Adding more value to audits for asset managers

“Armed with information from the analysis that occurs during the audit, some of our clients have been able to apply insights to improve their processes and operations.”

Michael Patanella

Grant Thornton National Managing Partner, Asset Management

"Armed with information from the analysis that occurs during the audit, some of our clients have been able to apply insights to improve their processes and operations,” Patanella said.

Upon seeing the value that automation brings to the audit, some asset managers also invest in advanced technology to upgrade their own systems and processes, further advancing their capabilities to gain faster, game-changing insights.

For example, innovation is helping asset managers meet their compliance obligations as they grapple with the SEC’s new rules for private fund advisers. The information required to comply with these rules is substantial, but automation can greatly reduce this compliance challenge. 

In the meantime, during the audit process, automation enables audit teams to quickly analyze files for characteristics that will require further questioning of the asset management client’s management. A process that used to be extremely labor intensive can now be completed in a matter of minutes, providing for much earlier and more meaningful conversations with the client.

For certain areas of the audit that were time- and labor-intensive due to the volume of data needing assessment, automation has dramatically reduced the time required to address all necessary questions with the asset management firm.

“Time is very precious in an audit,” said Grant Thornton Audit Senior Manager and Asset Management Audit Innovation Leader Eliaz Niedober. “Automation allows us to pull those conversations forward in the process. Instead of bringing them our questions a few days or weeks before signoff, we can now address them months earlier.”

The technology also has the potential to reduce and even eliminate errors. Automated programs add value by examining complete data sets rather than samples and flagging anomalies in the financial statements that may indicate simple mistakes or, occasionally, more serious issues that require the asset management firm’s attention.

“Toward the end of the audit, when turnaround times are increasingly condensed, the proper technology can alleviate some of the pressure on the asset manager and the audit team.”

Grant Thornton Senior Manager, Audit, and Asset Management Audit Innovation Leader

Meanwhile, automation helps audit team members provide a high-quality audit while working with expedience to meet the tight deadlines required by asset managers and regulators. Professional standards continue to demand that the technological output is evaluated with professional skepticism before the auditors rely on that output. As they exercise their objectivity and independence, auditors can evaluate more data in a timely fashion when they use technology.

“Toward the end of the audit, when turnaround times are increasingly condensed, the proper technology can alleviate some of the pressure on the asset manager and the audit team,” Niedober said. “At the same time, the speed of automated processing greatly reduces the risk that timing of the audit will be disrupted by any last-minute changes an asset management client may have.”

Once automation is incorporated and key processes are tested and validated, the preparation and review time required by the audit staff is usually reduced substantially. This can lead to faster delivery of the audit report.