Say Yes to Remote Audits, No to Remote Auditors

Man on his laptop by a pool

Written by Crisanto Francisco. Previously published in Accounting Today

The accounting industry is offering evidence and opinions on why remote audits are here to stay. As an audit partner in California, I have seen first-hand that securely transferred documents can allow audit teams to successfully perform audits remotely.

Videoconferencing technology can also handle remote audit planning and presentations on any audit findings.

The pros for remote audits?

  • Efficient timelines and procedures
  • Fewer travel and administrative costs
  • Less disruption for clients

These same advantages prompted firms in Europe and Asia to develop remote practices that serve their clients in other time zones. Fully remote services were happening there long before the pandemic accelerated the need for it in North America. But audits are a bit different than remote accounting or tax preparation.

There are clear disadvantages to the fully remote audit practice model that I have discovered over the past two years. These disadvantages are impactful for clients just as they are for audit teams. I have worked in the field as well as on remote audits, and here is what I miss the most:

  • Inability to pick up client social cues on a video conference call
  • Lack of context with client office culture
  • Less development of client relationships

Remote audits simply do not provide the same experience with client relationships as in-person audits can. During planning meetings and audit presentations, personal relationships are muted by technology. Camera angles, varying volume and a person’s physical distance from the screen can make it difficult to read facial expressions. It is harder to pick up on discomfort or unanswered questions.

Traditional on-site audits offered advantages for observing team culture. Do team members get along? What is their technology set-up? Do they appear confident in performing their jobs correctly?

In my experience with field audits, clients were also more comfortable asking questions and trusting the audit team to point them in the right direction. A welcoming smile from your auditor goes a long way toward building the relationship and hearing from the client more often during the year.

Will Client Risk Increase Through Remote Audits?

When clients ask questions, they gain a greater understanding of regulations and processes. This helps them to improve the organization and better manage their risk. Strict reliance on remote audits may not create the same conditions for trust and outreach to the audit team, particularly for CFOs, finance directors and controllers who are new to a role. They may only hear from their auditors once a year if they don’t reach out.

What about the impact of remote audits on practicing our professional skepticism? The audit team’s mere physical presence at the client’s offices has historically reinforced to staff the importance of organization, compliance and doing the right things. Anticipation of that field visit encouraged them to get the accounting department shipshape. And it was impossible to hide facial expressions behind a darkened video screen.

It remains to be seen if remote audits create more risk for clients and auditors to identify red flags of the human kind. With that in mind, we need to stay connected and alert during and after the audit.

Make Time to Visit and Connect

Remote audits may be here to stay, but auditors should be trained like other advisors to connect with clients more regularly during the audit and throughout the year. The client relationships are my favorite part of being an auditor. We are independent risk assessors, but we are also human beings. Just as we’ve realized that remote employees want to stay connected to the team, the occasional in-person client meetings (or quarterly phone calls at the very least) can really enhance our relationships and career fulfillment.

I was recently invited to a client’s offices to conduct a training session. After more than two years of doing remote training, I could feel the positive energy in the room as people interacted and affirmed my recommendations. Afterward, we enjoyed lunch together, which strengthened our relationships even more.

Our firm now has employees in different states. We understand the value of attracting top talent no matter where they live, but we also plan to invite all team members to an annual meeting in California. Audit clients could be treated to the same opportunities through training, networking with each other as part of a virtual event and finding ways to visit at in-person conferences. In these ways, we can perform remote audits and still be in person and accessible to them.

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