Key challenges facing the audit profession
Competition for human capital
In the auditing industry, human capital is an essential asset as the tedious task of performing an audit can only be done by professional audit personnel. However, the auditing industry has a high employee turnover of about two years with the big 4 having turnover of about half a year. Thus, one of the major challenges faced by audit firms is to hire and retain the best people.
Most people do not sought after the audit profession due to its long hours and poorly paid salary especially by fresh accounting graduates. As a result, the auditing industry loses out these graduates to the accounting industry.
Small audit firms face a tough time in hiring and retaining auditors as they are paid much better in bigger firms. The ones that work in small audit firms are usually the average ones with the hope of gaining experience and leaving for better prospects.
Although there are many who joined the Big 4 due to their high reputation, they ultimately left due to the long working hours.
There are also increasing new legislations, regulations and standards that make it difficult for auditors to keep up with. Auditors may also find themselves to be more legally liable for their work. With all these negatives, many leave the profession resulting in shortage of audit staff so firms have to compete for qualified professionals.
Another challenge faced by auditors is uncooperative clients. Some clients would send in their management accounts late resulting in delay in audit work and consequently unable to meet the statutory deadlines. Some clients would not reply to emails or are unhelpful in clearing audit queries and thus result in delay in completing the audit work. Yet, they blame auditors for the delay.
Due to the hassleness of audit work, some clients would limit the samples tested. Some even requested for change of samples as they are hard to find. Auditors would have to do alternative tests if not spend time talking to them to complete the audit. There are some whose financial records are disorganised and thus hard to find the documents. All these increase time costs.
The audit process would be very smooth if clients cooperate to provide the things required but uncooperative clients pose a great obstacle to auditors to perform and complete the audit.