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Talent shortage in auditing spells dire consequences for global economy

The talent shortage in the auditing industry has a ripple effect on the global economy, as the skills gap can lead to a lack of oversight and accountability that could have dire consequences. Without a qualified and experienced auditing workforce, companies may be at risk of failing to comply with regulations, resulting in costly fines and reputational damage. In turn, a lack of confidence in the financial systems and could lead to further economic instability. To address the talent shortage, the auditing industry must focus on reforming its image and creating a more attractive workplace for potential Audit professionals. There must also be an effort to ensure that current professionals are adequately trained and equipped to handle the complexities of the modern auditing environment.

The perfect storm … two plus years of a global pandemic that forced professional service firms and their clients to quickly adapt to a virtual work environment coupled with digital acceleration has resulted in remote work becoming acceptable, if not the norm, in many parts of the world. And while the remote workforce has been advantageous for many industries, some have suffered as a result. The auditing industry is one of them. Remote work has contributed to a severe talent shortage in this industry, which has huge implications not only for the sector but for the broader global economy.

As the demand for auditing services continues to grow, firms are struggling to find qualified professionals to fill key roles. A number of factors have contributed to this critical and growing shortage of talent in the industry.  Qualified college graduates have been in steady decline over the past 5 to 7 years. The path to certification has become more difficult and time consuming and the overall appeal of the profession has not kept pace with other sectors.  As a result, many students are not pursuing careers in auditing, as they view it as a less exciting or less innovative industry.

Another contributing factor to the talent shortage is the complex nature of auditing work which has continued to grow as businesses have continued to innovate, financial reporting and internal control environments have become more complicated and regulatory regimes around the world have evolved to provide tougher oversight of auditors.  Auditors and chartered accountants (CAs) require specialised skills and knowledge, including a deep understanding of financial regulations and accounting principles. Finding top tier individuals with these skills can be cumbersome and challenging, particularly in regions where the demand for auditing services is high.

The pandemic also put intense pressure on the audit workforce including the shift to remote working environments.  This immediate shift created difficulty in effective collaboration and mentoring and a shift away from an “apprenticeship model” that has long been the backbone to training, developing, and retaining audit talent.

The impact of this shortage on the industry is significant. With fewer qualified professionals available to fill key roles, auditing firms are struggling to meet the increasing demands around audit quality as well as the growing demand for audit and assurance services. This can result in delays in audits, which can have serious consequences for businesses, investors, and other stakeholders.

As a result, businesses may be unable to access capital or make important strategic decisions if their financial statements are not audited in a timely manner. Investors may also be affected, as delays in auditing can lead to delays in the release of financial reports. This results in uncertainty and potential fluctuations in the stock market.

And it does not end there. The talent shortage has broader implications for the economy as a whole. A lack of confidence in financial reporting can undermine investor trust and lead to a loss of confidence in the financial system. This can have serious consequences for the stability of the economy.

According to research by Caseware International, nine out of 10 accounting and audit firms struggle to find skilled talent. In two research reports, the 2023 State of Accounting Firms Trends Report and the 2023 State of Internal Audit Trends Report, Caseware outlines the talent shortage globally. The study involved 4,100 accountants and 2,300 auditors. It revealed that more than 90% of accountants and 95% of auditors found it challenging to hire skilled talent.

Yes, remote working has many advantages, but it may be a game-changer for the auditing sector.  Firms that can quickly adapt to an effective hybrid work environment that allows flexibility, effective remote working and rewards innovation can better attract young professionals while those that are slow to adapt will experience even more challenges in attracting and retaining top talent.  Though the impact is not limited to this industry alone, it is particularly serious due to the complex nature of auditing work.

The reality is that the holistic impact is felt across the entire value chain, from recruiting and hiring to training, development, and retention. This can lead to the quality of audits suffering due to a lack of experienced professionals. This is where top tier talent can provide oversight and ensure financial statements are accurate and compliant with relevant regulations.

At Makosi, we have tackled this challenge head-on because we understand that a more holistic and proactive approach is needed with end-to-end solutions for the entire value chain. That’s why we have put together and implemented distinctive and integrated strategies for recruitment, training, development, and retention. For us, ensuring a diverse talent pipeline means partnering with educational institutions, and investing in mentorship and coaching programs, while also offering competitive compensation packages and a unique culture which fosters innovation among all professionals.

Flexible work arrangements are also crucial to us as this can help appeal to younger generations who value a work-life balance and flexibility. Moreover, remote work also allows us to tap into a wider pool of talent by removing geographic barriers and allowing auditors and CAs to work from anywhere in the world.

Makosi’s holistic approach also involves leveraging technological tools which is vital in facilitating remote communication and collaborative work, regardless of a staff member’s physical location. This helps us streamline processes, reduce manual tasks, and improve efficiencies of auditing operations.

In these changing times, the talent shortage in the auditing sector – which is being experienced in all corners of the world – needs to be addressed for the sake of the industry and the broader economy. By attracting and retaining top tier professionals, auditing firms can ensure they are able to meet the demand for services, maintain the integrity of financial reporting, and contribute to the stability and growth of the economy.

Remote work, technology and innovation has the potential to revolutionize the auditing industry. By embracing remote work options and investing in technology, this industry can attract and retain talent. For auditing businesses to survive and thrive, it needs to act now and transform the way of work for a more sustainable business landscape as the world continues to evolve at an unprecedented rate.

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