Summary
The increased emphasis on real-time data and the criticism that financial statements are antiquated may signal reduced auditing work for accountants, but changes in the business world will also provide opportunities such as attestation services. The increase in information systems and services provide investors with data that is more timely than financial statements. The mass of information available still requires professionals to decipher the information for clients. Attestations, written affirmation of statements by others, are also becoming more prevalent.
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Extract
The future of audits.
Auditing creates tremendous economic value. Companies benefit from a reduced cost of raising capital; if their financial statements were unaudited, they would have to pay more. That is, for debt, they would pay higher interest rates; for equity, they would have to offer their shares at lower prices. If a company with $10 million in total capitalization (debt plus equity) had to pay 1% to 3% more for capital without an audit, having an audit would save between $100,000 and $300,000. For a company with $10 billion in capital, the comparable annual savings would be $100 million to $300 million!
Despite this past and present value, we must be concerned about future value, especially because information technology--increasingly a staple in the financial community--causes great change. Information technology provides alternative information sources to those who traditionally have relied on financial statements and dramatically changes all aspects of preparing, a...See the full content of this document
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