Redefining the Audit: The Impact of Digitalisation in Finance and Accounting

Jump to summary

IT landscape – a mix of cloud and traditional

First and foremost, comprehending the IT system landscape is essential, as it lays the groundwork for effective data management in finance and auditing. In today’s environment, where balance sheets, reports, and other key financial information are heavily IT-dependent – and given that auditing is inherently data-driven – the systems in place directly determine the effectiveness, accuracy, and integrity of audits.

Three quarters of respondents report a homogeneous IT system landscape for finance and accounting. Those planning to upgrade to or implement a new ERP system within three years (67%) are more likely to have homogeneous systems, while those with no ERP plans (24%) are more likely to have heterogeneous systems.

Companies use a mix of mostly cloud-based solutions (SAP, Microsoft 365) and traditional software (Excel, Abacus).  While some respondents list Excel as one of their ERPs, it is important to note that Excel is a spreadsheet tool, not an ERP. On the other hand, Abacus is a robust ERP solution, particularly well-suited for the middle market. For companies with revenues of CHF 1 to 99 million, Abacus and SAP are the primary ERP systems. Smaller companies (1 to 499 employees) are less likely to use SAP, while larger companies (2000+ employees) are more likely to use SAP as their primary ERP.

Transformation is underway – but there is still a long way to go 

15% of companies report that their transformation is complete, 55% are in the midst of transformation and 30% are planning to transform within the next 1 to 3 years. The size of the company affects the progress of its finance transformation: organisations with more than 2,000 employees are significantly more likely to have their transformation underway (65%), while those with less than 500 employees are more likely to be in the planning stage of their transformation (38%).

Streamlining business processes and implementing new ERP systems are perceived as the most impactful game changers over the last three years. The survey further reveals that more than 9 out of 10 companies are already benefiting from the adoption of advanced technologies, with process automation tools, cloud-based solutions and data visualization tools standing out. A total of 75% of respondents are either piloting or actively using cloud technology, while 73% are doing the same with data visualization solutions. These tools are proving essential in enhancing business performance and decision-making by providing real-time data access and advanced analytics. 

The widespread use of technology used is particularly impactful in augmenting a strategic perspective, improving companies' ability to manage business performance (63%), and furthering informed business decisions (52%). Looking ahead, 49% of respondents are either piloting or planning to implement AI solutions within the next 1-2 years.

However, while activities are being automated, many organisations still have significant work ahead to fully drive efficiency and achieve higher levels of automation. The survey shows that organisations scored an average of 6.17 out of 10 on the automation scale, indicating that many finance and accounting processes remain largely manual. This underscores the opportunity for further automation to improve efficiency and reduce time-consuming manual tasks.  

"How important is each of the following to improve finance and accounting processes in your organisation?"

Upgrading staff skills, automating tasks, and improving data management systems and processes are the top methods used to improve finance and accounting processes. Specifically, 94% of companies are focusing on upskilling staff and automating tasks, while 92% are focusing on enhancing data management systems. These improvements can be achieved with advanced technology tools.

Outsourcing low-value-added services, on the other hand, is seen as relatively insignificant for improving finance processes, with 47% of respondents considering it not important. The reason may be that many organisations have already outsourced these tasks or anticipate that AI will soon take over these low-value-adding activities.

The two areas that are expected to benefit most from new technology solutions are controlling and management accounting, where 90% of companies recognise the potential for efficiency gains, and financial data management, where 86% of companies see further opportunities for efficiency improvement.

In your opinion, to what extent are employees within your organisation taking full advantage of the technology solutions that are available?

Six out of ten say that, for the most part, employees make full use of the technology available in their organisations. However, a third feel that this varies from team to team. Companies that have completed their transformation report a higher percentage of full technology adoption by all employees (18%).

There are several barriers to adopting new technologies, including resistance from employees and management who prefer familiar methods and fear unreliability. Integration issues arise due to different technologies used by different teams and distributed skills. In addition, high costs and lack of budget for training hinder the adoption process.

Big expectations around AI

Emerging and cognitive technologies have the potential to revolutionise the finance function and the audit process in unprecedented ways. By leveraging data transformation, predictive analytics, and automation, these technologies fundamentally reshape how auditors will work in the future, providing audit teams with a comprehensive view of the audit landscape. What are the biggest changes and efficiency gains that companies expect from the use of new technologies, especially AI, in relation to the audit of the future?

