Auditing has long been one of the most conservative arms of the financial services sector. The news that the Competition Commission (CC) is planning to stipulate that audit contracts must be put up for tender every five years will really shake up the industry. It will take some of the largest businesses who may have stayed with the same accountancy practice for many years out of their comfort zone. And it is great news for the UK accountancy market, that there is an opportunity for firms to start competing on a level playing field against the Big Four in offering auditing services.
What will act as the catalyst in making this happen though, is a new development that is set to revolutionise auditing practice across the UK: the arrival of cloud-based auditing solutions, as evidenced by the launch of IRIS OpenAudit, the UK’s first online audit solution. The benefits of this new approach are too far-reaching for the industry to ignore for much longer.
Capitalising on an opportunity
Historically, many accountancy firms, and small practices in particular, have wanted to take advantage of the opportunity that auditing work potentially affords them, but they have struggled to do so. Some firms that did take up an audit licence were finding that the complexity of the process, the need to commit manpower offsite for days or weeks on end and the large volume of work still carried out using bulky paper-based files, prevented them from making money from the venture. Other practices, knowing they lacked the time and resources to commit to taking on this strand of business, decided not to register for an audit licence in the first place. However, auditing in the cloud offers a new opportunity for these firms, and even for those practices regularly engaged in traditional audit work, to make more money from the approach.
It is precisely this combination of challenge and opportunity that the new cloud-based IRIS Open Audit solution seeks to address.
Cloud computing has revolutionised many areas of businesses – slashing costs, driving operational agility and reducing the reliance on critical IT infrastructure. It is now doing the same for accountancy practices – solutions can be delivered as a service over the internet and data can be stored securely in the cloud and therefore be accessible in real-time from any internet connected device from PCs to laptops to tablets.
With respect to auditing, it will be faster and more efficient than what has been possible before, with resilient data available in real time, so practices that have previously regarded auditing as a hassle and not cost-effective will now be drawn to the model.
Small auditing practices will be able at last to compete on a level playing field against the largest firms. With solutions like Ithese, real-time checking of audit progress becomes more viable. There will be a reduction in costs and time taken to complete audits and firms will generally be able to achieve these benefits with smaller audit teams or in a shorter timeframe than before. There are environmental benefits too around reductions in travel and paper usage. Even when they are visiting their client’s offices, firms can take a laptop or tablet with them rather than bulky audit cases.
Even the perceived security concerns are no longer an issue. With ‘live’ saving of data, robust data storage security and automatic back-ups the cloud can actually be a much more secure method of storage than found in many traditional audit firms and can become a key part of any disaster recovery plan.
So, with solutions like IRISOpenAudit coming on stream, it is clear that cloud technology is now in place, ready and waiting to make its mark on auditing practice across the UK. The five-year tendering plans announced by the Competition Commission are likely to be the trigger that starts to really shake up auditing in the UK, enabling more competitive tendering, allowing small firms to compete against the larger competitors and moving auditing from the most out-of-date accountancy sector to the most cutting edge.