Better audits need broader skills finds report

Changes may be needed to ensure audit teams have the right skills in the future and there needs to be an open and constructive debate on the future of audit findings from two international studies produced for the UK’s Financial Reporting Council and ICAS show.

ICAS and the FRC commissioned the research in 2013 and this has resulted in two reports Skills, Competencies and the Sustainability of the Modern Audit – which is based on the findings from a series of  focus groups in the UK, Belgium, France, Germany and Sweden, which included audit partners, audit committee members, regulators, users and academics and sessions with trainee chartered accountants and students – and The Capability and Competency Requirements of Auditors in Today’s Complex Global Business Environment which follows interviews with key audit stakeholders in Australia, South Africa and the UK.  Those interviewed included individuals directly involved in preparing the audit in the six largest publicly listed companies in each country as well as people with some oversight, public policy or educative role with regard to audit in those countries.

The European-focused study found 11 ‘pressure points’ or areas of difficulty where the challenges lie for auditors are identified, covering four broad categories: the context of the specific audit engagement; the development of audit personnel; firms as suppliers of audit services; and interactions with stakeholders and society. The authors suggest that there needs to be consideration of the audit’s value in society and whether it is fulfilling its proper function and only by addressing these issues can the challenges identified by properly met.

The study focused on views from professionals in Australia, South Africa and the UK concluded that there is a need for a constructive debate about the future of audit and there is an increasing need in audit teams for people with more diverse backgrounds while specialising too early – except in the case of financial services – can sacrifice the breadth of experience. The authors suggests that an effective audit team will have a range of specialisms so individuals could be industry experts or data analytic experts with general audit knowledge -“thus, instead of audit firms training auditors to become specialists, firms will also be training specialists to become auditors.”

Commenting on the research, Stephen Haddrill, FRC Chief Executive, said, “As we implement significant changes in audit regulation, we hope that the research results will lead to a constructive debate on the future of audit and the competencies which will be required in order to meet that vision to deliver high quality audit and profession-led innovation in the UK.”

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