Deloitte Develops Audit Technology for Smaller Firms
Deloitte just announced the availability of audit technology for smaller accounting firms through a new venture it recently formed.
Deloitte created Auvenir as an in-house startup and tasked it with developing its own auditing technology that could be offered to small firms. Next week, Deloitte plans to announce the North American launch of the technology, known as the Auvenir Audit Smarter platform, which leverages artificial intelligence to help auditors with their work.
Auvenir doesn’t use Deloitte’s own proprietary auditing technology, but it was developed with input from Deloitte’s audit team. The Auvenir team also interviewed a number of small to midsized audit firms and their clients across North America to identify the issues they encounter with audits. It has been beta testing the Audit Smarter technology with several auditing firms in Canada.
Deloitte global audit and assurance innovation leader Chris Thatcher said he was tasked by his boss with coming up with the kind of technology that a startup might develop in competition with Deloitte. “One of the things he was quite concerned about, that kept him up at nights, was a couple of guys in a garage thinking about how you could do audit completely differently to how we would have done it traditionally in the past,” he said. “My boss basically challenged me to think about defending ourselves from disruption.”
“From our perspective at Auvenir, we spoke to hundreds of auditors and clients, primarily in that part of the market, the smaller auditing firms and smaller clients, and what we found is that a lot of the technology that’s available to them is not the right size technology for the size of engagements they’re dealing with,” Auvenir CEO Pete Myers said. “We want to open this up for any accounting firm. We’re not restricting who uses it. It’s available to any firm out there.”
The platform uses cloud-based storage, machine learning and artificial intelligence to improve workflow and collaboration between auditors and their clients.
The machine learning component helps auditors judge whether there is a low or high risk from the trends they are seeing. “It would be like saying nine out of 10 auditors when they were looking at this industry thought this was a high risk, but giving those insights in a real way,” said Myers. “It’s really providing those insights and tips, as someone who is working through the engagement or going through their decision-making to just have somewhat more confidence in the decisions they’re making. One thing that’s very clear, as a platform we’re not taking on the audit itself. We’re just a tool to be used by auditors, and we’re not making any of the decisions that need to be made in coming to an opinion.”
Deloitte admitted last month to a data breach in which hackers were able to access client data from its internal email system (see Deloitte email platform and client data hit by cyberattack). However, Auvenir is using separate servers and is emphasizing security.
“We host the data, and it’s completely separate from where Deloitte hosts their data,” said Myers. “Data security is one of our most important governing principles. In conversations with auditors and clients, it’s top of mind that the data is secure. Basically all of our customer and application data is encrypted whenever it’s being transmitted between our servers or with a customer device. It’s also encrypted anytime it’s stored on our servers. The data is never stored or transferred to a customer without strong encryption and then our encryption algorithms are all compliant or exceed ISO and NISD standards. And in addition to that, we’re making sure we’re going through an independent SOC 2 certification to make sure we’re complying with the SOC 2 and ISO 27001 security standards.”
Deloitte sees the technology as an innovation for the audit profession. “We believe this is quite radical innovation,” said Thatcher. “This is radically different innovation from what we’ve seen traditionally from ourselves and from others in the market. This is the very first venture we have done as a global audit business and certainly we hope it is not our last.”