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Challenges Facing The World Of Auditing

What are the key challenges facing the world of auditing today?

Talent In The Finance Function:

Quality financial reporting starts with the CFO, but requires a strong team on the ground in the markets the company operates, supported by traditional corporate roles such as financial controller, chief accountant and treasury functions. Success here requires the right people and their ability to work together.

Volatility In The Markets:

The market is cyclical and dynamic. The biggest single challenge is reading the market correctly and positioning the organization accordingly. This demand is reflected at a global scale with a shortage of established talent and a growing cadre of specialist, niche players.

The Pressure From Start-ups:

The rapid growth of technology has created new and innovative ways for start-ups to reach consumers, as well lowering the barriers to entry for small companies to enter new markets. These companies are offering consumers new ways to buy, pay, save and invest, and they’re threatening to disrupt traditional companies.

The Pressure From Regulators:

A lot of effort has gone into developing new guidance for audit, including new accounting standards and major revisions to international auditing standards. However, the new rules so far lack precision and only cover what to do but not how to do it. This creates new challenges on how to execute audit quality procedures in this increasingly globally connected world.

The Pressure From A New Generation:

The younger generation, known as millennials or Generation Y, expects the technology they’re accustomed to from mobile phones, apps and social networking to extend into the way companies communicate with them. Similar to the tech giants, these companies want to interact with their customers on their terms, and they’re offering easy ways to interact through social media, so CFOs need to create a communication strategy they can implement quickly and painlessly.

The Pressure From Non-financial Executives:

The job of the CFO has never been more demanding. Non-financial executives are asking for more than just a quarterly earnings statement, and they want to know more about their companies’ performance. They want to monitor risks, discover business opportunities and identify efficiencies. And, they want these insights to be available to them on an interactive basis or through analytics.

The Pressure From Boardroom Distraction:

In many respects, the CFO is the heart of the organization; responsible for corporate strategy, capital management, investor relations, financial modeling, financial technology, new business, due diligence, auditing and tax. The CFO’s agenda is wide-ranging, if not always visible, and peer-to-peer discussion with other finance leaders, CFOs and chief accounting officers is a real part of their role. It is important for the CFO to be focused and to give their full attention to the issues at hand – the AGM is not the time for a CFO to be distracted by executive action, bonus plans or employee approval.

The Pressure From New Accounting Standards:

The International Accounting Standards Board (IASB) has been in the process of developing new accounting standards and revising existing ones to bring them in line with international businesses and markets. The financial crisis of 2008/09 and the ensuing need for greater transparency provided the impetus for the new rules but the standards alone are not enough and the rules need to be interpreted correctly.

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Challenges In Auditing Firms