Recently, companies that a few years ago worked for rapid growth, without paying due attention to cost control, accuracy and efficiency of operations, have radically changed their approaches. With the spread of coronavirus around the world, the situation has changed dramatically and has not yet stabilized. At present, business requires radical transformation and change of the usual approaches to conducting business and communicating with customers.

The coronavirus crisis affected all areas of business and in most cases forced companies to change dramatically. Audit is no exception. However, it is not only the pandemic that is driving the industry to global transformations. What factors influence the audit today? How is the post-COVID reality changing and how can auditors painlessly ‘fit’ into the cycle of change?

Although the audit is the least susceptible to various transformations, the pandemic has made adjustments to the usual audit life, forcing the audit to modernize along with other areas of activity. These processes are most pronounced today in the United Kingdom. What is happening with the audit in the Foggy Albion and how these processes may affect the domestic audit market – below.

A project is a set of activities that are performed over a period of time, resulting in a finished product. Projects are carried out within the resources allocated to them - financial, human, time, etc. Audits are nothing more than a project. They have a purpose, deadlines, and resources allocated for their implementation, provide for the implementation of certain procedures in a certain period of time and provide the customer with an independent audit report i.e. the finished product.

This year business has faced the biggest challenges posed by the global pandemic. Life began to change right before our eyes, and all business models were instantly hopelessly outdated.

Most audit firms operating in Ukraine today are members of international networks or associations. At the same time, only the concept of “audit network” appears in the profile law. What are the main differences between networks and associations? How important can such differences be for Ukrainian audit firm, as evidenced by the international experience of associations in professional communities and how to achieve effective membership in both the network and the association?

It's no secret that today brand is not just a company that provides products or services. In modern world individuality also becomes a brand. Goods, services, products no longer exist – brands run the show. Thanks to their power we make a choice by giving our hard-earned money for particular goods or services.

It is possible to serve companies of public interest, keep clients in conditions of instability and expand the boundaries of their projects not only by complying with laws, professional standards and ethics, but also by properly promoting their professional activities in accordance with the new conditions. The laws of the information society require attention to communication, promotion and the formation of a positive attitude towards the audit firm, its services and staff.

The world is changing rapidly, new technologies are evolving and sometimes this leads to radical business transformation. Change management is a common practice for businesses. Instead of yielding to innovations, the effective top management tries to “tame” them and adapt to the company’s needs.

We all strive for success. But only few of us has clear vision of how to increase our chances. The ability to flexible and effective thinking in ever-changing world is the key to attaining set goals which is also know as adaptive intelligence. To effectively use it for development of audit company it is necessary to answer the following questions:

  • What global changes are taking place in the business environment?
  • What impact will these changes have on company, staff, clients?
  • How should manager act in changing environment?
  • What skills, habits, knowledge will help to become agile and successful in new conditions?
  • Are the traditional approaches to work effective in new conditions?
  • What development strategy and action plan must be elaborated?

Importance of adaptive intelligence for work

Adaptive intelligence is defined as readiness to learn new and agility. Modern tempo of advances in technologies and fierce competition force us to constantly update our knowledge. Our brain plasticity, our natural ability to perceive new things and our reactions to changing conditions are not enough to maintain a successful career throughout our life and compete with dignity in the market where new challenges and specialists willing to learn something new and ready to overcome obstacles constantly emerge.

The presence of adaptive intelligence among the team members of audit firm is some kind of success indicator. Given effective usage of adaptive intelligence the top management of audit firms are able to coordinate the goals and core values, develop necessary skills. As a result, the fulfillment of tasks becomes more efficient and decision-making – more balanced. Adaptive intelligence allows you to create a coherent motivated team with common goal and strategy while the management style remains authentic contributing to the employer’s brand development and increase of the financial performance of the company.

Adaptive intelligence helps not only to distinguish specific areas which may be influenced but also to create more thoughtful and reliable development plans given the expected changes. As a result, it creates enough courage to carry out what is planned.

How to develop adaptive intelligence

Agility is a skill which can be acquired. The preparation to changes begins with an imaginary prediction of potential consequences: “what will happen, if…”. From time to time you can ask yourself what can happen in your sphere or how necessary professional competencies will change in the future. In this way the creative potential is stimulated, problems are solved and way out of the situation is found. Such exercises train brain to react promptly in case of emergencies.

Lately the situations occur when the approach to work must be radically updated and traditional tools changed to innovative. In situation “forget everything you knew” it is important to “reset” your expectations and make decisions based on acquired knowledge and experience to cope with new challenges.

Usually we try to fall back on our previous experience and recall what worked in similar situation before. That’s why it can be difficult to move to new set-up. Nevertheless, it is important to practice experimental solutions so as not to be stuck forever in the last century. Obsession with previous achievements often becomes an obstacle to changes so this must be quenched.

With prudent management, business can adapt to any economic situation. Many companies, in order to adapt to today's realities, develop new strategies and try to optimize their expenses. Here are the most effective steps to overcome the coronavirus crisis by audit firms.

