The Future of Audit The future of audit was discussed at a series of roundtables in China, the EU, Singapore, South Africa, the UAE, the UK and Ukraine: locations chosen to cover a range of business environments with differing characteristics. The roundtables were jointly hosted by Grant Thornton and ACCA. What follows describes the results of those discussions, some of which might be surprising. March 2016 About ACCA ACCA (the Association of Chartered Certifed Accountants) is the global body for professional accountants. It offers business-relevant, frst-choice qualifcations to people of application, ability and ambition around the world who seek a rewarding career in accountancy, fnance and management. ACCA supports its 178,000 members and 455,000 students in 181 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. ACCA works through a network of 95 offces and centres and more than 7,110 Approved Employers worldwide, who provide high standards of employee learning and development. Through its public interest remit, ACCA promotes appropriate regulation of accounting and conducts relevant research to ensure accountancy continues to grow in reputation and infuence. Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. It believes that accountants bring value to economies in all stages of development and seek to develop capacity in the profession and encourage the adoption of global standards. ACCA’s core values are aligned to the needs of employers in all sectors and it ensures that through its range of qualifcations, it prepares accountants for business. ACCA seeks to open up the profession to people of all backgrounds and remove artifcial barriers, innovating its qualifcations and delivery to meet the diverse needs of trainee professionals and their employers. More information is available at: accaglobal About Grant Thornton Grant Thornton is one of the world’s leading organisations of independent assurance, tax and advisory frms. These frms help dynamic organisations unlock their potential for growth by providing meaningful, forward looking advice. Proactive teams, led by approachable partners in these frms, use insights, experience and instinct to understand complex issues for privately owned, publicly listed and public sector clients and help them to fnd solutions. More than 35,000 Grant Thornton people, across over 100 countries, are focused on making a difference to clients, colleagues and the communities in which we live and work. “Grant Thornton” refers to the brand under which the Grant Thornton member frms provide assurance, tax and advisory services to their clients and/or refers to one or more member frms, as the context requires. Grant Thornton International Ltd (GTIL) and the member frms are not a worldwide partnership. Services are delivered by the member frms. GTIL and its member frms are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions. Please see GrantThornton.global for further details. Contents Executive summary ...........4 Introduction .5 Change in environment 5 Change in expectations 5 Change to auditors ........5 Countries without audit are keen to invest in it .....6 Countries with a strong audit tradition want it to do more .......7 Who, what, why ...7 Different users, different requirements .........9 Nature of the audited entity ..10 Audit in the digital age .11 The auditor of the future .........12 The way ahead .....13 Implications for the profession .........13 Implications for standard setters and regulators ..13 Acknowledgements .......14This report, compiled from the insights of roundtables hosted by Grant Thornton and ACCA in seven countries, fnds that in a rapidly changing world audit does have a future. In countries without a longstanding tradition of audit, the view is that developing a capacity in audit is essential for underpinning and enhancing economic growth. The fnancial statement audit is seen as a gateway to a stronger accountancy profession and, with it, greater prosperity. By contrast, in countries where audit is more established, the view is that audit itself must develop. The suggestion is that new, differentiated types of reporting and new assurance offerings will keep the fnancial statement audit relevant for users. Executive summary This report, compiled from the insights of roundtables hosted by Grant Thornton and ACCA in seven countries, fnds that in a rapidly changing world audit does have a future. Auditors will need to keep their skills up to date to respond to the challenges created by heightened expectations of the profession. The digital age creates opportunities and threats. This report, as well as highlighting the changes that affect the profession and suggesting ways to respond to them, also sets out some recommendations for standard setters and regulators to support better global outcomes.The world is changing. The fnancial crisis emphasised the extent to which fnancial systems are connected globally. This interconnectedness brings greater prosperity, but also greater concentrations of systemic risk. Policymakers are still responding to both the economic fallout from the crisis and the public outcry for regulatory changes. Because the crisis led to a lack of public trust, it is not surprising that audit is expected to be a major part of the solution. In practice, to achieve this, audit and auditors will need to change to be able to respond to the challenges of this more interconnected world and greater public expectations. CHANGE IN ENVIRONMENT The environment for professional accountants is changing. ACCA research has identifed global connectivity, smart machines and new media as drivers that are likely to infuence the global need for accountants over the next decade. Where there is change, there is greater demand for assurance in general and audit in particular, and for audit and assurance to be provided in new ways that make use of new technologies. Novel funding models may require novel assurance services. Stakeholders expect auditors to exploit new ways of working to drive effciencies so that reporting timetables can be shortened while continuing to improve audit quality. CHANGE IN EXPECTATIONS Expectations are changing. Feedback from the Grant Thornton/ACCA roundtables suggests that investors like the ‘binary’ audit report in which the auditor must either commit to a ‘clean’ opinion or qualify the accounts. In general, however, users also want more contextual information to be provided, to explain the process whereby the auditors reached their opinion and the challenges they faced and overcame along the way. Although auditor reporting is changing, there is some frustration that it is not changing further, and more quickly. Users want more disclosure from companies, particularly of non-fnancial information, such as on sustainability, and forward-looking information. Users also want assurance that this information is being disclosed fairly and accurately. The accountancy profession is well placed to satisfy this demand. CHANGE TO AUDITORS In response to these changes, auditors themselves are changing. There is more emphasis on how well audit is done, with heightened focus on risk, professional scepticism and audit quality. Auditin