Blog Full

The accountancy profession is struggling to hire experienced auditors and new talent, as salary pressures and excessive workloads are felt across the board.

With the demand for auditing services continuing to rise, many firms across the UK are facing a staff deficit – particularly when trying to find qualified professionals to fill key roles.

The post-pandemic skills and talent shortage, backed by an uncertain economic outlook, have exacerbated the issue, as highlighted by the annual audit quality inspection (AQI) reports, published by the Financial Reporting Council (FRC), last week.

Staffing and retention issues were cited as one of the key areas for improvement across Tier 1 firms, with the majority being scrutinised for their ‘lack of audit professionals’ and mounting recruitment challenges.

According to the audit watchdog, the profession was riddled with ‘resourcing difficulties, resulting in a limited and competitive market’.

‘Attrition has fallen across all firms during the year, but resource constraints still exist. To respond, firms have developed a reassessment of their recruitment strategies to attract a broader demographic and explore other non-traditional routes of entry’, the report said.

For Big Four firm EY, the FRC cited management challenges and substantial workload as an ongoing weakness within the firm’s culture, with employees lacking a ‘clear connection’ with on-site coaching.  

Challenges in working patterns and mitigating a healthy work-life balance remain prominent within the profession, with long hours and limited flexibility continuing to grind those in practice.

Traditional ways of working are becoming increasingly less attractive to new talent, particularly with the rollout of hybrid-working, which has shifted to the default for many companies since the pandemic.

EY has since developed a ‘new index’ to track the work intensity placed on their employees, which includes dialogue with teams across the business to understand what reducing work intensity means, and what the barriers might be.

It has also expanded access to coaching support, which will include the launch of a ‘quality enablement network’ of senior managers.

Staff retention was also referenced by the audit watchdog, which recorded ‘serious problems’ within KPMG’s framework.

Facing an uncertain economic outlook, potential candidates are demanding higher wages, better perks, and greater flexibility, like with post-pandemic shifts like hybrid working.

For those currently in practice, accounting teams are feeling burnt out at the prospect of long hours and burdensome tasks – leaving many open to considering new positions, and even complete career changes.

Firms like Mazars were also scrutinised for providing ‘limited access to staff support, with limited processes in place to ensure that staff bonuses were appropriately considered.

Combining training with genuine development opportunities, with a strong access to support, is integral for employee retention, and greater standardisation in addressing this stood as a key complaint by the FRC across all Tier 1 firms assessed.

Insufficient recruitment decisions were also recognised, as seen for BDO, which displayed a ‘complete lack of’ complete interview templates for potential candidates.

The firm has since implemented ‘further training programmes’ to counter this issue. 

Article from Accountancy Daily 12/07/23

The International Sustainability Standards Board (ISSB) has issued its inaugural standards, FRS S1 and IFRS S2.

IFRS S1 is based around General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 is based on Climate-related Disclosures.

IFRS S1 provides a set of disclosure requirements designed to enable companies to
communicate to investors about the sustainability-related risks and opportunities they face over the short, medium and long term.

IFRS S2 sets out specific climate-related disclosures and is designed to be used with IFRS S1.

For the first time, the standards create a common language for disclosing the effect of
climate-related risks and opportunities on a company’s prospects.

The standards will be officially launched by ISSB chair Emmanuel Faber at the IFRS
Foundation’s annual conference today and through a week of events hosted by stock exchanges around the world,

The Association of International Certified Professional Accountants (AICPA) and the Chartered Institute of Management Accountants (CIMA) have both praised the new standards.

Barry Melancon, CPA, CGMA, the CEO of AICPA and CIMA, said: “Clear, consistent and globally accepted reporting standards are essential for high quality sustainability accounting, and the disclosure baselines released today move us closer to that goal. We’re in a new era in corporate reporting.

“Investors, lenders, regulators and other stakeholders are demanding broader sets of business information, and capital markets are looking for the same level of rigour in reporting for sustainability as for financial information. As this global framework matures, we expect professional accountants to play a critical role in delivering consistency and trust in both sustainability reporting and assurance.”

AICPA and CIMA are among the sponsors of a forum at the New York Stock Exchange.

Liam J Moran writes in Accountancy Today

The FRC said that by setting out clear expectations and guidelines, it aims to support the delivery of high-quality audits and reinforce public trust in the financial reporting process

The Financial Reporting Council (FRC) has unveiled a new minimum standard for audit, which aims to “enhance performance and ensure a consistent approach” across audit committees within the FTSE350.

The FRC said that by setting out clear expectations and guidelines, it aims to support the delivery of high-quality audits and reinforce public trust in the financial reporting process.

The publication of the Audit Committees and the External Audit: Minimum Standard comes after “careful consideration” of consultation responses received from stakeholders.

A consultation on the draft proposal for the Minimum Standard was launched by the FRC as a direct response to the government’s consultation on Restoring Trust in Audit and Corporate Governance.

This consultation had expressed the intention to grant statutory powers to ARGA (Audit, Reporting and Governance Authority) for mandating minimum standards for audit committees in their role on external audits. 

Throughout the consultation period, the FRC received feedback from a wide range of stakeholders, including prepares, investors, audit firms, accountancy bodies and members of the public. The responses were broadly supportive of the standard, it said. 

The standard is now available to audit committees on a voluntary basis, ahead of the anticipated legislation that will make compliance with the standard mandatory. The FRC added this voluntary adoption period will allow audit committees to familiarise themselves with the requirements and “proactively enhance their practices”.

Mark Babington, executive director of regulatory Standards at the FRC, said: “The publication of the Audit Committees and the External Audit: Minimum Standard represents a milestone in our collective efforts to restore trust in the audit profession and promote effective corporate governance.

Writes Heather Sandlin in Accountancy Today