Recently, companies have been working for rapid growth without paying proper attention to cost control, accuracy and efficiency. With the worldwide spread of coronavirus, the situation has changed dramatically and has not stabilized yet. At the moment, business requires a radical transformation and change of usual approaches to conducting business and communicating with clients. Let’s consider how audit firms should act in the period of risk caused by COVID-19 to maintain business positions and customer loyalty.

Reputational scandals in the audit services market are widespread. The companies of both the "Big Four" and the smaller ones are regularly in the epicenter. How well they hold the punch - show independent ratings and the overall success of the company in the market. Why is reputation so important in auditing? Because trust is at the heart of it. The higher the level of trust in a business, the better its reputation.

The beginning of the year is high time for planning. However, when making annual plans and developing long-term development strategies, it is important not to lose sight of the global context. It is no secret that events and circumstances of the world scale can undo all efforts to fruitfully work during the year, separating themselves from the global realities by the walls of our own office. So, what should the owners and executives of audit firms keep in mind when planning their activities for 2020?

Before we know it 2019 is ending, so it is time to sum up what was done, what results were achieved and whether the right vector of activity was selected last year.

The turnover of staff in audit firms compels their owners to seek new ways of attracting qualified personnel, retaining professional experts with experience and ways to "grow" their own experts. However, in the current competitive environment, it is becoming increasingly difficult to win in this confrontation every year. Therefore, recently, company executives are focusing on the development of the employer brand and consider it a strategic direction of development.

Today, the business faces a number of new challenges as competition between companies grows. The most important competitive advantage of the company is the formation of its development strategy, which is focused on meeting the social needs of both staff and all stakeholders. Therefore, all companies, including audit, have to look for new ways to interact effectively with different market participants and implement them in numerous CSR projects.

Strong organization is characterized by both the reliable structure which can provide the achievement of determined goals and clear motivating ideology that lays down fundamental business principles. These features lie at the core of organization and as result determine brand development and strategies for communicating clients. The values at the heart of company’s activity and interaction with stakeholders reflect its maturity and strength.

The desire to enter foreign markets is a natural stage of successful business development aimed at sustainable development. If an audit firm is established in the Ukrainian market, has become a member of an international professional network, alliance or association, has high customer awareness, self-confidence and resources to continue paving the way for success in the international arena, it is definitely worth trying opportunities to finally get out of the conditional comfort zone.

Audit is essentially a project. It has a purpose, a time frame, and resources are allocated for its implementation. The project should be skillfully managed so that its result meets the client’s expectations. Project management trendy term is actively used in the work of IT companies, creative and web agencies, international corporations and even government institutions. What is project management, and could its methodologies be used in audit firms work?

What unites a project manager and an audit head

Task

The tasks that the audit firms perform for their clients are nothing more than a project. They provide for the execution of certain procedures within a specified period of time and provide the client with an independent audit report or other document on the work done – the finished product.

Roles

If in the classical project teams, projects are managed by project managers, then in audit firms such a role is performed by the head of audit or another task. For example, he/she manages a company audit as well as a project manager. In particular, he/she develops a plan of an audit, assigns tasks to the auditors – members of the audit team, monitors their implementation, solves problem issues with the client and within the working group, and eventually provides the work results to the client, conducting the audit to the end.

Working process understanding

The project manager work is quite complicated. He/she must understand well the specifics of the project. Without a deep knowledge of the peculiarities of the work, the project manager will not be able to perform his/her functions, plan the work correctly, determine its duration and evaluate the quality of the tasks performed by the project implementers. The same can be said about the audit head. Typically, such functions are performed by the most experienced auditors who are well-versed in the audit methodology, the practical application of International Standards on Auditing and Audit Procedures.

Communication skills and thinking scale

The project manager should have well-developed communication skills. During the project, he/she has to communicate with different people. Everyone needs to be able to bring information so that it is understandable.

Such specialists should have well developed analytical, critical and abstract thinking to accomplish the diverse tasks at the same time. In addition, he/she should learn to think globally to understand the situation inside and out. The same qualities are required from the auditors. The main business areas of the audit head are to clearly plan work without losing any important detail, competently appoint responsible ones for different fronts of works, check the quality of work performed and plan time. In addition, he/she has to solve problem issues and even conflict situations with the team and management of the audit firm, as well as with the client.

Management complexity

The main difficulty of the project manager’s work is that he/she has to manage people who are not de jure subordinate to him/her. For example, there are the so-called project offices in large banks, where project managers work. Project offices have their own management structure. The executors of the projects are employees of individual departments and departments of the bank, which have their own service hierarchy.

Today, working teams consist of auditors as well as they include tax advisers, financial analysts, and accountants, and lawyers. All of them are not subject to the auditor head but are transferred to his/her disposal at the audit time. Therefore, both the audit head and the project manager have similar issues.

Do auditors need PM?

Does the audit firm need a project manager (PM) in pure form? Can his/her knowledge and skills help to carry out the projects, earn more money, and get rid of client complaints and overdue tasks once and for all?

Neither the project manager him/herself nor the methodology of his/her work are capable of creating a miracle. The specifics of the activities of audit firms enable to selectively use best practices in project management and to develop project management skills of managers in certain areas of service provision.

