The audit industry is witnessing an unprecedented disparity between the demand for auditors and those with the necessary skills and training to do the job.
Over the past few years, audit thresholds have continued to rise culminating in over 90 per cent of businesses in the UK avoiding statutory audits.
The majority of firms in the UK have seen this reduction in business as shifting the priority away from auditing skills, with many reducing their graduate audit intake. This has, in turn, caused fewer students to specialise in auditing, with many opting to specialise in more tax- and accountancy-centric areas.
Research from the Financial Reporting Council (FRC) shows that the number of people holding audit qualifications has fallen from 140,135 to 129,509 over the course of two years. As a result, there is a severe shortage in the number of people with the necessary qualifications and skills to carry out audit work, especially in senior capacities.
There has also been a reduction in the number of audit firms registered with the RSBs. There are currently only 6,010 firms registered, 17 per cent fewer than between 2012 and 2016. This has seen firms slip inexorably towards using contracted auditors.
Contracted auditors may be effective, but they also tend to be very expensive, with them earning around 50 per cent more per hour than the average employee.
The increasing prominence of technology has transformed the industry as AI and new software take over the more tedious tasks, particularly those focused on numerical data. However, the advent of technology does not mean that the auditor is a relic within the accounting field, as they are able to add IT skills to those necessary to carry out the job.
Figures from the Chartered Institute of Internal auditors (CIIA) found that, in a survey around required skills, IT skills have seen the biggest increase in importance over the last few years.
It is also becoming increasingly desirable that auditors have a well-rounded and developed set of ‘soft skills’. The CIIA research found that, between 2013 and 2016, communication skills were consistently considered to be more important than all others.
It seems obvious to say, but there is a dire need within the industry for more staff with auditing skills, but it is unclear as to how, or whether, this need will be addressed.