing this is, you know, if I remember my days as a junior auditor. I was…I still had the green pen, as we call it, which was, you know, the running joke in the industry. No one's really interested in sitting and looking at a bank statement, comparing it to a contract and then the transaction, how that looks in the client's client system. The real value does come in, in understanding how the client conducts their business. Is it the most effective way? Is there more, you know, there could be more rigor, but also just the insight and understand we get about how other businesses work is then sharing and or giving a view on the most effective way that they can then conduct their work as well.
So, I do really think, you know, a lot of my conversations these days, especially when we're onboarding new clients, is working alongside the audit teams and management of those clients to evaluate where we can really help in the process and leverage our technology. But also concurrently, what is it about how they're operating their business that might improve our process but also make their daily lives better as well?
Rebecca Archer
And have you got any examples perhaps of where that technological process has been able to do what it's supposed to do and given you the time and space and ability to really service the business itself?
Liam Te-wierik
Yeah, I think perhaps one of the learnings something recently was with looking at how a client goes through their process for recording revenue. This was a very manual activity that involved a lot of different pivot tables. Essentially someone in the finance team going through the process of manipulating the data that was coming out of their main financial system to then ultimately get the right records that they need to put in place.
Now, ultimately, this was taking the client maybe 10 days of the month to close the financials. Often that doesn't seem like a big deal, but there are businesses out there that have their month end close down to two to three days, perhaps even less when you do adopt technology in the right way.
So, we as the audit team could absolutely come in and say, well, we can see these data. We can see where you're trying to get to. We have the means through data analytics to get to that answer, or the answer we're expecting in a more shortcut fashion in taking the entire data set, by the way. So, this wasn't on a sample basis, and that's how, yeah, we could conduct that audit process and look for the unusual items, which, you know, we found a couple of things there that they didn't necessarily see through, how they were completing the work.
Now, the client could go back and just keep going about their day and do those activities with pivot tables and Excel. The real value conversation was going, we came to the same answer as you by taking this approach. There's perhaps an opportunity there for you to explore how you could be taking up similar technologies to actually make this your core process as opposed to just how the audit is going about how we're doing our calculations.
Rebecca Archer
That example sort of says to me that the productivity and the efficiencies within a business could be completely transformed.
Liam Te-wierik
Oh, absolutely, and again, when we think about where really do you want the humans to be in the process, it's adding insight, it's analysing, it's having these conversations and sharing that, you know, the end results of those efforts to do other activities within the business or even for our audit teams, we can focus them more on those areas that do actually require the more judgment, the areas that our regulators keep pushing us to spend more time involved in, but we still got to make sure that we're ticking the boxes there for those regular activities that we know we need to conduct anyway.
Rebecca Archer
So, what's the main challenge or challenges, plural, for auditors when it comes to integrating this technology into their workflow? What would you say are the biggest sort of obstacles or roadblocks that you need to deal with?
Liam Te-wierik
I think it's the just get adapting to change. We – more and more so – the modern work environment is constantly changing and getting used to the idea that just because I was always doing an activity or task, and this is how I was trained when I was in a junior position, is the way that needs to be going forward.
So, I think we always want to try to work smarter, not harder, as they do say the cliché, but yeah, being comfortable with adapting, being comfortable with open to learning and changing the mind and always, you know, for me, even I don't know all these technologies myself, but absolutely have to get my head around how they're going to have an impact to both me and also to our business.
So, spending that time to get that understanding and knowing where or seeing where we can maximise the opportunities of using those different technologies as they do continue to evolve.
Rebecca Archer
And I mean, the time that's put in now can really just pay off so much in the future, I suppose, and that's what it's good to keep an eye on too, right?
Liam Te-wierik
Yeah, absolutely. And, you know, from a client's perspective, there's always a benefit for us in terms of that efficiency and experience. The finance teams can spend less time, you know, collating different documents because we're really focusing in on those areas of interest and those topics that actually matter most to the work that we're completing, yeah.
So, I think that overall is our ultimate goal, is to make the process and the engagement more enjoyable for everyone on both sides of the fence.
If I do reflect on my own career, it wasn't until maybe five, six years into my time having just completed the Chartered Accountants program and my university degree that was like, no, I really need to get deeper into this data analytics area in this technology space.
I felt best for me going back to university and doing further study, taking more theoretical approach and just getting some of that foundations that come from learning the mind of a technologist, which was, you know, for me how I felt best, but you know, learning on the job. Absolutely. You can see how these different technologies work, or it could be other areas of interest that, you know, just picking out the books and, or reading articles. There's so much content on the Internet that yeah, really being…positioning yourself as someone that's adaptable and always open to experimenting I think is going to be a really important key to the workplace of the future.