Special courses, seminars and trainings can be useful. There is a lot of high-quality professional literature. In addition, owners and managers of audit firms should remember that the number of projects cannot exceed the number of their performers. The shortage of personnel can adversely affect on the project quality.

Some projects, and especially complex, large and branched, require project managers who can organize the work of a large number of people, control its quality, break down large and fuzzy tasks into a number of small and clear, monitor the compliance with the terms of the project, solve problem issues, keep all the necessary documentation on the project and eventually complete it. Today it is impossible to meet the requirements of the client that are constantly growing without such specialists.

Business in Ukraine becomes increasingly demanding in the work of audit firms. In order to meet the expectations of the client, it is not enough to know only the profession part. Knowledge of related and sometimes non-related branches is required. This is especially true for owners and managers of audit firms. That’s why we have to look for a variety of solutions – from automation of business processes to the application of the principles of project management in their activities. Now the client requires quality services carried out by experts without undue delay. The staff of the audit firm must be professionally head and shoulders above the client. This is the only way to stay in a highly competitive market, and to become its leader if to make greater efforts.

As practice shows, traditional audit is not effective enough, although its importance grows with each passing year. Usual “manual” verification methods do not allow to receive the results of an audit in a timely manner or to understand where the weakness has occurred and how a business can improve its performance. Investors want to know in which way the company could better eliminate risks or maximize profits and do so on time before the situation escalation. Therefore, the main task of the future audit is the mastery of modern approaches to its implementation and the use of the widest range of tools from related industries, including IT. One thing is clear: the changes in the audit and the approaches to work are inevitable, so auditors need to acquire new competencies in order to be in demand by clients. And it should be started today.

Audit function development

The importance of auditing for executives of companies, business owners, top management and investors increases every year, and its results are highly valued and have a decisive influence on the adoption of fateful solutions for companies all over the world. However, recently, it is noticeable a tendency towards expanding the sphere of verification of information reliability. In order to do this, the audit should respond more quickly to changes and constantly evolve, increasing the set of tools for its implementation and replenishing the range of necessary competencies of auditors, in particular in IT, in order to maintain its relevance.

However, traditional audit methods lose the degree of usefulness for users of information. Business executives want to get the data as quickly as possible in real-time and act ahead of potential threats to business. Most investors are not ready to wait for the auditor’s report for several months. Current information is needed here and now. Therefore, auditors should consider using modern technologies to ensure the quality and timeliness of audits to improve its effectiveness.

With the help of modern tools and resources, audit experts can more rationally use their time. Today, the audit process becomes automated, industry representatives gradually refuse to use “manual” analysis. Machine learning algorithms are currently actively used to test documents in international auditing and consulting companies, reducing the time for processing information, using tools of big data, machine learning and analytics.

Today, the effectiveness of the auditor is determined not by the speed of operation with big data collected “manually”, but the ability to think critically, attract innovative ideas and identify potential risks to the company in a timely manner, and suggest effective ways to overcome crises.

There are already mobile applications that allow auditors to count, evaluate the results of audits, and share their information in real time.

Technologies challenge traditional methods of work

The world develops rapidly. In order to stay afloat and even more to win in the competition, companies have to play under new rules, to form modern business management systems, and to increase the requirements for employees’ knowledge and skills.

Innovation in the field of audit changed the approach to assessing the professional knowledge, competencies and specialists experience. Now leading audit companies all over the world want to see among their employees the specialists who actively expand the range of professional skills in using digital technologies, know foreign languages, in particular English, customer-oriented and capable of creative solutions.

The key skills for modern auditors and future experts are the abilities to transform raw data into creative ideas that can be used by stakeholders for business needs and protection from potential threats. Auditors need IT skills to digitize information and streamline data exchange, rapid analysis and reporting, but it is not necessarily to be able to program. However, the ability to easily adapt to the latest developments in the industry is necessary. A professional in auditing to become marketable should be a free-to-navigate in digital world and know how to apply innovative solutions to work.

Change in approach to audit

Digitalization is a new trend of the present time, which requires changes in staffing, new management styles, and other systems of organization of work. Recent research suggests that most traditional companies are not yet ready for digital transformation. The main problem is in the staff that got accustomed to work, using traditional tools and methods of interaction between themselves and with clients.

But today, people and communication among themselves in teams are more important than the processes and tools they use at work. Feedback with audit clients is more important than formal discussion of a contract for service provision. Much higher value is given to a quick and flexible reaction to changes than to follow a pre-agreed plan.

A new type of employees who work in teams and are personally responsible for their work needs new ways for their motivation. Today, it is very valued not only the opportunity for professional development, career growth and high remuneration for work, but also the transition from the hierarchy to the network, from work control to trust and delegation of authority, but with adhering of strict rules of the game; from planning to experimentation; from closeness to transparency, etc.

Companies that are timely aware of the importance of introducing innovative changes and constantly look for new ways to interact with the world and allied industries, guaranteed get leadership positions in the market. Today the main key to sustainable business development is to be on trend and to meet the requirements of modern users of services.

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