The Audit Renaissance Is Here. Data Scientists Welcome.

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Public company auditing has long been a steady mainstay of our financial markets. Since the turn of the century, however, auditors have pushed into a new era — and it's a good one.

"We're in an audit renaissance," Deloitte & Touche LLP partner Dan Sunderland told me recently. Dan is the firm's National Leader of Audit and Assurance Services.

What's behind this audit rebirth? Dan says it's a confluence of factors, but two stand out as driving forces: (1) auditor relevance and (2) technology.

Let's have a look at these forces, which have implications for both the markets generally and for those considering a career in auditing.

Auditor Relevance in the 21st Century

Across the globe, investors, audit committees, and other key market participants have expressed their need and desire for more information regarding the work and views of public company auditors. This isn't surprising, given evidence of the robust confidence that investors place in independent auditors.

The auditing profession is responding actively to this need on a number of fronts, notably development of audit quality indicators and rethinking the auditor's report.

The latter is a great example of the push for greater understanding. By way of background, the auditor's report is where the auditor opines on whether the financial statements are presented fairly, in all material respects, in accordance with a financial reporting framework like U.S. GAAP. The report is seen as a simple "pass-fail" statement, but policymakers, the profession, and others have been exploring how to make it more informative.

The United Kingdom has been in the vanguard on this issue. UK audit reports now provide more information, including a discussion of the application of materiality, the scope of the audit, and an assessment of risks of material misstatement. According to a report issued by the UK's Financial Reporting Council in January, "investors have welcomed extended auditor reporting, and greatly value the enhanced information it provides." For his part, James Doty, Chairman of the U.S. Public Company Accounting Oversight Board (PCAOB), recently hailed the new UK audit reports as bringing "new relevance to the audit."

As in the United Kingdom, U.S. public company auditors have been deeply engaged on the issue of auditor's report, providing extensive and constructive input on regulatory proposals. The profession will remain engaged as PCAOB continues work this year on rules to refashion the auditor's report.

Enhanced Understanding through Technology

As I've noted before on LinkedIn, technology is also a force for change in auditing. Firms are pushing into exciting new technological areas, like greater use of data analytics and artificial intelligence techniques. In the words of EY:

"Big data and analytics are enabling auditors to better identify financial reporting, fraud and operational business risks and tailor their approach to deliver a more relevant audit."

It's important to emphasize that the use of technology isn't just about being on the cutting edge. As Deloitte's Dan Sunderland told me, technology is "a depth of understanding play." High tech, in other words, is strengthening and deepening the auditor's analytical role and work — not simply speeding it up or adding bells and whistles.

Career Implications

The audit renaissance, of course, has career implications as well.

Generally speaking, accounting and auditing has a very favorable career profile, with a healthy hiring outlook driven by a global increase in demand. The profession's technological awakening should be of particular interest to jobseekers, as audit firms of all sizes will continue to hunt for those with expertise to use technology and the enthusiasm to learn it.

But remember, the audit renaissance is bigger than just adopting whiz-bang tech. In essence, this rebirth is driven by the need and desire, both inside and outside of the profession, for enhanced understanding. As such, the core skills and attributes that auditors have always had — independence, skepticism, objectivity — will remain as important and valuable as ever.

I welcome your thoughts in the comments.

A securities lawyer, Cindy Fornelli has served as the Executive Director of the Center for Audit Quality since its establishment in 2007.