Even before Allee Bonnard officially assumed her role as managing partner for audit and assurance at Deloitte’s UK firm, she was already creating a stir – as the first woman appointed to the position in the UK firm’s 179-year history. 

With the sector eagerly awaiting the Audit Reform and Corporate Governance Bill promised in the King’s Speech last year, and yet to be published, Bonnard is leading Deloitte’s audit charge at a time of potential massive upheaval for the profession.

As the draft legislation is expected in the next few months, the challenge is around reforming the system in a way that will enable growth in the UK, she says. “In order to grow and thrive, the UK business environment needs to be seen as one in which innovation is supported – and growth and innovation inevitably bring risk. 

Minimising disorderly failure

“I recognise that some companies will unfortunately fail as they evolve. However, businesses should minimise disorderly failure through providing appropriate transparency of risk so that all investors, consumers, employees and other stakeholders can make informed decisions based on their own risk appetite.” 

Corporate reporting, governance and audit must work effectively so that information around risks, judgements and the range of outcomes is disclosed transparently in the annual report, Bonnard adds. “All players in the system have a role to play to achieve this – company management, company directors, audit firms, the government and the regulators.”

A focus on director accountability will help level the playing field, she says. “That’s been really important to us as a profession because it felt in the past that auditors could be held to standards and have their careers investigated, whereas people involved in the actual business decisions and the reporting of those decisions could face no consequences.” 

Balanced regulation

However, a proportionate regulatory response is needed to ensure that being a company director remains attractive, Bonnard says. “It’s about making directors accountable, but ideally using measures and standards that are already there, and encouraging good behaviour, rather than trying to come in with a big stick. It will be important for the government to get the right balance with its growth initiative and ensure that great people still want to be directors. Keeping the attractiveness of the role is crucial.”

Bonnard agrees that choice in the auditor market is an issue, but there’s general acceptance that managed shared audits isn’t a great solution to that problem, she says. “Companies don’t want it. Most audit firms don’t want it. But we have to figure out ways to bring up the next tier of firms. And in that second tier, how do we improve the quality in the eyes of the regulator around those firms?”

Pulling more companies into the Public Interest Entity (PIE) regime could benefit auditors financially but do little to improve audit quality, she maintains. Instead, Bonnard believes that revisiting the “onerous” and restrictive independence rules applied to firms bidding for PIE audits – currently the strictest in the world, she says – could open up the market and provide companies with more choice.

Fee caps and sustainability assurance 

Meanwhile, the march towards statutory sustainability assurance raises questions about fee caps, Bonnard says. “There are many companies that won’t be able to use their auditors for sustainability assurance work, which requires an auditing skill set. I think the government should think carefully about how it structures that so that companies can approach sustainability assurance in the most efficient way for them.” 

Attractiveness of the profession is a key priority under Bonnard’s remit, as concerns about the impact of tech on audit as a viable career choice create waves, not helped by recent comments in the media by Jeremy Hunt MP that graduates should not go into accountancy because the profession is being replaced by AI.

The Big Four firms remain a popular choice for graduates on the university ‘milk rounds’, Bonnard maintains. However, awareness of the profession among new recruits has fallen off from a decade ago, and gender and sociodemographic bias means that men and candidates with a higher sociodemographic status dominate those applying for jobs. “I want to make sure people really understand what we do. That’s about trying to combat some of those stereotypes and helping people understand our purpose.”

Highlighting the positive impact of audit

Against a backdrop of audit scandals, highlighting the positive impact of the audit profession on wider society is a powerful tool in the quest to both attract new talent and retain existing staff – the latter, an increasingly thorny issue for all firms, not helped by the stereotype of a long hours’ culture and a desire among employees to better prioritise their wellbeing.

Audit failures are guaranteed to hit the headlines. In contrast, the positive impact of audits rarely gets a look in, Bonnard says. “It’s important that employees appreciate the positive impact we’re making every day to try to counter the negative stories in the press. When the team finishes an audit, that’s a proud moment, because we know we’ve made sure that people will have information to make better decisions.”

The impact of AI

Use of technology and artificial intelligence (AI) is transforming the employee experience, reducing more mundane work and allowing juniors to do more judgement-making earlier on in their careers. Deloitte’s own GenAI platform PairD, launched last year, is programmed with the firm’s training manuals and is used as a coaching tool for more junior team members. 

But employees at all stages of their careers want a piece of the AI action. Already three-quarters of Deloitte’s auditors use PairD on a regular basis, with staff in the audit assurance business leading the march and generating more than 1.1 million prompts over the past year to automate tasks, summarise documents and compare instructions against prepared materials. “It’s making a big difference. It helps them get stuff done quicker,” Bonnard explains. “We’ve run innovation competitions to help people understand best use. The feedback is that they want more.”

Inevitably, audit roles will adapt in the future, but AI will never remove the essential need for human judgement that is at the centre of quality audits, Bonnard says. “We will need people to audit the AI that companies are using and people to build, test and train AI that we will use on audits. AI will augment the auditor rather than replace them and while the skills they need will change, it will certainly make the role more interesting and attractive to those looking to join the profession.”

Relationship building

At the same time, reinvesting in relationship-building skills is not only critical from an attractiveness of the profession perspective, but also as a service differentiator. “When I look back over my career, the times I found fraud, it wasn’t because something jumped out of a piece of paper – it was because I understood the culture of the company and the motivations of the people.”

Bonnard accepts that for some younger employees, face-to-face communication can take them out of their comfort zone. “During COVID, we had to audit remotely and new recruits spent their critical training years learning everything from home, so building relationships became more difficult. I want people to feel those connections with their teams and have actual conversations rather than trying to audit over email, which is not the most effective way to do it.”