Energy companies: The future of audit is now


Technology can provide higher quality and reduce risk


As technology unlocks opportunities for novel insights and efficiencies, companies in the energy industry are finding that financial statement auditors who use tools customized for the industry’s unique accounting model can provide greater efficiency, higher quality and lower risk in their audits.


Upstream oil and gas companies, for example, are complex, with unique accounting principles and challenges. They have land management, exploration, drilling and joint interest billing (JIB) activities represented in their financial statements that are unique to their subsector. Many upstream companies follow the Successful Efforts model of accounting, capitalizing costs only for successful wells.


“That’s a very unique accounting model that is not found in other industries,” said Grant Thornton Energy Leader for Audit Services Gerrad Heep. “The energy industry has some very specific accounting issues, and it’s important for financial statement auditors to design and use tools that specifically address the risks that arise with energy company accounting.”


Energy company executives and board members recognize the need for their external auditors to make the most of technological opportunities to enhance the efficiency of their financial statement audit process. Heep said that, without exception, his energy audit clients’ boards are asking how innovation and technology can be used to improve their audit process and experience.

Bryan Benoit

"The potential outcomes are invigorating. They capture the imagination in a very positive way.”

Bryan Benoit

Grant Thornton Global Head of Energy and Natural Resources


Grant Thornton Global Head of Energy and Natural Resources Bryan Benoit said much of the conversation about technology in audit is related to robotic process automation and low-code solutions. However, auditors are starting to explore artificial intelligence. Benoit envisions a future where AI-enabled technology may transform the financial statement audit from a yearly or quarterly exercise to a monthly or even higher-frequency activity.


“Think about how technology and accounting and auditing processes have radically improved in 2024 compared with the last several decades,” Benoit said. “One of the themes over that time has been an insatiable appetite for data, quality and integrity. Here’s a cliffhanger: Will there be a continuation of that theme over the next several decades? The potential outcomes are invigorating. They capture the imagination in a very positive way.”



Related resources












Reducing demands on clients


Technologies lessen financial statement work for energy clients


Time savings in tracking down data and providing information to auditors is one of the biggest benefits clients are experiencing from the automation of audit processes. Heep cited the example of a Grant Thornton oil field services client that benefits from an analytic that measures volatility in revenue.


The client doesn’t experience many pricing changes, and its contracts are uniform, so its revenue is expected to remain consistent across various periods. Using a volatility indicator that conducts an in-depth analysis of revenue trends in the client’s financial statements, the auditors quickly identify any anomalies in the data that require further investigation and/or testing.


This automated analysis:

  • Identifies revenue anomalies more quickly than a manual process;
  • Eliminates false positives that might have surfaced from a manual assessment; and
  • Identifies anomalies that a manual assessment might have missed.

Mostly through the elimination of false positives, the automated analysis results in a reduction in circumstances leading the auditor to request more information.


“We’ve had 50% fewer revenue items to test as part of the audit, and management had 50% fewer revenue items to pull for us to test,” Heep said.


That translates to a significant time savings for all involved when there are typically a few hundred items that need follow-up.


Oil and gas producers, meanwhile, can benefit from the firm’s reversal tool, which removes offsetting entries that net to zero so auditors can focus on just the entries that represent true activity. This is especially useful for high-volume accounts that involve JIB transactions. This data cleansing activity previously took a half-day of manual auditor labor for a typical mid- to large-sized oil and gas client; the automated data purging now takes about 30 minutes.


“Using this automated technique had a big impact this past audit cycle on a couple of my clients, taking something that used to be time-consuming and really streamlining it for our clients,” said Grant Thornton Audit Manager Shea Prihoda.


As with the revenue analytics, the reversal tool eliminates false positives and reduces the labor that energy clients must spend gathering additional data for the audit team. The automated analysis also eliminates the risk that a red flag might be missed in a manual assessment.


Audit insights from other industries


Finance function applications


Unlocking potential efficiencies


Auditors also can use automation to analyze an entire ledger, unlocking potential improvements and efficiencies that can help clients transform their finance functions.

John Howell

“Auditors get all this data as part of your audit. It can be used to create real value and insights for clients.”

John Howell

Grant Thornton Principal, CFO Advisory


These techniques benefit clients by discovering duplicate payments, finding opportunities to accelerate the financial close process, and identifying potential process improvements. Thus far, Grant Thornton auditors have identified opportunities for savings that have included:

  • Double payments: Separate, otherwise identical entries were found showing a vendor’s name with and without “LLP” at the end, leading to a $200,000 cost recovery.
  • Manual journal entries: Unnecessary manual entries can be automated, saving staff time; in one case, a large portion of an accounting team was simply not using the system’s ability to auto-reverse manual entries.
  • Misallocation of resources: One insight revealed that a director of finance was among the highest contributors in creating manual journal entries, performing low-level tasks at a high salary.

"Auditors get all this data as part of your audit,” said Grant Thornton CFO Advisory Principal John Howell. “It can be used to create real value and insights for clients — uncovering things that they would not have known otherwise thanks to the power of the audit technology and all the information it pulls in.”


The future of financial statement audits


Firms are poised to add even more value with their services


As audit clients benefit from the technology that’s available today, there’s even more excitement for the potential improvements and benefits they’ll receive from the audit of the future.

Gerrad Heep

“We have innovative audit technology tools at our disposal. And we’re going to expand to add even more tools to gain efficiencies and effectiveness for our audit clients.”

Gerrad Heep

Grant Thornton Energy Leader for Audit Services


“We have innovative audit technology tools at our disposal,” Heep said. “And we’re going to expand to add even more tools to gain efficiencies and effectiveness for our audit clients.”


Another analytic that Grant Thornton auditors are starting to use for upstream oil and gas clients automates a price-volume analysis that was previously done manually. The automated analysis will consider estimates of reserves and future production, comparing these to historical data.


This analysis of the relationships between pricing, production volume and revenue can provide valuable insights for oil and gas audit clients as they map their strategic direction — without requiring manual work. The tool is so new that Heep can’t yet estimate how much time it will save for auditors and clients, but he believes it will be substantial.


Ultimately, Benoit envisions a future scenario where regulators, banks and investors will see audit opinions provided faster and more frequently, enabled by technology. Public accounting firms are investing heavily in this technology because it provides value, and Benoit is eager to see what the future will bring.


“Interest in enabling audits with technology has reached a zenith — it’s never been talked about more than it is today,” Benoit said. “Clients are varied in their expectations, but we expect that our capable audit practitioners will be able to use AI-powered technology to provide an even greater service that’s in high demand with more frequency.”



John M. Howell

John has over 25 years of professional consulting experience and has significant experience assisting clients with Financial Management and Reporting related process transformation initiatives.

Charlotte, North Carolina

  • Asset management
  • Insurance
  • Banking
  • Construction & real estate
  • Manufacturing, Transportation & Distribution
Service Experience
  • Advisory
  • Audit & Assurance
  • CFO advisory
Content disclaimer

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.

For additional information on topics covered in this content, contact a Grant Thornton professional.

Grant Thornton LLP and Grant Thornton Advisors LLC (and their respective subsidiary entities) practice as an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable law, regulations and professional standards. Grant Thornton LLP is a licensed independent CPA firm that provides attest services to its clients, and Grant Thornton Advisors LLC and its subsidiary entities provide tax and business consulting services to their clients. Grant Thornton Advisors LLC and its subsidiary entities are not licensed CPA firms.


Audit innovation in other industries




More energy insights