Human judgment and technology as cornerstones for trust

In a time where technology is developing at the speed of light, understanding the client remains key for a trustworthy relationship.

The following list gives insight into what our clients deem important. 

The answers show that technology surely does play an important role in client relationships, but more as an enabling factor rather than a real differentiator.

What really counts for a trustworthy client-auditor relationship is that the auditor understands the client’s business and its environment, speaks the client’s language and that there is a match on a personal level. These elements are also the basis when it comes to assurance on non-financial information in the domain of Environmental, Social and Governance (ESG).

What comes a bit as a surprise is that the aspect of "thought leadership" was mentioned as the least important factor for a trustworthy relationship. We believe that “thought leadership” still plays an important role in the context of “industry knowledge and business understanding” to be relevant for our clients.

Clients perceive the value of a technology enabled audit as high:

In the eyes of the interviewees, the role of human experts is crucial. Their contextual knowledge and experience, analytical mindset and ability to associate information are indispensable. 

According to the survey, the following aspects of the human being cannot easily be replaced by technology:

We therefore dub this the high-tech, high-touch audit era. An era where technology can only be successful when humans have a key role in the assessment and judgement. The good news is: auditors traditionally have been trained to be critical and are curious by nature. These are prerequisites for warranting their place in the loop. 

High-tech, high-touch also means close collaboration between auditors and clients. We believe this becomes even more vital to navigating this landscape effectively and to optimally exploiting the potential of technology. The interviewees confirm this view in the survey. 

We cannot overlook the impact of AI on our lives. As AI becomes ingrained in our daily routines, we must ensure that the algorithms are designed to be trustworthy.

These algorithms increasingly guide us in decisions, both in our personal and business lives. They add transparency and hold the power to enhance our lives by doing so, but they also carry the risk of leading us astray if not reliable and interpreted properly.

As AI and algorithms become increasingly prevalent in various industries, including finance, healthcare, and technology, the need for assurance and accountability in their proper functioning becomes paramount.

This highlights the need for new concepts for assurance, which is somewhat of a "terra incognita" (unknown territory). 

Auditors are developing new methods and concepts and can contribute to areas such as:

• Risk Assessment - understanding the potential impact of AI 
• Compliance and Ethical Considerations - verification that the organization's AI practices comply with relevant laws, regulations, and ethical standards
• Governance and Controls - reviewing policies, procedures, and controls that govern AI use, as well as evaluating the roles and responsibilities of key stakeholders involved in the AI process
• Explainability and Transparency - ensuring that stakeholders can understand the reasoning behind AI-driven decisions

Overall, it is an exciting time with many opportunities to improve the audit. Our clients have confirmed once more that the human factor is an essential component. Together with our clients, we are dedicated to shaping the future of auditing and bringing them value.

Our KPMG Masterclass will cover a full array of AI topics to give you a good insight into the matter as well as equip you and your team with necessary information and methodologies to tackle AI challenges. Visit our website for more information.