Disappointing results from a recent inspection report by the Canadian Public Accountability Board (CPAB) are driving audit firms to find new solutions that challenge the traditional audit process.
The CPAB, which oversees the work of Canadian audit firms, said it was “disappointed” in the progress being made on improving audit quality. Its concerns were directed toward both smaller regional firms and the “Big Four” national accounting firms, which audit about 94% of Canada’s publicly traded companies by market size. CPAB found deficiencies between 20 -26% of the audit files it reviewed at the Big Four firms and 47% of the audit files it reviewed from 10 smaller firms.
The results may be, in part, due to the growing pressure on audit firms to become more competitive. Audit fees have been dropping across the board since 2007. From a long term perspective, the CPAB is concerned that reduced audit fees could result in audit firms scaling back investments in people, training and methodology improvements, which may jeopardize overall audit quality.
Many audit firms still rely on email or USB devices for the exchange of confidential financial information with clients. However, both methods prove to be inefficient when exchanging large volumes of information. Auditors can spend hours routing, organizing and looking for email attachments, hindering their overall productivity and prolonging the audit process. That is why many firms are now re-evaluating their data exchange process and turning to virtual data rooms as a more efficient solution.
Virtual data rooms provide a secure online document repository to upload large volumes of confidential financial information. Companies can prepare for their audit in advance and upload documents incrementally, simplifying the information review process. Firmex’s unlimited use data room model also makes it affordable to keep past audits online for easy reference to historical data and deferred revenues. With a more efficient document sharing solution, auditors have more time to focus on other parts of the audit process and to help improve overall audit quality.