Professional Services Firms: Providing Better Services, Deeper Insights with Data
If you are wondering what makes professional service firms flourish, especially those that offer audit, tax and advisory services, well it’s a combination of their deep expertise, differentiated services and relentless focus on client success. But what does this translate to when the firm also needs to address fee caps on audits, tight regulations, and the demand for deeper insights quickly. The answer lies in agility and maximizing the use of data.
Making the most of data at the enterprise level
Companies get their transactions audited quarterly, once a year, or continuously depending on the regulations that they comply with. Each industry also has several different parameters for conducting audit and taxation. For instance, it is acceptable for the health industry to have 3%-4% expenditure in unmanaged transactions, but this would be a big no-no in the financial services industry, where unmanaged transactions cannot exceed 0.5% of total expenditure. There are similar regulatory parameters across departments, states, regions, and countries. Add to this the fact that enterprises – depending on their size – have millions if not billions of transactions each year and a professional services firm has humungous quantity of data points to review. To address this situation, most firms are required to audit samples based on risk profiling. Even then, this is an effort-intensive task, and automation is emerging as a trustable option to effectively do repetitive work which is often considered ‘hygiene’.
And when professional service firms need to up their game – introduce speed, accuracy, insights, and cost-efficiency – they can leverage the power of data analytics, machine learning, artificial intelligence, and data visualization platforms. This allows professional service firms to review every single transaction, and data visualization bubbles up rich insights and recommendations.
With ML and AI, professional service firms can also collate and review data for multiple years. Visualization dashboards can enable tax consultants to drill down to a granular level, unearth deeper and complex trends and use these to the clients’ advantage. For instance, the procurement department of an airline preorders excess fuel during a particular month, which exceeds the legal stipulation. The audit firm accessing historical data can inform the client that while this was acceptable in the past, it is no longer legal. Similarly, internal information could also be combined with economic market trends and the client could be advised on the correct approach to align with existing circumstances.
Another area where data empowered by automation can play a crucial role is in Mergers and Acquisitions (M&A). With hundreds of millions at stake, the professional service firm managing due diligence needs to be accurate and drill down to the very last transaction. Systems built on business rules can review workflows and transactions, and enable strategy, advisory, and deal teams to easily read historical data, recent trends and make the right recommendations.
Making data work beyond the enterprise
While data powered by automation plays a key internal role in improving enterprise-level monitoring and assurance it can play an external role as well.
- Benchmarking across clients by industry, geo, and sub-vertical
- Observe trends and draw inferences that can be published as knowledge articles
- Create new global standards for data exchange specific to their lines of services that can simplify and standardize data requirements
Keeping in mind factors such as global regulations, economics, client portfolios across geographies, and related complexities, data can be accurately analyzed, benchmarked and standardized. More so as regulators closely monitor compliance. For instance, legal documents and contractual agreements can have different meanings in different industries, auditors ensure that the client is consistently compliant. Regulatory bodies are favorable towards the use of software in compliance when it is also supported by the intervention of auditors.
As professional service firms usually provide audit services to many clients, they are able to observe industry trends early and as they emerge. These insights can be used for competitive advantage or to enable clients to stay compliant. For instance, these insights could be used to build AI models that are reusable across the industry. Any compliance or regulatory changes – for instance, geo specific, or revenue split across entities can be managed by AI models. These can alert auditors to anomalies. Previously, these trends were observable only to highly skilled personnel. The added technical validation provides better quality outputs even with changing regulations.
Professional service firms can write about these trends and observations, educate clients and enhance their credibility. For instance, a professional services firm notices that their client is spending more on transport and advises them to shift to electric vehicles which are cost effective and also offer tax benefits. In turn, the client could write about how they as an environmentally conscious company actively engage in reducing their carbon footprint.
Certain geographies have a mandate to rotate auditors every 4 or 5 years. When this happens clients need to determine the requirements of the new auditors and supply that data. If a governing body publishes standards of data - a full set of requirements that can be leveraged by any auditor - this will make the task of the client and their succeeding auditors much easier. Similarly, on the tax business, standard data requirements for tax filing would help immensely.
Data visualization and data auditing can become game-changers
With automation, data from an enterprise ERP can be converted into meaningful insights without human intervention. Data can be used in new ways of auditing, say by applying standards to workflows and auto-completion based on history. This can assist not only in auditing, but prompt the right data points based on history, extract the data and visualize it post-processing.
Data security can be a concern during auditing and both professional service firms and their clients need to plan for cross border data policies while applying automation, analytics, and data visualization. Automation enables frequent if not continuous auditing as required by regulations. AI can be used to achieve a high level of assurance cost-efficiently, resulting in better quality auditing, and reduced risk and liability.
Data from the tax and auditing systems can also be leveraged not just by the professional service firm but the company as well. A single transformation platform which houses both historical and current data can be used by c-suite executives to access insights into areas which were earlier inaccessible. For instance, if an IT company is engaged in R&D and their work can benefit the public at large, or a company invests in renewable energy, they could access tax reliefs for their technology and people investments. Informing the c-suite that they can capitalize on these tax reliefs allows them to make larger investments in a particular area.
The combination of analytics, AI, and data visualization helps bridge the gap that existed in many parts of large organizations and build more accurate continuous data-driven solutions with less human interventions.