**5.3 Digitalization and the audit's professional profile**

All auditors will require a good understanding of technology, specifically, using data analysis in the audit process. The expectation by organizations is not for all auditors to be specialists in the field of data analytics; however, the need to analyze large data sets, interpret the outcomes of audit tests based on data analytics and the ability to visualize data in an understandable and comprehensible way is required. This is supported by the already changing recruitment processes implemented in South African organizations that stipulate the need for 'a strong data analytical background' as a requirement for new joiners. This requirement has been added to all role profiles, irrespective of an auditor's field of specialty, and it is regarded as a core competency. A general information technology (IT) background was listed as a plus. The organizations at the forefront of audit digitalization indicated that their recruitment processes have been updated and have been aligned to their digitalization strategies. All new joiners must have a moderate to strong IT background, data analytics is key, and understanding of new emerging technologies and the application thereof is a plus.

There is an expectation that the existing balance in audit teams between financial auditors and IT auditors will be impacted as organization's progress on their respective digitalization journeys with the increased need for IT skills. The expected shift is not definitive as different variants exist to achieve and deliver digitalization strategies. The two extreme cases identified are a major shift from the traditional balance with more IT auditors than financial auditors or there will be no shift to existing teams, and the digitalization of audit processes is driven by a specialized team outside the audit department. In both these scenarios, the required skillsets of the audit team should be revisited with the increased need for cross-skilled individuals in audit departments to benefit from audit digitalization.

There is an expectation that the digitalization of audits will have a positive impact on the role profile for auditors in the South African job market. The role profile of a cross-skilled auditor will attract younger professionals, and it will also attract more individuals at a university level to move into the audit profession. The need for specialized technical IT skills in emerging technologies will also open the door for non-auditors to join audit teams to deliver audit digitalization strategies. These technical specialists are currently being used in the South African audit industry to codify the knowledge and held by existing audit team members.

Although market expectations for future graduates look bright, concerns were raised over the level of IT coverage and IT exposure current university degrees and diplomas include. It was noted that newly graduated individuals do not meet the minimum requirements to join audit departments due to a lack of IT knowledge and a general understanding of technology.

#### **5.4 Digitalization and the audit user perception**

More trust will be placed in the outcome of automated audit procedures than in the traditional, manual audit procedures. The increased trust levels will be based on introducing end-to-end process testing covering multiple data points, eliminating sample risk and human error during the audit testing process and reducing subjectivity and auditor biased. These benefits will lead to better, more informed audit opinions and judgments and better richer, more informed audit reports and audit insights. These were the combined views shared by all participants based on their lived experiences.

#### **5.5 Digitalization and the auditor-client relationship**

One of the key outcomes of the study was the expected, and proposed changes to the current costing and pricing models in use for assurance services and the impact digitalization of audit will have on these models.

At the time of the research, all participants in this study were still employing an hourly-based pricing model for assurance services that makes up the total cost of the audit opinion. Introducing emerging technologies and the ongoing digitalization journeys seen in the South African audit industry have led to shorter audit execution times. Audit procedures that previously took days or weeks to complete can now be completed in a few minutes, depending on the computing power available to the codified audit procedure (robot auditor). The assurance provided by the robot auditor can be completed monthly or even daily, whereas the manual procedures are generally scheduled twice a year or on an annual rotation basis based on risk. The coverage and assurance provided by the robot auditor are not based on sample testing but full population testing, leading to better assurance outcomes, as discussed in this paper.

Most participants (91%) indicated that the current pricing model used in South Africa is not fit for the purpose of a digitalized audit function, leveraging emerging technologies in their automated auditing capabilities. Participants proposed that a value-based costing model would be more fitting in a digitalized audit world as clients will receive better assurance deliverables, better quality audit reports, betterinformed audit opinions and judgments on a more frequent basis. The expectation from some participants is that there might be reduced costs after the initial investment costs have been depreciated. However, as the technology and risk landscape change, there will be a need for different assurance that will introduce new costs.

The expected impact of blockchain technology on the audit industry is that the need for assurance will be different, and that it might increase. Although it is expected that blockchain technology will have a major impact on the financial accounting processes and principles as described by Penkin and Pehrsson [19], participants in this study believe that the assurance over a typical triple-entry accounting system will be different, and the need for assurance might increase.

#### **5.6 The auditor of the future**

Based on the research completed and the industry views and opinions obtained, the auditor of the future can be best described as a digitally fluent individual, crossskilled to use a combination of IT and audit skills to deliver audits. Considering the four themes covered in this study, various aspects of the auditors' ways of working will be impacted, including the audit process, the auditor's professional profile, the audit user perception, and the auditor-client relationships.

#### *Perspective Chapter: Audit Digitalization – Key Impacts on the Audit Profession DOI: http://dx.doi.org/10.5772/intechopen.109042*

Looking at the audit process, the audit execution will be the most impacted. The traditional audit steps of inquiring, observance and performance by a human auditor are falling away as audit processes are digitalized. Auditors will rely on audit steps executed by a robot auditor, and an auditor's audit skills will be applied for opinionforming, judgment, and client engagements. Based on the progress made in the South African context, evidence suggests that digitalization will result in richer and better quality audit reports and improved client relationships.

The need for cross-skilled individuals will impact the profile of the auditor, which suggests making it more attractive in the job market and at the university level for new entrants. The study highlights the role universities must play to ensure that degrees and diplomas remain fit for purpose, and in line with the skills required by the audit industry to equip young professionals. These changing requirements will also cast the net wider and allow for IT specialists and technologists to join audit departments as their specialized skills are required for the digitalization efforts within the audit industry to deliver organizations' digitalization strategies.

Auditors will still provide assurance over the accuracy and completeness of financial statements and provide assurance over current and emerging risks. However, the way this assurance is derived will change, including the quality, frequency and focus area. This will result in a different value proposition to clients who will need a different costing model. The current hourly-based model in use in South Africa does not fit this new emerging value proposition, and this study suggests a value-based costing model for audit opinions derived from automated auditing or audits completed by robot auditors.