44% of respondents anticipate the most significant improvements to lie in the analysis of full data populations, e.g. for detecting anomalies in large data sets. The audit of IT systems, including IT general controls and IT application controls, ranks second, with 33% of companies expecting improvements in this area. Nearly 25% of companies expect better cooperation and communication with their auditors, as well as improved sharing and use of data to support the audit. The expectation that testing attributes will improve due to new technologies is particularly prevalent among companies with revenues between CHF 500 and 1000 million.

In your opinion, which of the following do you think will have the biggest impact on the future of the overall audit process in the next five years? 

However, technology alone does not provide value to a business; the expertise, judgment, and insight of financial professionals remain crucial. The value of technology stems from enabling humans to work differently. While AI excels at processing data and handling repetitive tasks, human intelligence is essential for understanding business contexts, exercising scepticism, and building relationships. By achieving an ideal balance between human intelligence and AI, both can be harnessed effectively to provide greater outcomes than either of them could accomplish on its own.

New advancements in data analytics and digital technologies are beginning to reshape the audit landscape, offering the potential for continuous auditing. These innovations contribute to more efficient and comprehensive audits by facilitating centralised testing of revenue, centralised risk analysis, and other key areas, complementing the traditional local audits that remain mandatory for meeting statutory requirements in most countries. This raises important questions about where, by whom, and with what support audits should be carried out in the future.

In response to the question about whether audits will still be performed primarily on site five years from now, responses vary. Only 10% of respondents believe that audits will be conducted mainly on site. A significant majority of 67% foresee a hybrid model with audits performed partially on site. Meanwhile, 13% anticipate that audits will be mostly remote, and 7% think that audits will be fully remote.

Regarding the preference for a Swiss audit team on site versus working with employees from a Centre of Excellence (CoE) or Shared Service Centre (SSC) abroad, opinions are also diverse. 36% of respondents prefer a local Swiss team. However, 29% are open to working with a CoE/SSC for selected areas, and 18% would be willing to work with a CoE/SSC if it leads to a significant reduction in audit fees. Additionally, 12% are generally open to collaborating with a CoE/SSC, while 5% would not accept working with a CoE/SSC at all.

When asked whether they are open to further centralisation of audits in a group audit context (e.g. centralised revenue testing) or prefer individual local audits, most respondents indicate a preference for centralisation. Specifically, 57% are in favour of centralising certain elements of the audit, while 24% support centralising as much as possible, and 19% prefer individual local audits. Of those willing to work with a CoE or SSC, almost all (93%) express a wish for centralisation. In contrast, respondents who prefer a local Swiss team are more likely to favour individual local audits (33%).

Centralising audits offers significant benefits in terms of efficiency and insight. By consolidating efforts at group level, auditors gain a comprehensive view of the organisation, improving risk management and insight. This approach also streamlines the process by reducing duplicate document requests from various audit teams around the world, resulting in a more efficient and consistent audit while ensuring compliance with regulatory requirements.

Responses were mixed on the willingness to audit in stages throughout the year (continuous audit) rather than at interim and year-end. 32% of respondents prefer audits at specific times, while 31% support continuous auditing and see clear benefits of this approach. In addition, 29% are open to continuous auditing in selected areas, and 8% would not accept continuous auditing at all. Those who prefer a local Swiss team are more likely to opt for scheduled audits (45%) and much less likely to support continuous auditing (20%).

To leverage technology investments such as cloud and ERP systems, organisations should be prepared for data extraction and direct access by auditors, while also addressing privacy concerns.

How is your financial audit structured and organised today?

There are currently several approaches and structures for organising financial audits. However, only 47% of auditors use advanced technology solutions for audit procedures and cooperation. In addition, 42% of companies report that the auditor performs the audit where the work is done, 40% say they have one auditor for the whole organisation, and 35% say that auditors use their own shared service centres and remote resources to increase efficiency.

