May 23 2024 - Traditional audits are holding back organizations across the US from achieving their growth potential, with accountancy firms cautious to embrace modern approaches because of large vendors being slow to advance legacy tools.
That’s according to new research from Inflo, which polled US organizations to understand the challenges created by their annual audits and the opportunities they foresee in working with accounting firms.
Despite a strong belief that their annual audit can provide valuable insights to help them grow their operations and make better decisions, over two-thirds of organizations (67%) feel their current audit process actually hinders business growth.
There are several key reasons for this sentiment. Over half of US organizations (52%) reported finding the audit process “stressful” because of the disruption it causes to business-as-usual procedures. This is largely due to the time it takes them to prepare (62%) and how manual the process is (61%). The study revealed that the larger the business, the more stressful the audit as organizations’ financial complexities increase.
More than three-quarters (78%) of finance leaders said the ‘resource cost’ of audits causes them anxiety. In addition, a third of organizations (31%) find audits to be a “slow and cumbersome” process, with a quarter (26%) admitting to feeling “burnt out” as a result. This is enough to drive one in five finance leaders (19%) in charge of managing the audit process in-house to consider leaving their role.
“Audit services must remain relevant to the modern digital business world,” commented Inflo’s CEO, Mark Edmondson. “Clearly organizations see the value in their annual audits and the potential for them to drive better decision making. Yet the vast majority of organizations feel like they’re not getting the value they crave. When the process is causing stress and burnout, with a significant knock-on effect on business productivity, it’s clear something has to change.”
Despite frustrations, US organizations see huge value in what their audits can provide, with nearly all respondents (95%) believing the audit can give them data driven insights to support business growth. Nearly three-quarters (72%) see an opportunity to improve processes and operations through audits, while over half (51%) find comparing their performance against competitors to be highly valuable. Interestingly, larger organizations place more value on this, contradicting any assumption that bigger organizations with more resources can get this perspective themselves.
When it comes to talent retention, well performed audits have the power to transform the way finance teams feel about their jobs. The vast majority (95%) of finance leaders believe a data-driven audit would help retain members of the finance team.
To unlock the potential of audits and drive better business value, over half of organizations (53%) want their audit firms to embrace more technology – larger organizations are most vocal about this. Two-thirds (67%) want firms to work more collaboratively with their auditors via cloud-based software. For US organizations, these key shifts will enable the data-driven services that two-thirds of companies (67%) want to receive, and free up their finance teams’ time for business-critical tasks such as corporate strategy (63%).
Edmondson continued: “It’s encouraging that organizations in the US value collaboration with their accountancy firm and want even more. We must equip audit teams with the tools they need to deliver more effective and data-driven audit services. Accounting firms who recognize the demands of modern-day organizations and feed them with the insights they need will be most successful. It is only through embracing modernization to provide deep, data-driven insights that we will create more relevant audits for organizations and audit teams alike. This will set a new standard for the industry.”
Inflo’s research forms part of its latest industry report, "What modern businesses want from their audits: how to stay relevant in a digital world". For more information, visit https://info.inflosoftware.com/what-modern-businesses-want-from-their-audits
About Inflo
Inflo is a leading provider of audit software solutions, transforming the way professionals work by introducing innovative, data-driven processes. With a global footprint, Inflo is committed to elevating the audit experience for both professionals and their clients.