audit is becoming further commodified.
by alan anderson
transforming audit for the future
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“the new manifesto for accountants.“
the value of what we provide to clients has declined until it has become a commodity. that, in turn, drives our fees down.
the lack of innovation means that our clients can’t tell the difference between the audit we do and one done by the firm down the street. none of them provide relevant information or any value to our clients.
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if our clients don’t see the value, then the audit is only being done to meet a regulatory or banking requirement, and in that case, the cheapest option that meets that basic requirement is the one they choose.
it’s not our clients who drive the commoditization of the audit. it’s our failure to provide any kind of value.
we participate in that commoditization every time we lower our fees when we’re under a little fee pressure from our clients. quite often, whether you are aware of this or not, you probably haven’t delivered anything more than 24 pages with an audit report on it.
we also drive commoditization when we rely on checklists and saly for our audit programs. if i fill out enough checklists, i certainly must have done an audit. when audit staff have a better memory of the number of pages in their checklists than the bottom line for their last audit, that’s a clear sign that we’re sending the wrong message to our teams.
if we want to change that, it’s up to us to make that happen.
the downward trend in fees means that audit firms need to rely on volume, not quality. but because most firms are atrocious in managing workflow, the emphasis on volume means marathon work weeks for our staff. firms aren’t operating at capacity – they’re operating beyond reasonable capacity. while it may still be a badge of honor in the big four to see who can log the most billable hours, generational changes in the workforce and scarcity of talent means that’s no longer a reasonable way to run a firm.