As the global business environment becomes increasingly complex, the need for specialist technologies to support the auditing process has grown. EY is leading innovation in this space by embracing digital auditing. This not only increases the accuracy of the work, but also allows them to provide a better customer experience.
As Olivier Lemaire, Head of Audit & Assurance at EY Luxembourg explains, “We started our digital audit journey more than 5 years ago and we start now to see the full benefits of it, particularly in terms of robustness of the audit process as well as in automating routine audit tasks and allowing our audit professionals to focus on what matters.“
Transforming the audit process globally
EY has developed tools to support their auditing teams globally, which has transformed their work in several ways. Firstly, automation of the audit process is increasing the quality of the work. As Pavel Nesvedov, Audit Innovation Leader at EY Luxembourg highlights, “by its nature, the limitation of any assurance service is the reliance on samples of transactions and balances to verify that, from a size and risk perspective, the reporting is free from mistakes. Now, technology enables us to instead look at all transactions and balances and analyse them as a whole.” This produces more accurate results and frees up auditors to focus on higher risk transactions.
Another change is the way they work with clients. Previously, all information was exchanged via email, making communication slow and sometimes opaque. In an age where clients expect access to information 24/7, EY has shifted to a digital platform that allows their clients to track their audit progress at any time. The shift away from email – which is vulnerable to hacking – towards the secure platform also means clients’ data is stored safely.
Finally innovation has changed the type of work auditors do. Previously, the main tool used was Excel, but this can no longer support the volumes of data from clients. Now, as Nesvedov explains, “the teams have switched to dedicated digital tools which work on a server with high computing capacity. This allows us to use more sophisticated software to be able to process larger data sets.” These new systems require the team to receive specialist training. They’re also creating new types of jobs. According to Nesvedov, “We have an evolving team of data analysts. They aren’t traditional finance audit professionals, they have been trained specifically to work with data analysis and programming tools. These roles are becoming more important as it is practically impossible to have one profile that can address all aspects of the business and service delivery.”
“We can get a much better picture of the portfolio of the assets as a whole.”Pavel Nesvedov, Audit Innovation Leader at EY Luxembourg
Tailored solutions for Luxembourg
All of these global tools are available for clients in Luxembourg, however it requires companies to have the data available and the right systems in place to consolidate and share it. Nesvedov, explains that certain industries are more prepared than others in Luxembourg. “The banking sector collects a lot of data, but the systems used are not integrated and, due to the heavily regulated nature of the sector, there are challenges to overcome when sharing data.” The commercial and industrial sector, however, is moving towards collecting and centralising their data. “They see the advantage of having all that data for management decisions, primarily, because they understand the potential value it holds if analysed correctly.”
To help clients prepare, EY has developed a Digital Audit Readiness Roadmap which presents the new toolset, benchmarks the clients’ readiness to use them and explains the requirements to access them.
Aside from general global tools, there are systems in place to support the needs of Luxembourg companies specifically. For example, EY has developed a valuation prediction tool for real estate and private equity (PE) funds. With this, the team can look at the whole population of valuations to provide benchmarks for clients. “The advantage is that we can get a much better picture of the portfolio of the assets as a whole, providing our clients peace of mind that we give them feedback on their entire portfolio, not just a sample,” Nesvedov explains.
“The audit teams can work more effectively across multiple clients, as the data output is standardised regardless of the company or industry.”Pierre-Marie Boul, WAM Audit Partner and Asset Servicing Leader at EY Luxembourg
Digital tools for wealth and asset management (WAM)
Audit innovation also supports the traditional wealth and asset management fund market. Luxembourg is the second largest market globally (after the US) in terms of assets under management, and EY has developed a new tool called WAMapps. It supports wealth and asset management audits by streamlining data collection and cleansing, and enabling more efficient automation for analysing the data.
The tool works by cleansing and standardising data provided by clients – including owned data, data from service providers and third parties – and independent market data so that regardless of the source format, the output data always looks the same. This enables the team to build automation for sophisticated analytics and data enhancements more efficiently.
And this automation brings a number of key benefits. Firstly, according to Pierre-Marie Boul, WAM Audit Partner and Asset Servicing Leader at EY Luxembourg, “because the team no longer needs to collect and clean the data manually, they can instead focus on investigating outliers and exceptions in the data immediately. We also bring a totally new digital audit experience to our people, where different skills are used and developed, in line with the expectations of our new joiners” Secondly, it reduces the risk of human error. Finally, it means the audit teams can work more effectively across multiple clients, as the data output is standardised regardless of the company or industry. This leads to more valuable conversations with clients. It also benefits clients with cross-border operations as all the data is stored centrally, and securely, within EY’s global platforms.
Most importantly for the client, it enables continuous auditing. As Boul explains, “We no longer just check the economic statements at the end of the year. Because we are able to automate continuous data collection, we can undertake ad-hoc analysis any time a client requests it. For example, a firm might be distributing a large dividend to investors during the year. Before, we would only look at that during the audit year-end. Now, we can create automatic testing for specific needs at any time. This enhances the customer experience we deliver” Overall, digitalisation of the audit process brings many benefits to our people and to our clients, particularly in providing more accurate and high quality data analysis.