Lifting the lid on audit
An essential process for a transparent, trusted economy
Great audits are an unsung hero of thriving economies.
For the most part, we don’t hear about the successful audits that happen day after day, quietly ensuring the reliability of financial information and fostering trust in businesses and markets. Auditors help to identify financial reporting errors, control deficiencies and misleading reporting every day.
When an audit is mentioned in the news, often it’s because there have been serious challenges at the company in question. But compared to the numbers of audits that are completed successfully, instances are rare.
This year, Deloitte’s audit teams signed over 8,500 audits. The Financial Reporting Council (FRC), the body that regulates UK audits, rated 95% of our sampled audits as “good or requiring no more than limited improvements” during its annual inspections, our highest results to date and top of the industry this year.
We’re incredibly proud of this high quality, high-value work, not least because the profession is extremely important to UK business and trade.
Few people understand a business the way an auditor does
Deloitte's Audit & Assurance (A&A) business holds some of the world’s biggest brands to account.
Its people are passionate about adding value to the market and, while this side of the profession is rarely seen by outsiders, it’s part of what makes a great auditor.
Contrary to popular belief, as Shauna Robinson, lead partner for public policy in Deloitte’s A&A business, explains, being a great auditor demands a lot more than being good at maths.
“The best auditors I work with are those who understand people, who are inquisitive and want to constantly learn more about a company or an issue,” says Shauna.
“These are individuals who find ways of solving complex problems, who are interested in the biggest issues that businesses and society face.”
Shauna also believes there’s no better way to deeply understand a company than being part of its audit process.
“One of the difficulties of lifting the lid on the audit profession is that the public sees just the tip of the iceberg, because an auditor’s report is a summary of the auditor’s opinion and key matters.
“What many don’t see is the impact the auditor has on the financial reporting environment at a company, from identifying errors and ensuring companies correct them, to improving the clarity and transparency of the company’s past, present and future activities across the entire business.”
"Working in audit, you get to really understand how the cogs work in a business and meet different people. It’s nice to feel that you’re having an impact on the quality, accuracy and transparency of information companies produce."
A&A Assistant Manager, Deloitte
A focus on value and impact
The audit process often highlights areas needing improvement in companies, like finance, governance or the control environment. This can enable changes in companies that lead to greater accountability and transparency. This in turn strengthens the overall business environment and promotes high quality financial reporting across the system.
From start-ups to multinationals, our A&A colleagues dive deep into the wiring of companies to see what makes them tick, so are often the first to spot anomalies. This is important so users of accounts – whether it be investors, pensioners or other stakeholders – can have trust and confidence in the information they receive. There are also instances when the team works on matters that involve the public’s purse – checking how the government’s money is spent.
Luckily, many errors never see the light of day. One of our team members spotted an error in an entity they were auditing – the company was unknowingly calculating the total compensation for the management of a public company incorrectly.
They explained it to the finance team who corrected the mistake, allowing stakeholders to approve the right amount.
"We’re not deliberately trying to find errors," another assistant manager working on a different entity says, "but we want to make sure everything’s correct.
"Investors that are interested in the performance of companies need accurate and reliable information to use, as well as a clear understanding of the risks and exposures involved."
Leading the way in audit innovation
The audit profession has rapidly evolved in recent years, and Deloitte’s auditors are embracing emerging technologies, like AI, to augment the way they work. Whether it’s the ability to work faster and in more detail – for example testing an entire data set, rather than a sample, which was once the norm in all audits – technology is transforming the way we work.
Examples include further investments in the likes of Omnia, the firm’s global cloud-based audit and assurance platform, where GenAI is supporting our teams to review documents, extract data, spot patterns and identify risks.
Alongside this, three-quarters of Deloitte’s auditors here in the UK regularly use our Generative AI (GenAI) platform, PairD, generating more than 1.1 million prompts over the past year to help make elements of their work more efficient.
While human judgment won’t be replaced by GenAI, using it for tasks like data comparison frees auditors up to work on other tasks that can’t be automated.
For example, during an audit this year, one of our senior associates identified misstatements using AI when comparing a company’s explanations and rationalisations and found contradictions. Left unchecked, these had the potential to lead to financial penalties, legal issues and operational disruption for the entity. He pointed this out and the organisation’s management subsequently corrected the error, avoiding any of the above ramifications.
“Misstatements, if not raised, could lead investors to make decisions that aren’t based on fact,” he says.
“PairD has already cut down the time I spend on manual tasks, freeing me up to spend more time on judgemental work. In this case, GenAI enabled me to spot an error more quickly.”
UK managing partner for A&A, Allee Bonnard, agrees the future of audit will depend on blending human judgment and AI.
“AI will augment auditors rather than replace them,” she says.
“Don’t believe anyone who suggests AI spells the end for auditors. Calculators, spreadsheets, computers – they were all new technologies once, but there are more accountants than there ever have been.
“AI will impact the profession, and it will evolve, but it won’t replace the need for humans.”
“While the skills auditors need will change, embracing new technology will make the role more interesting and attractive to those looking to join the profession.”
Allee Bonnard, UK Managing Partner for Audit & Assurance, Deloitte
