Improving Audit Quality With Automation
Audit quality has never mattered more. Reliable financial statements depend on independent auditors delivering consistent, high-quality work.
Yet today’s audit environment is more complex than ever. Changing markets, fast-moving transactions, and lean audit teams create more opportunities for errors, inconsistencies, and deficiencies. In a recent PCAOB report, the aggregate Part I.A deficiency rate hit 39%.
To combat that volatility, firms must rely on modern audit automation. When firms automate the most error-prone, manual parts of their process, they strengthen the reliability of their evidence and elevate the quality of their conclusions.
In this blog, we’ll explore how automation helps firms reinforce audit integrity, reduce audit compliance risk, and build stronger documentation from day one.
CPA firm auditing is changing rapidly. Recently, Board Member Christina Ho of The Public Company Accounting Oversight Board (PCAOB), a non-profit entity that oversees audits of public companies and protects investors, said that the PCAOB is entering a “new era” of innovation.
In this era, the PCAOB is taking the initiative to modernize auditing processes. The goal is higher audit quality, stronger investor protection, and more reliable financial reporting. To get there, they’re mandating increased use of technology, AI, and structured data.
The PCAOB sees standardized audit documentation as an industry necessity. That’s because consistent, standardized data:
The CPA firms that automate data standardization are aligned with the PCAOB’s vision for the future of audit quality.
While the technology isn’t fully there yet, using AI in audits will also become crucial. That’s because in the future, AI-enabled, full-population testing in audits will be possible, delivering better audit coverage and higher-quality evidence.
For firms that want to leverage AI, they’ll need some clarity to do it without regulatory risk. Otherwise, firms may retreat to manual, sample-based approaches simply because they feel safer from an inspection standpoint. However, responsible AI use will be supported, and new frameworks are coming to help firms adopt technology with confidence.
The PCAOB emphasized that in the future, auditors must be proficient with data analytics, systems thinking, and emerging technology to maintain audit quality.
The PCAOB is actively encouraging curricula and training that build this skillset, because the future audit won’t be possible without it.
Audit quality starts with audit evidence, and automation makes evidence more complete and reliable by removing the manual friction that creates inconsistencies and blind spots.
Traditional manual workflows force teams to use client data that often arrives in fragmented exports, inconsistent formats, and reports that vary by client and month to month.
That fragmentation often pushes teams toward sample-based testing. Sample-based testing can miss unusual transactions or risk indicators hiding outside the sample.
However, by connecting directly to client ERPs and accounting systems, auditors can extract full populations of general ledger activity, subledgers, trial balances, AR/AP aging, and more in a matter of minutes.
The payoff is stronger journal entry testing with 100% population coverage, more complete cash testing and revenue recognition procedures, reduced reliance on assumed error rates, and fewer blind spots.
Manual Excel work leads to data risk. Copy/paste slips, mapping inconsistencies, column shifts, or simple keystroke errors can impact workpapers and audit conclusions.
Modern extraction tools automate normalization and validation checks, including:
When auditors aren’t stuck cleaning data, stitching spreadsheets together, or chasing missing reports, they can finally focus on what drives audit quality:
By freeing auditors from manual processes, audit automation gives more time to spend on tasks that require human judgment, leading to higher-quality results.
PCAOB audit deficiencies trace back to incomplete data and insufficient evidence. Firms can reduce these deficiencies by finding data problems, strengthening data accuracy in audits, improving documentation, and supporting tech-enabled approaches.
Many of the most frequently cited PCAOB deficiencies are data issues in disguise. When auditors rely on fragmented exports or untested management reports, procedures become harder to execute and defend
Audit automation tackles these vulnerabilities at the source by providing complete, reconciled, and validated datasets before testing even begins.
When the data foundation is solid, audit procedures are naturally more consistent and defensible.
To reduce deficiencies, firms must demonstrate that they have evaluated the accuracy and completeness of the information used in the audit.
With automated extraction, auditors receive:
Through audit automation, PCAOB inspectors are far less likely to find gaps in how the firm tested completeness and accuracy. Instead of questioning the reliability of the underlying data, reviewers can focus on the quality of the procedures.
Automation improves documentation automatically by:
With standardized documentation, inspectors can easily follow the flow of the engagement and spend less time piecing together why a test was performed a certain way.
Automation also takes audit methodology to the next level.
Firms can use audit automation to:
This aligns directly with the PCAOB’s innovation agenda. Regulators want to see firms using technology responsibly, consistently, and strategically.
As AI, automation, and regulatory expectations evolve, firms need a modern playbook for delivering high-quality, defensible audits. These three best practices will help improve audit quality.
Sampling once made sense. Inconsistent client exports and manual data prep made full-population testing unrealistic for many firms.
But in an AI-enabled environment, sampling can leave blind spots.
Today’s audit automation tools make it easy to extract complete datasets directly from client ERPs or accounting systems. That means audit teams can begin engagements with full-population testing, standardized data structures, and built-in validation checks.
Audit quality is ultimately driven by the judgment, skepticism, and critical thinking of your people. But when staff are buried in spreadsheet cleanup or chasing missing client files, audit quality suffers.
Burnout doesn’t just hurt morale. It increases the risk of:
Automation helps by eliminating the repetitive, low-value tasks that drain capacity and attention. When teams begin with clean, complete data, they can spend their time on:
Technology is essential for staying compliant, competitive, and aligned with future PCAOB expectations.
To support audit quality, firms need tools that:
Maxwell Locke & Ritter (ML&R) faced a familiar audit bottleneck: clients sending late, incomplete, or inconsistently formatted reports that forced auditors to spend hours stitching together data, reformatting journal entries, and validating balances.
The manual burden was inefficient and introduced risk to their process. More steps meant more chances for errors, and inconsistent workpapers made it harder to demonstrate a strong, well-supported audit approach.
ML&R turned to Crunchafi Data Extraction after their Transaction Advisory team called it “life-changing.” The platform connects securely to client systems and automatically delivers trial balances, GL, subledgers, and supporting data into a clean, standardized Excel workbook.
“My team and I are experts in Excel,” says Audit Partner Lesley Hargraves. “Crunchafi keeps us out of our clients’ systems but gives us the data we need in the format we’re great at.”
The impact on audit quality was immediate. With complete, validated data on day one, ML&R reduced client requests, eliminated gaps caused by missing reports, and elevated their testing. Auditors now perform better journal entry testing, deeper analytics in high-risk areas, and less basic balance-checking. Standardized workpapers also improve internal reviews and create a clearer audit trail.
To stay ahead of emerging technology-driven standards, firms must shift their mindset. Instead of treating audit automation as a convenience tool, they should see it as a core component of audit quality and audit compliance. Structured data, consistent workpapers, and validated datasets are the foundation of modern audits aligned with the PCAOB’s evolving approach to innovation.
That’s why forward-thinking firms are embracing platforms like Crunchafi, not just to streamline their audit process but to elevate their audit evidence, strengthen documentation, and reduce risk.
By extracting, normalizing, and validating client data in minutes, Crunchafi gives audit teams a clean, standardized starting point that supports reliable testing, clear traceability, and a more defensible audit file.
If you’re interested in trying Crunchafi’s Data Extraction or Lease Accounting software, you can request a demo here.
