Audit firms worried about AI should be drawing up hiring plans

When the billable hour dies, the audit category grows. Let's look at how statutory audits became law.

1. A small group adopts a habit that builds trust: In 1300s England, merchant guilds elected auditors to check their books.

2. The habit spreads until skipping it looks suspicious: By 1926, over 90% of New York Stock Exchange companies were audited voluntarily.

3. Peer pressure as a compliance mechanism stops working once strangers do business: In the 1920s, millions of people bought shares in companies they knew nothing about.

4. Enforcing compliance must be practically possible: By the 1930s, a trained accounting profession had matured, having the capacity to audit every listed company.

→ The same logic explains why the UK set a legal drink-driving limit in 1967, the year police got roadside breathalysers. Practical enforceability!

5. A crisis or other event hits and lawmakers codify what's already normal: After the 1929 crash, the US made audits mandatory for every listed company.

Statutory audit made it all the way through. Others are climbing the ladder.

IT audits sit somewhere around step 4. On paper ISO 27001 and SOC 2 are optional, but as CEO of a tech company I can say that few enterprise buyers share that. (Rivisio ISO audit ongoing :) )

ESG audits sit around step 3. Investors and customers want verified sustainability data, but checking across global supply chains is still too costly.

News and agents are both at step 1. Auditors sell trust, and the internet is running low on it, so someone will need to certify what's real. And when companies and people start employing agents configured by someone else, demand for certification of guardrails and agent actions will rise.

The inflection point has always been step 4, since scaling audits costs a fortune. AI is about to make it cheap.

Cheaper audits mean more things become worth auditing, and every norm that becomes cheap to verify moves closer to becoming law.

The firms that move their freed-up people into these new audits early will own the categories when the mandates arrive, and they will need to hire to keep up.