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Despite the rise of drones and AI, auditors still can't escape the profession's dirtiest and often tedious job: counting inventory.
Once a year auditors are tasked with the mundane task of traveling to the middle of nowhere and tallying up a large amount of unusual things in a field or warehouse, from chickens and pigs to quarry rocks, corn silos, traffic lights and telephone poles. They complain about ending up covered in manure or dust, or shivering in a freezer, reports WSJ Leadership Institute’s Mark Maurer. We sat with Mark to get the backstory:
Mark, how did this story come about?
Junior auditors love to post on social media about their trips to perform inventory counts in different parts of the country. Sometimes these are horror stories, or just an unusual story. More senior auditors are sometimes involved with counts, too.
Meanwhile, leaders of accounting firms often tell me about the innovative ways in which they’re integrating AI into their auditing business and other service lines. I was curious as to how such field trips were changing in an era of greater reliance on drones and AI. Some auditors said this task isn’t changing fast enough.
What was the most surprising or interesting anecdote you discovered from your reporting?
It was interesting looking at the limitations of modern audit technology and related tools. Drones struggle to count items that are covered or hiding, such as cattle in mountainous terrains, and are largely ineffective indoors. Using technology to evaluate trees across vast timberlands remains hard. Auditor Navneet Sharma told me he had to postpone Thanksgiving dinner and pull an all-nighter when bar-code scanners malfunctioned in the cold. He and his team had to manually count frozen vegetables and premade food in a subzero cold storage facility.
Why does this matter for financial professionals such as CFOs and auditors?
Inventory counts are an essential part of audits of company financial statements—and might be the messiest task auditors will have to do in their career. Audited companies are stepping up their use of AI and robotics in inventory data and storage, which means auditors can target higher-risk areas. Given the pace of development in AI, the rise of the technology in inventory counts appears likely.
Key quote: “AI can count something faster than a human can, so you can see it coming,” said Christian Peo, KPMG’s U.S. assurance leader.
For the full details, read on here.
And speaking of CFOs, some are on the move again. Read on below for those details.
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