News that Grant Thornton has been fined by the Financial Reporting Council for “serious lack of competence” in its audits should serve to remind us of multiple audit failures at other firms and the industry-wide nature of these issues. The fine imposed in this instance is a logical step forward as the UK addresses historic wrongdoing and overhauls its corporate governance and audit oversight (“Grant Thornton fined £2.3m for Patisserie Valerie audits”, September 28).

Holding audit firms and individual directors accountable is an important step forward, but we must also be encouraging auditors and regulators globally to rethink the purpose and scope of audit within the context of greater availability of data and technology.

Nothing less than a complete transformation of accountancy firms’ business models is needed if they are to become fit for purpose. The future of accountancy and audit is no longer about transactional number-crunching, but about the sound judgments that can only be made from better quality data.

We need to see a more intense drive for innovation and the rapid implementation of technology across all firms, regardless of size. Sadly, this is not happening quickly enough and, in many cases, it is not happening at all due to both cultural and structural issues in the industry.

The audit industry is approaching a period of intense and far-reaching transformation, driven by digitisation, new regulations, innovation and intelligent data use. Firms cannot just keep throwing more and more people at the problem as they have tried to do in the past, with predictable impacts on their profitability and quality. The solution to the problems associated with the audit, therefore, must be in part to adopt technology to implement a risk-based approach as standard.

Over the next 12 months the use of artificial intelligence to remove and reduce fraud will be on the increase. Intelligent tools like this will create the context and visibility needed to help firms ensure audits cannot fail.

Technology isn’t a panacea, but audit firms will never succeed in resolving the problems they face unless they adopt technology to help spot fraud and errors and to prevent further scandals damaging the reputation of the sector.

Shamus Rae
Chief Executive, Engine B,
London N1, UK