Adding more value to audits for asset managers


Technology and customization provide extra benefits


Asset management firms stand to reap numerous benefits from technological advancements that are transforming their financial statement audits and enhancing their value.


Technologies such as artificial intelligence — including generative AI — and data analytics are enabling audit firms to provide comprehensive insights and analysis of full data sets, rather than just samples.


However, to fully capitalize on these benefits, asset management firms must rethink their approach to audits and prepare to extract more value from a process traditionally seen as merely a compliance exercise.


“Asset management firms have an opportunity to move beyond the goal of avoiding adjustments and securing a clean audit report, as they now have the potential to gain much more value from their audits,” said Grant Thornton National Managing Partner for Asset Management Michael Patanella.


Benefits for asset managers


It’s easy for asset managers to see the improvements that technology is bringing to their financial statement audits. Technology enables auditors to analyze whole populations of data rather than samples, providing greater scrutiny and analysis of data in a fraction of the time it once took to perform testing.


This relieves pressure on auditors as well as asset management clients during the audit process and facilitates more comprehensive results in a shorter time frame, often leading to a faster completion of the audit — as well as providing new insights.

Headshot of Michael Patanella

“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.

Headshot of Eliaz Niedober

“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.


Related resources


How to take advantage of audit innovation


Advocate for advanced tech in your audit


Asset management firms, through their board and audit committee members, should inquire about the technology their auditors are using, including the capabilities and benefits of these tools.


Understanding which processes are automated, which are not, and who’s performing the work will enable the firms being audited to better understand their interaction with the auditor and the advantages that the audit can provide.


“Be an advocate for more technology,” Patanella advises. “Our clients are often curious about how their data is being used and what technology we use. This curiosity sometimes leads them to reevaluate their own technological needs and results in operational improvements.”




Expect customized treatment


No two asset managers are alike, and therefore their auditor should be able to adapt high-quality technological systems to individual client needs. One client provided data for the audit to Grant Thornton through text files and suddenly experienced a significant increase in both the number of reports and volume of data needing review.


This surge made the audit more challenging due to the amount of data and its format. However, we quickly addressed this issue by devising a method to manage the data more effectively. "Within a matter of hours, we were able to develop a solution for the audit team using Alteryx that organizes the data for testing, regardless of the number of reports the client provides,” Niedober said.




Get your data in order


As asset managers work to take advantage of technology such as AI in their own operations and finance functions, they are finding that reliable, consistent data is the raw material that makes automation possible.


The same is true in the financial statement audit. Having well-ordered data that can be provided to the auditor through a secure shared site platform — even as the auditor continues to apply skepticism to all the data — will enable easier interactions and better results.




Upgrade your project management


An audit that’s executed in a methodical fashion is likely to provide more value-added benefits than an audit that’s disorganized.


Audit insights from other industries



Asset managers need to enhance their project management focus so they understand precisely where their data resides, how to provide it to the auditor, the relevant deadlines, and who in their organization will be responsible for interacting with the audit team. While auditors may use customized dashboards and project management technology to track the provision of data for the audit, the audited firm must ensure that the right personnel are prepared to engage with both the auditor and the technology.



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This content provides information and comments on current issues and developments from Grant Thornton Advisors LLC and Grant Thornton LLP. It is not a comprehensive analysis of the subject matter covered. It is not, and should not be construed as, accounting, legal, tax, or professional advice provided by Grant Thornton Advisors LLC and Grant Thornton LLP. All relevant facts and circumstances, including the pertinent authoritative literature, need to be considered to arrive at conclusions that comply with matters addressed in this content.

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