**4.2 Auditor's professional profile**

Overall, all participants agreed that there would be a shift in the skillset required of the auditor. In summary, audit teams will consist of cross-skilled individuals that are tech-savvy to complement their existing audit skillset and understanding of risks and controls in the financial services market. All auditors would not need to be IT experts but should understand what capability emerging technologies provide and how these technologies can be used in the automation process.

The lived and anticipated changes were described by participants based on where they are on their individual digitalization journeys, with Participant 1 describing the anticipated changes as *"[…] updated tech-savvy skillset and an inquisitive mind would define the auditor of the future oppose to the traditional box ticker or a cookie-cutter mindset*." Participant 9, which had the least exposure to automated auditing, shared her upskilling journey. She specifically highlighted the need to analyze large data sets, including trends analysis and pattern identification. These skills were obtained through completing online Udemy courses, specifically focusing on data analytics. She emphasized the need for all new auditors joining their firm "[…] *to have a basic understanding of data analytics and data visualization*."

Participants that have made the most progress on their respective audit digitalization journey are provided insight into their current recruitment practices. Such as Participant 4, who responded:

*"Being in a digital organization, the auditors we have recruited over the last two years all have an IT background or moderate to strong IT knowledge and understanding of the capabilities and use of emerging technologies."*

Follow-up questions revealed that the ask is not for all new hires to be IT specialists, but a moderate understanding, use and applying emerging technologies (specifically data analytics) in the audit process have become a standard requirement. These skills were described in the context of auditors still having their


#### **Table 5.**

*Skillset required of the auditor—summary.*

specialized audit knowledge and experience. **Table 5** provides a summarized breakdown of responses received per participant.

All participants expect a shift in the skillset required of an auditor with 10 participants highlighting the need for data analytical skills as a key requirement. Although the participants were asked their expectations for the future, six participants indicated that data analytics is already a required skill for all new joiners in their respective audit teams. In terms of adoption of emerging technologies, most participants are expecting an impact on the balance within audit teams with the ongoing adoption of emerging technologies. Eight participants expect the balance in audit teams to shift leaning towards more IT auditors than financial auditors. However, follow-up questions led to diverse views from some participants.

Participant 1 does not expect a change in the balance in audit teams, as the skills required from both financial auditors and IT auditors will remain. He describes the expected change as "[…] *the forming of more rounded auditors with a balanced skillset between auditing and IT skills*." He highlighted that in his view, "[…] *auditors with stronger business acumen to provide correct contextual judgements based on automated audit activities* […]" will be required. The increase of data points consumed by automated auditing will provide "[…] *much greater insights to the control estates and the risks to the business*," which will require auditors with institutional knowledge of the organization to understand and correctly interpret the outputs for opinion-forming and judgments.

Participant 8 agreed with the views of Participant 1 that the existing members of audit teams will need to upskill and obtain a more balanced skill set and that the need for the original team compositions will remain. He, however, describes the required shift in team composition as:

*"[…] current audit teams are made up of financial auditors and IT auditors, where the latter is focused on the auditing of IT. The need for these skills will remain and should be supplemented/supported by data analytical skills. The introduction of a new capability is required, audit with IT. This is a team that focuses on digitalization and automation of audit procedures."*

This is a team of emerging technology specialists focused on "[…] *codifying existing audit procedures and institutional knowledge* […]" and driving the digitalization journey. He describes this as the key contributor to all the progress they have made to date. Therefore, the team balance in his organization has seen a dramatic


#### **Table 6.**

*Auditor skills profile—summary.*

shift with the restructure. **Table 6** provides a summarized breakdown of responses received per participant.

The collective response from other participants highlights the increased need for data analytics skills in the teams to support their respective initiatives. Adding these specialized skills will impact the team balances leaning towards the IT auditor being more dominant in the composition of the audit team.

The consensus among participants is that the professional profile of the audit profession will be more attractive for young professionals. The audit profession will become "[…] *funky and sexy* […]" as described by Participant 2 and "[…] *glamorous and exciting* […]" as described by Participant 9. All participants agreed that the impact would be positive and that the audit profession would be more attractive for young professionals. Participants 8 and 12 believed the profile has started to change and will continue to change as the adoption of emerging technologies in auditing matures in South Africa.

