When I was training to become ACCA qualified, the advanced audit and assurance module was my least favourite part of it. Unsurprisingly, it was my worst mark, but it made no difference to my career. I was already working in a financial controller role, it didn’t seem relevant to me.
That was 20 years ago; the functions of audit and the finance team have diverged even further since then. We’re about to get a UK government response to Sir Donald Brydon’s review any day now. It got me thinking: is audit knowledge even relevant to what we do as CFOs?
A stepping stone
Audit has traditionally been seen as a stepping stone into advisory or business roles, but I’m not sure that really works anymore. The digital finance function is moving in a direction that involves an incredibly commercial mindset and an active role within an organisation. My suspicion is that various governments’ audit and governance reforms will pull it in the opposite direction.
We’re using data to make predictions. We’re integrating new tools to give real time reporting and insights. Equally on the audit side, there are companies taking the core systems and trying to create what they call a common data model. From that, they can pretty much automate or streamline a lot of the process. It’s all very exciting, but not exactly relevant to what we do day-to-day.
Common vs uncommon data models
In business, there is no common data model, because every business is different. It’s changing all the time. A common data model works for audit because it sits on top of an ERP. The compliance side is relatively fixed, so you can marry those two things together and automate it. On the business side, everything is specific to the company, industry and strategy, so a common data model is less likely. The business side is very specific and complex. It’s not as possible to marry end-to-end processes for automation. We will need commercial people to operate them. The audit side is being simplified and standardised and automated. It is even less relevant to core finance function training today.
I think we’re getting to a point where audit, through its automation, is becoming less and less important to the core of what a business accountant needs to know. There’s a strong argument to be made that the audit part of our qualification isn’t relevant anymore. Are the digital skills we need in business finance, more important than those audit competencies that are being tested?
Is audit dead?
Where does that leave audit? It doesn’t mean it goes away; it means it’s another exam and a different career. You would train for it and stick with it as an auditor, rather than making a choice later on between audit or industry. It doesn’t really make sense anymore because the skill set around industry has expanded and is so clear and so different to audit.
So this is an open question to the community: is it time to have a qualification for business accountants and another for auditors? Should we drop the advanced audit and assurance (AAA) module and its equivalents for something else, possibly a better understanding of technology, innovation, digital skills?
I’d like to see some responses on either side of the argument on this site in the coming days.