The audit process, one of the most vertically integrated professional services left in today’s market, is being broken down into separate parts by audit clients, creating a huge opportunity for technology firms to enter the market, a new report finds today.

The report finds that a third of audit clients are breaking down their audit process into separate parts and that 44% are thinking about doing so. Furthermore, 45% say that this change will lead to more parts of audit work going to technology firms.

The two front-running technology firms in the eyes of audit clients are IBM (40%) and Accenture (18%). However, just over half (52%) of clients identified Deloitte as the audit firm best positioned to deliver the technology components of an audit, followed by KPMG (22%) and then EY (18%).

This new report is published by Source Global Research, the leading research and strategy firm for the global professional services industry. Source surveyed CEOs, CXOs, CFOs, and senior finance executives from a large number of organisations; 49% of these organisations employ more than 5,000 staff, 58% were audited by the Big Four, and 39% had worked with the same auditor for more than five years.[1]

Fiona Czerniawska, Director at Source Global Research, said:

“If you assume that some parts of the audit process will require more technology, and more technology know-how, than others, then, provided an auditor retains control of some part of the process, it would be logical to turn to technology specialists.

In short, it’s clear that breaking the audit process down will significantly change the rules of engagement for traditional audit firms. This simple change creates opportunities for non-audit firms to become involved.”

Source also found that around two-thirds (64%) of audit clients expect their reliance on outside help to increase over the next decade. Just over a third (36%) of clients said that this was because they’d need to access more specialised skills, but more significantly, almost a quarter (23%) said it was because they’d need greater access to innovative new tools. Source adds in the report that this is something that’s borne out by interviews it has carried out with audit clients: “We’re looking to our auditors to give us tools that will help us carry out our own analysis,” said one finance director recently.

Fiona Czerniawska concluded:

“Technology companies that might never have considered entering this market will be paying a lot of attention to the significant changes that our research has revealed are taking place right now in the audit market. When we consider the potential size of the new market that could be carved out of the existing one, it’s clear that this will be a huge opportunity for new entrants.”

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