Audit has proved its worth over the years, to investors and companies alike. The financial statement audit has long delivered compliance and confidence and it will continue to do so. But in today's business environment this may not be enough. As the events of the last decade have shown, it's time for change - for a revolution in audit thinking and execution. Business has changed, shareholder needs have evolved, and audit needs to keep up.
The value of an audit, highlights its major limitation: it only deals with historical financial data. Although an audit reduces the cost of capital, it has less - some would say declining - relevance to capital markets.
Investors are more concerned with what drives share price and organisational value than with annual reports. Advances in technology and an explosion of data have changed the game. Organisations and investors now have access to a breadth and depth of information that would have been unthinkable a decade ago. The most enlightened of companies are making use of that information to give them a competitive edge.
While auditors have always relied on their analysis of available data and information to assess the accuracy of the financial statements and aid them in reaching an audit opinion, they by and large use methods like sampling to do so today. We believe they should be equipped to leverage more of
the available information to further enhance the quality of the financial statement audit and deliver additional insight and perspective.
Data & Analytics (D&A) is the key to unlocking the rich information that businesses hold. By effectively interrogating and understanding data, companies can gain greater understanding of the factors affecting their performance - from customer data to environmental influences - and turn this into real advantage.
Data & Analytics is helping businesses to become smarter, more productive, and better at making predictions. Edson Magondo, Head of Audit KPMG said, "Data is big and it can overwhelm you. So you need to be able to pick the right data and provide the correct insight when you engage with clients."
Audits have traditionally focused on looking back; analyzing transactions and other data from past activities.
While audits enhance confidence that financial statements comply with standards governing their preparation, they do not release the value of data giving organisations greater insights into their past performance. And this in turn enables them to take stock of their processes and activities and adjust them to improve performance.
For an organisation to really understand its performance, it must look beyond the figures - and measure successes against those of peers and the best in the world. As well as benchmarking, we look in depth at the data, discovering complex patterns, making sense of them, and identifying anomalies. We use this information in our audit of the financial statements and to generate meaningful, useable insights - that give organisations invaluable information on which they can act to gain real advantage. The future can't be predicted - but having a view of what it is likely to bring can make all the difference. By looking ahead and anticipating scenarios, an audit can play a major role in identifying the future risks facing an organisation and quantifying the impact they could have on performance. It can also help to identify opportunities, giving organisations the foresight to take advantage.
Through predictive analytics, using historical performance trends and giving effect to current market events, we believe we are better prepared to assess future performance. Through correlative data (macro and microeconomic indicators) we can assess predictive performance and, where appropriate, share sensitivity analysis with management and the audit committee.
A dynamic audit gives professionals the space to focus on every step of the process, from planning to completion. They can bring their judgment to bear on higher risk areas, rather than being held up in the analyzing of data. This broader view means that they can identify trends, risks and opportunities. These insights give organisations the information they need to better anticipate possible futures and to plan ahead more effectively.

Edson Magondo
Edson Magondo is the Head of Audit and a board member of KPMG's South African firm. He was previously managing partner for KPMG Pretoria. Edson was one of four founding partners of KMMT, an accounting firm that merged with KPMG in 2002. In addition to managing KPMG's South African Audit practice, Edson leads an extensive portfolio of clients mainly in the public sector. 

www.kpmg.com/za