KPMG calls time on remote working as big firms split on value of virtual audits

Whether audits can be properly conducted remotely has opened a fault line at the top of Britain’s accounting firms. 

Deloitte and BDO are reportedly happy with the current arrangement whereby staff are not always present on site or at the office. Their teams have used drones, CCTV, virtual workspaces and other technologies including screen-saving software to verify data and stock information. 

KPMG, on the other hand, has told staff they will have to return to at least a four-day office or site working pattern. Despite ongoing concerns over the mutating strains of the coronavirus, KPMG’s employees were informed at the end of November that client-facing staff must clock at least two days a week either at the firm’s offices or at client sites. Cath Burnet, KPMG’s head of audit in the UK, told the UK audit team that long term their future lies back in the office.

Recently, the firm was criticised by the Financial Reporting Council for the “unacceptable” quality of its banking audits. It was also told by the UK government a ban on bidding for public contracts would be handed out if it oversaw further scandal, and senior staff are concerned quality may slip if individuals are not on site or in the office for the majority of the week.

Senior auditors have also raised concerns that remote work can hinder the development of younger talent who will lose out on valuable in-person experience. However, flexible working patterns have become a welcome perk for busy accountants who may be reluctant to give up the extra freedom. The firms themselves also have different views on how effective technology is in facilitating remote audits.

‘In-person doesn’t always equal better’

“It’s much easier to deal with remote work when the entire organisation has effective and well-practiced project management, processes, and technology capabilities,” said Jon Raphael, audit and assurance manager at Deloitte. 

The Big Four firm’s UK arm believes it is time the accounting industry moved on from the old view that spending endless hours in the office guarantees accuracy, pointing to the suites of technologies available to augment the auditor’s skills

“While there are elements of an audit that will happen in person, we don’t believe quality is impacted by auditors working flexibly and we have been operating in a remote environment very effectively for well over a year now,” said Paul Stephenson, Deloitte UK managing partner for audit and assurance. “The audit of each entity will be different,” he said. “There is no ‘one-size-fits-all’ approach and that’s why we want individual teams, in discussion with the companies they are auditing, to work out the arrangements that will work best for each personal and professional circumstance.”

A similar point was made by BDO managing partner Paul Eagland, who said it’s “not simple that physical equals better”. “Some things are still done better face to face, but that’s not a whole week of work, is it?” said Eagland. “That’s a well-timed progress meeting with the client.”

Accounting and audit are renowned for high burnout rates and long hours, and the chance to offer a more flexible working week will make BDO a more favourable destination for talent, Eagland said.

Bucking the global trend

Auditors at PwC will be asked to spend two to three days a week in the office post-pandemic, the firm said. The largest audit firm in the UK said large amounts of work could be done remotely, but on occasion staff working in the same place as their colleagues would help judgement, teamwork, and improve accuracy.

Similarly, EY remains cautiously supportive of hybrid working patterns in the short term, but longer term such arrangements will require managerial approval. EY chair Hywel Ball reportedly emailed partners asking them to speak with HR about contractual implications before making commitments to staff on future remote working arrangements.

Broader workforce trends point to a continuation of remote hours in a post-Covid world, with both employers and employees for the most part in agreement. It remains to be seen if audit firms echo the attitudes of the firms whose books they analyse. 

A survey conducted by EY, not of its own workforce, revealed that more than half (54%) of employees surveyed from around the world would consider leaving their jobs if they were not afforded flexible working arrangements following the changes triggered by the pandemic.

EY found that nine out of 10 employees want flexibility in where and when they work in the survey, one of the largest of its kind which canvassed the views of more than 16,000 employees across 16 countries and multiple industries and job roles.

Quality counts, not presence

Industry experts believe discussions over working arrangements overshadow what really matters; whether the audits are accurate.

“I think we have to really look at what makes an audit work well,” said Julia Penny, of JS Penny Consulting. “Some of that is about the challenge of management over policies or estimates and such conversations are almost certainly easier and probably more effective in person,” Penny told AccountingWEB. It is also essential that the correct culture is built up among staff and partners, she said, which doesn’t have to mean spending every day chained to office desks. “I’ve seen plenty of people in an office but not talking to one another,” Penny said. 

“Much of an audit is about detailed work looking at trends, documents, system notes and so on,” Penny said. “Quiet time working from home could be an advantage for this and if we want people to continue to be auditors in a difficult environment it might be essential that there is some give and take and investigation into new ways of doing things.”

Guidance by the ICAEW covers similar ground, stating that it is not always necessary for the auditor to be present, but in such cases where remote work is required it is to the benefit of both parties that changes to the engagement terms are agreed beforehand.

“While the four basic techniques for gathering audit evidence - observation, inspection, inquiry, and analytical procedures - do not require auditors to be on-site, auditors will need to consider how they will compensate for a lack of physical proximity in some areas,” a spokesperson for the ICAEW said.