10th April 2019
MGI Worldwide CEO, Clive Viegas Bennett, discusses evolving regulations within the audit market during a recent IAB roundtable.
In the latest edition of the International Accounting Bulletin (IAB), firm leaders including accountancy network MGI Worldwide CEO, Clive Viegas Bennett, shared their thoughts on the increasingly scrutinised audit market and what this may hold for the future. Panellists were numbered to protect their anonymity, but there were a number of key points raised during the discussions:
Proposed regulatory changes
These are currently just that – proposals. Reports detail observations and recommendations, but there is no compelling need for action yet, aside from further enquiry and consideration.
Concern over unintended consequences
Should regulatory changes go ahead, there will no doubt be implications reaching beyond the Big Four. Splitting audit from non-audit operations, for example, could make audit partners, whose remuneration and staff are dependent on the client, even less independent.
More revenue could be generated from advice
Big audits are delivering less profit outside of the Big Four. Listed audit comes with increased risk, regulation, staff training and cost implications. One of the panellists commented that unless there is to be a better return for audit, why would an accounting firm offer it? Different advisory services, or advice combined with auditing, may start appearing as a service proposition.
The audit process could change
Artificial intelligence and data analysis are evolving and there could be changes in the way they are used to audit. Technology could soon facilitate sampling, and where a human could defend not auditing 100% due to it being an impossible task, it is a reasonable request for new technology to be able to do this. The need for the auditor may not necessarily be removed, but there could be pressure to decrease fees and perhaps to focus on projections, rather than just the analysis of results.
How can auditing be made more appealing?
It’s difficult due to tight profit margins, but there must be a professional reward that comes from auditing. How to make real changes though, is very much under debate.
Shortage of talent is a real issue
Finding qualified and capable individuals with the right skill levels is becoming increasingly more difficult. Accounting firms may accept and train graduates, but then lose them to larger firms with a more attractive package. The older generation may find that their skill set is not necessarily as critical as they believed, and skills that will be needed over the coming decades are changing, with income coming from software, cloud services and other technologies that did not previous represent such a large area.
MGI Worldwide is a top 20 ranked global accounting network with some 5,200 independent auditors, accountants and tax experts in over 260 locations around the world.