Providing auditors with documentation is by far the most timeconsuming element of the audit process

Providing auditors with documentation and supporting materials has been identified as the most time-consuming element of the audit process (71%). This indicates that despite the growing adoption of digital solutions and automation, companies are still facing significant inefficiencies in preparing and sharing critical documentation with auditors. As organisations continue to embrace new technologies, improving document management and integration with audit processes should be a priority to alleviate this burden.

What do you currently see as the main limiting factors for the use/leverage of technological tools/applications in the year-end audit?

When asked to identify the main limiting factors for the use of technology tools in the financial statement audit, 44% of organisations cite high data privacy and security requirements as their top concern. 39% point to the significant effort required to implement solutions and extract data, 36% the limited availability of audit technology, and 35% the need for large investments that add no value beyond the audit. In addition, 28% mention the fast pace of technological change and insufficient skills or training of audit staff, 26% say their organisation is not ready for a modern audit, and 25% express concerns about data protection.

Those who prefer to work with a local Swiss auditor are more likely to perceive various limiting factors, in particular the need for large investments that do not add value beyond the audit (44%) and high requirements for data protection and data security measures (51%). Companies with a very homogeneous IT landscape point to the effort required to implement solutions and extract data (47%), which, though surprising, stems from the fact that auditors tend to make more use of available data on homogeneous platforms. As the demand for data by auditors increases in the future, this could become a pain point. In contrast, those with a mostly heterogeneous IT landscape highlight the only partial availability of audit technology (55%).

By leveraging technology investments such as cloud and ERP systems, organisations can streamline data extraction and provide direct access to auditors, significantly reducing the time and effort required to support the audit. This not only improves efficiency, but also ensures better compliance with data protection requirements, ultimately leading to more effective and timely audits. Investing in advanced technology solutions can transform the audit process, making it more integrated and less burdensome for organisations.

Our study highlights key insights into the ongoing digital transformation in finance and accounting. 85% of organisations are still in the process of transformation, with two thirds planning to upgrade or implement new ERP systems, indicating that the transformation journey is far from being complete for many companies. Despite the progress already made, a substantial need for further automation and technology upgrades remains, particularly for repetitive and time-consuming finance activities. 

• The need for upskilling and automation: More than nine out of ten respondents recognise the critical need to upskill their workforce and automate tasks, highlighting the significant potential for progress in these areas. Artificial intelligence is widely expected to have a transformative impact, with six out of ten respondents anticipating that AI will also substantially influence the audit process. Outsourcing low value-adding services, on the other hand, is seen as relatively unimportant to improving finance processes, with just over 50% of respondents considering it important.
• Companies want the audit to transform with them: There is a growing openness to centralising audits, with more than 80% of respondents in favour. Also, 60% support continuous auditing. However, only a third currently have (partially) centralised audits in place, indicating that there is scope for further efficiency improvements. Seven out of ten respondents mention the time-consuming nature of providing documents and data as a major challenge in the audit process, with limited technology adoption due to privacy and security concerns cited as a barrier.

Future challenges

Overall, as the finance and audit landscape continues to evolve, several challenges loom on the horizon. Around 40% of respondents believe that the tools used for audits are not up to date. Combined with the perceived limitations of technology adoption, this suggests that significant investment will be required to bring audit tools and processes up to par. New regulatory requirements, particularly in areas such as sustainability reporting (e.g. CSRD), will put further pressure on organisations, making it increasingly difficult to meet these requirements efficiently without greater reliance on technology.

• Building readiness for transformation: As AI and other advanced technologies become more integrated into business processes, reliability and effectiveness must improve. Trust in these technologies is critical to ensure a broadening of their application. However, one in four respondents does not feel ready for a modern audit, and more than one third are reluctant to invest in improvements such as control maturity. Overcoming this reluctance and building readiness for transformation will be essential for conducting audits that are not only modern and data-focused, but also effective at driving future business success.

• Continuous data sharing: Companies need to move forward by being open to sharing data not just once, but on an ongoing basis, which is essential to enable continuous auditing, even in the face of data protection concerns. In addition, companies should centralise and harmonise their processes to facilitate efficient and cohesive auditing. As part of their transformation projects, companies must consider these aspects, including the development of unified data platforms and ensuring digital access to documents such as delivery notes and invoices. Furthermore, updating and digitalising internal control systems (ICS), such as implementing automated application controls, will enable auditors to use these systems effectively during audits.