A survey on the topic of clients and trust in an era of new technological possibilities highlights that technology is a must-have, but only adds value if humans are in the loop.
Clients expect high benefits from the use of technology such as Data Analytics, Robotics and Automated Controls. When it comes to Artificial Intelligence, there is a clear need for trust.
Technology has permeated every aspect of our society, from businesses to personal interactions. The impact goes beyond a mere technological transformation; it also has far-reaching consequences on a fundamental aspect of human society: trust. Trust being the fundamental fuel for every aspect of society.
The shift in the paradigm is about how we build and maintain trust in a world dominated by technology. The trustworthiness of information that we use for decisions is key as it has always been. But the path to obtaining this trustworthiness may be impacted by technology.
What does this mean for the trustworthiness of the auditor, a key figure when it comes to the trustworthiness of information? And what do Board members, CFOs and Heads of Accounting expect from their auditors in this perspective?
We spoke to a series of clients about this fascinating topic.
What to expect from this article
- Understanding the client remains key for a trustworthy relationship
- The use of technology is a "must" and expectations towards technology are high
- Clients expect many benefits from the use of technology
- Human experts are a differentiator and cannot be replaced
- Guarding AI: many questions on this "terra incognita"
Understanding the client remains key for a trustworthy relationship
In a time where technology is developing at the speed of light, understanding the client remains key for a trustworthy relationship.
The following list gives insight into what our clients deem important.
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| "Industry knowledge and business understanding are key." Roy Bächinger, Global Director of Group Accounting at Breitling AG |
The answers show that technology surely does play an important role in client relationships, but more as an enabling factor rather than a real differentiator.
What really counts for a trustworthy client-auditor relationship is that the auditor understands the client’s business and its environment, speaks the client’s language and that there is a match on a personal level. These elements are also the basis when it comes to assurance on non-financial information in the domain of Environmental, Social and Governance (ESG).
What comes a bit as a surprise is that the aspect of "thought leadership" was mentioned as the least important factor for a trustworthy relationship. We believe that “thought leadership” still plays an important role in the context of “industry knowledge and business understanding” to be relevant for our clients.
The use of technology is a "must" and expectations are high
The interviews show that using technology in the audit is expected from clients. For example, the survey clearly underpins that embedding technology in the communication between clients and the auditor is enriching for most of the interviewees (e.g. using exchange spaces for exchanging documents and information, Sharepoints).
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Furthermore, trust in established technologies such as Data Analytics, Robotics and Automated Controls is high. When it comes to Artificial Intelligence (AI), the Board members, CFOs and Heads of Accounting are hesitant about the reliability of this new technology.
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Clients expect many benefits from the use of technology
Clients perceive the value of a technology enabled audit as high:
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Specifically, clients expect a value-add from technology in the following areas:
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Human experts are a differentiator and cannot be replaced
In the eyes of the interviewees, the role of human experts is crucial. Their contextual knowledge and experience, analytical mindset and ability to associate information are indispensable.
According to the survey, the following aspects of the human being cannot easily be replaced by technology:
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We therefore dub this the high-tech, high-touch audit era. An era where technology can only be successful when humans have a key role in the assessment and judgement. The good news is: auditors traditionally have been trained to be critical and are curious by nature. These are prerequisites for warranting their place in the loop.
High-tech, high-touch also means close collaboration between auditors and clients. We believe this becomes even more vital to navigating this landscape effectively and to optimally exploiting the potential of technology. The interviewees confirm this view in the survey.
| "The ability for an independent judgment in the key risk areas is essential." Suzanne Thoma, President of the Board of Directors at Sulzer |
Guarding AI: many questions on this "terra incognita"
We cannot overlook the impact of AI on our lives. As AI becomes ingrained in our daily routines, we must ensure that the algorithms are designed to be trustworthy.
These algorithms increasingly guide us in decisions, both in our personal and business lives. They add transparency and hold the power to enhance our lives by doing so, but they also carry the risk of leading us astray if not reliable and interpreted properly.
As AI and algorithms become increasingly prevalent in various industries, including finance, healthcare, and technology, the need for assurance and accountability in their proper functioning becomes paramount.
This highlights the need for new concepts for assurance, which is somewhat of a "terra incognita" (unknown territory).
Auditors are developing new methods and concepts and can contribute to areas such as:
- Risk Assessment - understanding the potential impact of AI
- Compliance and Ethical Considerations - verification that the organization's AI practices comply with relevant laws, regulations, and ethical standards
- Governance and Controls - reviewing policies, procedures, and controls that govern AI use, as well as evaluating the roles and responsibilities of key stakeholders involved in the AI process
- Explainability and Transparency - ensuring that stakeholders can understand the reasoning behind AI-driven decisions
Overall, it is an exciting time with many opportunities to improve the audit. Our clients have confirmed once more that the human factor is an essential component. Together with our clients, we are dedicated to shaping the future of auditing and bringing them value.
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KPMG as a trusted partner will shape the future of audit. We speak the client’s language and understand their business and environment. We’re happy to help you with your audit, provide assurance services or support you in implementing regulatory requirements.