Rebecca Archer
So, what in terms of that future, do you think the trends are for the auditing profession?
Liam Te-wierik
It's definitely going to lead to…of those compliance-based activities, less involvement of, I guess, people in those particular activities. Those areas that do require more significant judgment, estimation, the numbers that we can't see, so to speak, that's really where the, you know, the auditor and the people are going to spend, to me, the spend their most time in the process.
So, and that really is, you know, where we do spend most of the time. It's those other tasks that we need to make sure that we can do what's important to the auditing standards and getting those complete, but then really allowing the space there for people to put their full minds and focus into those areas that can be those, the challenges that do arise.
Rebecca Archer
And what about those businesses that might be feeling a little bit wary about AI and machine learning and cutting-edge technologies like we're discussing today? What would you say to them to try to ease their minds a little bit to be able to come on board? Because I would imagine that there is an element out there within the business community of people who are pushing back perhaps a bit against this. Is it important that they accept that, look, this is here. It's not something that might happen. It is happening. It's best to get on board?
Liam Te-wierik
The technologies are here, people are looking for… other people are looking for ways of how they're going to maximise those opportunities to then improve their business models.
So, it is those that are willing to adopt and willing to take the risks that are more than likely going to be those that are seeking to take a more conservative or resistant path. As we're saying that the technology moves whether you like it to or not. So, it's probably best and important to accept that is the factor, and as I said, the change is the change.
So, how can you adapt and how can you fit and be comfortable with that? And whatever cadence you need to take, of course that's important, but yeah, these things are not disappearing.
Rebecca Archer
On the regulatory process, if we can look at that for a moment. A lot of the times when it comes to technology, we have a situation where laws just aren't being made or adjusted quick enough to keep up with the technology. And by the time they are legislated, the technology has leapt forward even further. So, is that a similar case when it comes to a regulatory environment when in terms of AI technology and auditing?
Liam Te-wierik
Yeah, I think so. Certainly know within. Yeah, if I think about the auditing standards and the auditing profession, following a principles based approach has always been the foundation to what those, those standards are. That absolutely caters for making space that different technologies, as and as they evolve, can fit into whatever requirement is within those standards. However, sometimes, yes, the technology leaps way faster than the regulators and the minds around that space can catch up to. So you can find yourself in a chicken and egg situation of did we need the standard to move first to make it clearer how that technology can be adopted, or do you really want to be pushing the boundaries and then demonstrating how you see it fitting into that equation? So those conversations are going on constantly, particularly with the large firms within the our order industry, both domestically and internationally.
The regulators absolutely get that that's an important factor, and it is really just the ongoing dialogue between those stakeholders plus directors of companies to get comfort around where really should we be sitting in terms of trying to push those boundaries? And you know, what does the audit tomorrow need to look like in order to satisfy investors and other stakeholders that do rely on this information.
Rebecca Archer
And just finally before we wrap up, Liam, I'd love to hear from you what you're most excited about in terms of what the future holds for the auditing sector and the advent of all of this fast moving, cutting edge technology?
Liam Te-wierik
I don't know…I think it's really going to make me sound like an audit nerd to say that, you know, I really like seeing that that audit does move past being perceived by some as being more compliance-based activity and that it really does add value and insight to the business, and while it might feel uncomfortable being under the microscope, we are definitely going to be asking for much more information, but in the process and the outcomes of that is getting a lot more comfort around that you're how your business is operating and that you know, essentially the health check that comes from that audit process, but then really those opportunities and insights around maximising how you go about your day and how your business goes about its activity so actually meet your goals more so than then just delivering that audit report and a nice signature at the end of the process.
Rebecca Archer
So, Liam, thank you very, very much for your time today. Now for those people who are listening and who might want to connect or delve a bit deeper into the work that you do and explore potential ways that you could even help them, what's the best way for them to reach out?
Liam Te-wierik
Certainly, I think through probably LinkedIn or through the Grant Thornton website is the best way to get in contact with me. I'm certainly talking to or happy to talk to anyone related to the audit industry, whether that be businesses, but also academics or people in the regulatory space because I feel that this is a really important area, that it takes multiple minds to contribute to what that future looks like.
Rebecca Archer
Interested in who we interview outside of our firm? Have you heard about our other podcast series The Remarkables? Listen as we uncover and explore remarkable stories about incredible people working to better their local (and sometimes global!) communities and inspire younger generations. A link to series will be in the show notes.
If you liked this podcast and would like to hear more, you can find and subscribe to Grant Thornton Australia on Apple Podcasts or Spotify. Leave us a review or ideas on who you’d like to hear from next. Thank you for listening!
