Digitising processes and adopting secure systems that prevent fraud has become a leading priority for banks and audit firms. Scammers are evolving quickly and leveraging new tactics that make them hard to detect. Traditional, manual, and paper-based processes are particularly open to easy manipulation and, hence, must change.

A report by ACCC on scam activity highlights that:

• Australians lost a record $3.1 billion to scammers in 2022, an 80% increase on total losses in 2021.
• Investment scams were the highest loss category standing at $1.5 billion, remote access scams at $229 million, and payment redirection scams at $224 million.

Along with all this, there is also a risk of fraud in audit and accounting firms. The Wirecard scandal where an approximate $2 billion went missing from Wirecard’s books is a recent example of how easily traditional systems are manipulated. The company had been manipulating the system for years. This fraud opened the discussion regarding the auditors role in identifying and combating fraud. While the company’s auditor, Ernst & Young (EY) lead discovered the fraud, the audit firm faced severe criticism and a 500,000 euro fine for failing to detect the fraud sooner.

While audits intend to deliver independent evaluations and examinations of financial statements, traditional processes lend themselves to easy manipulation. Catching forged invoices, contracts, and letters with outdated auditing systems is no longer possible.

In a study of 358 audit firms, auditors witnessed a 2.2% drop in client growth for each highlighted flaw and 6.1% lower fee growth over the next year. This also explains why audit quality can be easily compromised in the absence of foolproof systems.

The Audit Challenge

Data shows processes and systems that can be manipulated will be manipulated. As fraud sophistication grows, audit processes that are dated and manual, and hence open to manipulation, are no longer viable. For auditors to retain trust and credibility, auditing will need to progress beyond email/fax/mail and leverage strong and secure technology platforms.

The gap between the current technological adoption and audit accounting standards has increased, compelling a rethinking of the audit process keeping technology at its heart. The reason to do this is twofold – to increase the quality and confidence of audit and to provide more opportunity for audits to become a proactive, value-driven, and forward-looking activity.

The Role of Technology

Auditors are now arming themselves with industry-compliant technology tools and platforms to identify anomalies, look at and analyse large and comprehensive data sets, and improve the quality of audits while also increasing audit velocity and confidence.

Technology platforms like Confirmation have become invaluable in helping audit companies stay ahead of the competition. Confirmation enables audit firms an easy, fast, and secure way to send more than 100 confirmation types to anyone, anywhere in the world. More than 16,000 audit firms trust Confirmation and use it to keep up with constant regulatory changes, reduce non-value-added responsibilities, and conduct more insightful analyses and focus on high-value tasks.

Streamlining the audit confirmation process increases auditor productivity, elevates customer experience, and improves profitability while combatting fraud. An automated confirmation process removes the hidden costs of traditional approaches like email, fax, or mail. Our studies show that:

• Up to 30% of audit requests received by banks are duplicates, creating unnecessary work,
• 40% of auditors have had to delay the completion of their clients’ audits due to late confirmation responses,
• 65% of auditors have had to ask their clients to chase the bank for urgent confirmation responses.

Confirmation allows auditors to verify financial data and creates an ecosystem that cannot be manipulated. To illustrate Confirmation’s commitment to effective operational controls and privacy and security best practices, we undergo Service Organisation Control (SOC) examinations annually and have received an ISO 27001 certification for the service. Collectively, these provide assurance about the controls we implement to protect the privacy and confidentiality of our users’ data and the security, availability, and processing integrity of our system.

A compliant and comprehensive confirmation platform contributes significantly to elevating the quality of audits. Online confirmations reduce the audit confirmation process from weeks to just days and delivers a validated global network. This reduces the chance of fraud and increases auditors’ confidence as responses received are from validated financial institutions.

Connect with our team to see how Confirmation, the global gold standard for audit confirmations, protects against fraud while increasing audit quality, improving customer experience, and advancing organisational profitability.