#177 – THE FUTURE OF AUDITING – PETER HOLTMANN

179fed3-150x150Social collaboration, online audit tools and in-house expertise point the way forward for the future audit.

Using social platforms to support the audit process with electronic audit tools and remote auditors is the way of the future. How we start to position ourselves for the future audit is something I have been thinking about since I first wrote parts of this article in 2013. Let’s look back now to go forward.

2013 was a learning curve for me on systems such as crowdsourcing, social collaboration, social commerce and memes. I had been across some of these topics at high level in the past, especially when related to games-based solutions to solving scientific dilemmas such as the Rosetta project.

AAA HOLTMANNow in 2017, crowdsourcing and computer assisted auditing platforms are the future for training and deployment of audit resources. Crowdsourcing, the use of a collective of individuals that work together to achieve a common goal, has a low investment with high return and an effective control of labour especially when apportioning smaller chunks of work (microwork) that combine to deliver the intended outcome.

Fiendishly clever in its inception, infinitely scalable, limitless potential and yet still nascent for the auditing world. It has spawned a number of other collaborative consumption genres. To name but a small few here, social commerce (EBay); reputational systems (Trip Advisor); games-based solutions (Rosetta), crowd funding (Kiva); social Peer 2 Peer communities (open source learning), etc. It’s amazing stuff!

Having the audit industry adopt this strategy makes good sense given the geographical region of businesses wanting certification or recognition has spread to every continent, the number of experts available to travel broadly to cover demand is diminishing, and the competitive nature of the audit industry means margins cannot sustain in-person visits.

Moving to social platforms, training in-house expertise to utilise online audit platforms makes good business sense. Picture if you will a social network that trains its own using Peer-to-Peer concepts (memes). In this universe, education is established by training organisations who set parameters based on industry want and need. The content is aggregated from social opinion rather than the critical consciousness of auditing norms. Training could be games-based, interactive and based on real world scenarios that simultaneously assess knowledge and skill; and resolve or innovate industrial applications for standards.

In 2013 I stated that the utilisation of third party resources globally and working with industry to determine best practice, again based on Peer-to-Peer interactions, be combined with international standards. The audit scope, timing and audit team composition would be placed into the crowdsourced audit pool. Once these parameters are established the crowd would determine the composition of audit teams.

Today in 2017, I still believe this formula of members working remotely, electronically and on micro-projects such as desk auditing, with their results being fed back into the crowd for further use, is the most viable option. Technology has advanced considerably to allow members to utilise an electronic pool of technical experts who would be witnessing the audit through remote tools, Meerkat or Periscope and logging results into online tools such as icomplied.

The audit process would interactively walk the audit team through their assigned duties, e-based members of the team can ensure that all process steps are being completed and can be compiling audit results in real-time using online audit platforms. The audit outcomes would be a collaborative exercise presented to the auditee onsite, in real-time, by the crowd using a team member as a meeting facilitator.

The Certification Body/Registrar gets a completed audit for its client and can bill immediately for final outcomes and the auditee gets a globally benchmarked audit and outcomes, has proactively contributed to the audit process, and has probably gained a multitude of new professional connections and reference points.

Are there potential risks of this system?  Previously I believed that ensuring the crowd is the right crowd for the job, was the risk. Some crowd members may have malicious intent for whatever reasons and thus control of their outcomes and actions, could present a risk.  Today I believe that having experts employed within the organisation can mitigate the risk. Training of onsite expertise, achieving a level of expertise equal to or greater than the third-party professional is achievable and can dramatically improve the outcomes of audits. It also can give you access to real-time or online data about compliance as opposed to the off-line content captured during third-party audits.

There is a risk that the equitable use of crowd-sourced resources receives fair income for their services. Currently most crowdsourced activities are tasked by volunteers. Nothing wrong with this but when outcomes have high stakes or employ high level skills, an expectation of fee for service is implied. When stretched across the globe into different economies and cultures, the “fair days pay for a fair days work” axiom may become blurred.

Completion of task as the crowd may move with more attractive or lucrative propositions is possible, however, the use of social commerce or reputational systems plays a huge role especially in the close fraternity of professional auditing. Just as you may never buy from an EBay seller with a very low seller score, or you may never book accommodation at a venue with a very low reviewer rating, the same could be deployed for both the registrar and the auditor crowd. Speaking of professional standing, the client may consider social parameters such as ethical treatment, environmental controls, fair pay, anti-terrorism, etc. Despite their professional credentials, the client may refuse to opt-in if one or more of these factors are not met. This is considered as an impact on reputational capital.

I believe today, as I wrote in 2013, that the benefits for adopting this vision, is in its global approach. Anyone can participate from anywhere and be local to the center of work.  The division of labour offers the “wisdom of the crowd” philosophy. Everyone grows, everyone gains. Especially important for emerging skilled workforces, industries, nations, economies. This includes onsite audit professionals who lead external experts or certifying auditors through remote auditing platforms. This model incorporates a centrally planned audit, conducted by autonomous agents, whose competence is regulated by a central authority. This model places great controls and transparency into the process and removes a raft of barriers to entry for the audit and auditor industry. Most importantly, innovation is nurtured and allowed to propagate through the assistance of the crowd, the client expertise and the external certification provider. International standards would be worked upon by the “users” and the “certifiers”.

This vision still excites me greatly and is more achievable now in 2017 than at any previous time. In fact it’s hard finding reasons why not to do this model of auditing.

Given the vision here, let me ask of you some critical questions that determine the ability of the vision to be realized.

Would you become involved in crowdsourced audits? Would you volunteer to create meme-based training in a games-based environment? Would you engage in Peer-to-Peer innovation of industrial standards?

If you answered yes to one or more of these, I dare say we have a start toward an exciting future.

About the Author

Peter is the founder and Director of Holtmann Professional Services, a global provider of executive coaching, business excellence consulting and career path development. Peter has 20 years of experience in executive roles and has been the President and CEO of a global Non-profit for personnel certification. Peter has written for many journals and blogs, is a keynote speaker and is a champion of prosperity through excellence of leadership.

Peter can be contacted at hps@peterholtmann.com. Visit us at www.holtmannprofesisonalservices.com

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