The discussions that flowed from this question varied between participants. The researcher allowed for the flexibility to gain insights covering topics, such as what the updated auditor profile will mean for the audit profession, the type of individual that the profession will attract, and the additional skills these potential new auditors will require.

Participant 2 suggested that the title of the auditor will change to better reflect the changing audit environment. He explains that "[…] *the title auditor suggests that you, as the person, is the process, and you go in and audit by looking at transactions or working through files* […]" however, this will not be the case. The role of an auditor will be to focus on the output provided by an automated procedure or work through exceptions noted. Therefore, as the expectation of an auditor will change to focus on "[…] *root cause identification, risk assessment, reporting, client engagements* […]," the title of the profession should change. He suggested a "[…] *Strategic Assurance Analyst* […]" would be a better fit which will lead to an improved and more attractive profile in the job market.

Participants 6, 9, 10 and 11 all noted their concerns around the slow rate of change in university auditing degrees and diplomas to include more comprehensive coverage of technology principles and emerging technologies in current curriculums. Exposure to and using data analytics in the audit process was raised by all four participants as a shortcoming they have noted in newly graduated professionals. Participants 6 and 9 indicated that organizational training paths had been defined, focusing on data analytics short courses, for the upskilling of new graduates joining their organizations. **Table 7** provides a summarized breakdown of responses received per participant.


#### **Table 7.**

*Auditor's professional profile—summary.*

All participants agreed that the adoption of emerging technologies would make the professional profile of an auditor more attractive in the job market. The field of auditing will require individuals skilled in technology principles, a general understanding of emerging technologies and using data analytics. This raised the question of whether the current curriculums at the university level have changed at the same pace with the changes experienced in the audit industry.

#### **4.3 Audit user perceptions**

All participants agree that audit users will trust automated audit procedures more than manual procedures; however, trust comes over time (all participants). Most participants indicated that the initial trust levels were low. Participants 2, 4 and 7 shared that the first audits supported by automated audit procedures took significantly longer than similar audits supported by manual audit procedures. This was due to the lack of trust in the automation capability within the audit team, the automated testing procedure itself, and, as noted by Participant 2, "[…] *the lack of human interaction with the audit client made them feel left out of the process and not involved in the execution* […]."

Participant 3 noted that "[…] *population testing by means of automated auditing* […]" rather than "[…] *sample testing during manual audit procedures* […]" eliminated sample risk. This was noted as one of the key contributors to increasing the trust levels in automated auditing and "[…] *realization of value* […]" by the audit clients. Like Participant 2, Participant 3 highlighted the need for client engagement as:

*"There is still the need for an auditor to play the role of a trusted adviser to interpret results and maintain the auditor-client relationship. Maintaining the relationship is a key ingredient to build and maintain trust during these engagements."*

Participant 7 added that automated audit procedures remove the subjectivity from the audit procedure and audit bias during the audit procedure execution. The removal of the human element during audit execution improves the overall quality of the audit deliverable. This improved quality and value provided are the ingredients for building trust. **Table 8** provides a summarized breakdown of responses received per participant.

All participants believe that more trust will be placed in automated audit procedures. At first, trust levels will be low, but as the audit department progress on their digitalization journeys, trust levels improve. It was noted that the inclusion of the


#### **Table 8.**

*Audit user perceptions—summary.*

audit client in the audit automation journey promote trust levels and assist audit teams in reaching a state of digital maturity quicker.

All participants indicated that the impact would be the ability to form better audit opinions and judgments. This was mainly supported by the "[…] *move from sample testing to full population testing during audit execution* […]" (all participants) also, "[…] *the fact that more data points are consumed by automated audit procedures, specifically in case where principals of big data analytics are applied and used* […]" (Participants 1, 4 and 8). Therefore, the coverage of multiple full population datasets provides the opportunity for the forming of better audit opinions and judgments.

Sample risk (Participant 3), subjectivity and auditor bias during audit execution (Participant 7), human error and oversight during manual testing (Participant 9) are all factors that affect the quality of the testing outcome, which audit judgments are based on. The removal of these factors improves the testing outcomes and better informs the audit opinion and judgment. This was best described by Participant 4 as:

*"[…] the major change is how the opinion or judgement gets informed. In our current environment, most of the fieldwork in the audit process is a data-enabled body of evidence. Gone are the days to manually understand controls and sampling. The auditor needs to understand the digital process and step back and interpret the output and ask, "what does that mean?" Therefore, audit judgement and opinion will be better-informed."*

**Table 9** provides a summarized breakdown of responses received per participant. The adoption of emerging technologies supporting audit automation projects and programmes will enhance auditors' ability to provide better, informed audit opinions and judgments. This is supported by the increased coverage of automated audit procedures. This is not limited to the automated audit procedure that can test the full population but also the fact that multiple datasets are included in the design of these tests. This allows for exception and theme identification that is not possible with sample testing. Furthermore, with using automated audit techniques, human errors and oversight during audit execution are removed, and sample risk, audit subjectivity and auditor bias.


#### **Table 9.**

*Audit user perceptions of automation—summary.*

#### **4.4 Auditor-client relationship**

In general, most participants agreed that continued adoption of emerging technologies in the digitalization of auditing would have an impact on the current pricing models but not necessarily the cost of the audit opinion and judgment.

Participant 11 started his response by highlighting the sensitivity around "[…] *pricing of assurance services* […]" and highlighted the "[…] *legal liability that comes with audit opinions* […]." He pointed out that the "[…] *legal liability on both the auditor and audit firm* […]," and the "[…] *auditor responsibility towards the director, shareholders and stakeholders* […]" remain unchanged. Therefore, the cost of the audit opinion or judgment should remain the same "[…] *irrespective of the approach followed to conclude* […]." He indicated that "[…] *the current pricing requires a revamp as it based on hourly charge-out rates, which will not be as relevant going forward due to the reduction in audit execution time* […]." Similar views were shared by Participants 4, 6, 8 and 9, with Participant 4 explaining:

*"The cost will not change; the quality of the assurance will improve. This is evident with the automation we have already implemented move from sample to population testing. So, the quality of your view, opinion and judgement is exponentially better. Therefore, for the same price, a client will get a much better quality of audit."*

Participant 2 shared similar views and agreed that the current pricing models should be adjusted to consider the quality of assurance. However, he suggested that a hybrid model should be considered. He suggested that audit departments should "[…] *start with calculating the cost of automation of a single audit test. This should be extrapolated across all data-driven audit procedures that can be automated to get a view of the total future investment. This should consider all costs such as research and development, licencing cost, procedure maintenance, staff upskilling* […]." These are the elements that should make up the calculation for the cost of quality. **Table 10** provides a summarized breakdown of responses received per participant.

The consensus is that pricing models must be adjusted in time, but there will not be an immediate cost saving for the audit client and audit user. Clients will receive better assurance deliverables, better quality audit reports, better-informed audit opinions and judgments on a more frequent basis at a similar or higher cost. The expectation from some participants is that there might be reduced costs in the future


#### **Table 10.**

*Auditor-client relationship—summary.*

after the initial investment costs have been depreciated. However, as the technology and risk land space change there will be a need for different assurance that will introduce new costs.

During the interview introductory questions, it was established that none were currently using or are planning to use blockchain technology as part of their audit digitalization journeys. Participants 4, 6, 9, 11 and 12 indicated that they know little about the technology other than the relationship with cryptocurrencies such as Bitcoin. They chose not to provide an opinion. Both Participants 2 and 3 indicated that they know little of the technology itself and the different applications thereof, but they both shared the view *"[…] as with the introduction and use of all new technologies, there will be a shift in the risk landscape or the introduction of new risks, therefore, the impact on audit and the audit process will be the need for assurance over this risk resulting in a higher demand for audits […]."* Participants 7 and 10 agreed that the need for audit would increase, and at no point will audit not be necessary. The expected change is only a shift in focus of the auditor.

Participants 5 and 8 shared their understanding of triple-entry accounting made possible by blockchain technology. They noted the advantages and efficiencies this approach has over the double entry accounting principles currently in use as "[…] *it will fundamentally improve accounting and address the current transparency and trust issues that exist*." Both participants concluded by stating that if accounting is enabled by blockchain technology, the need for audit will just increase, and it will focus on different controls and risks. Five of the participants chose not to share a view or opinion due to their limited knowledge of blockchain technology. The other eight participants highlighted that using new technology such as blockchain will change the risk landscape and introduce a new set of risks and controls, therefore, different focus areas for audit. Two participants indicated that the need for audit might even increase. None of the participants aim to use blockchain technology as part of the audit digitalization journey.
