Sometimes people ask “why do you write about things happening in Australia on an American website?” Tempted as we are to quip back “because just how much American accounting news do you think there is?” the more accurate answer is because of things like this. We aren’t so different really if you ignore their culinary quirks and backwards seasons.
The Australians are having the same staffing problems we are and the chair of the Australian Securities and Investments Commission said in the most libertarian way possible it’s because of all the regulation. While that may be a factor, and certainly one contributing to why audit partner is not the attractive career path it once was, one senator called bullshit on his claim.
Auditing firms are struggling to attract people into the profession because the role is demanding and the work unpleasant, the head of the corporate regulator says.
ASIC chairman Joe Longo told a parliamentary inquiry into the regulator on Friday that the auditing profession also had “long-term staffing challenges”, partly because being an auditor was a “high-risk” occupation because of heavy regulation of the sector.
However, Labor committee chairman Deborah O’Neill said the key reason firms had a staffing problem was the low pay of junior auditors compared with the oversized pay packets of partners at the large auditing firms.
AFR goes on to share the actual quotes:
“The audit professionals globally and nationally, [it’s] a challenge for them to attract people into that profession,” he told the joint committee. “It’s a very demanding role. It’s heavily regulated. It’s high risk. So I think that’s an issue that I know that big firms are thinking about; how they’re going to address moving people around the network, giving them exposure, making it a more attractive role.”
Senator O’Neill responded: “Or they could pay their junior staff a bit better, Mr Longo.”
Let’s find out what Aussie grads make in audit these days:
Graduate salaries at the Big 4 can vary depending on the service line you work in and the job you’re doing. In a broad sense, you could expect to be earning anywhere between $45,000 and $75,000, but this can even be different from city to city.
If you’re working in specialised departments like economics, digital services, financial advisory and consulting you’ll often have a starting salary between $60,000 and $70,000, and this is the higher end of the pay scale for graduates at the Big 4. At the lower end, graduates working in audit and assurance departments have reported salaries between $45,000 and $60,000. Most of these packages include superannuation.
$45,000 AUD = $28,560 USD.
On the topic of regulators and auditor pay, Financial Reporting Council chair Jan du Plessis responded directly to a similar complaint from UK Big 4 firms last summer with his own burn. FT:
Senior partners at the Big Four — Deloitte, EY, KPMG and PwC — have claimed that criticism from politicians and regulators, including high-profile fines for poor work, is making it more difficult to recruit and retain auditors.
But Sir Jan du Plessis, chair of the Financial Reporting Council, hit back, denying that the watchdog’s tough approach had made the profession unappealing.
Asked whether increasing pay was a solution to attracting people to work as auditors, du Plessis told the Financial Times: “Blunt answer: yes . . . There has been a significant increase in profitability at all the audit firms. They have the resources available to increase the pay levels of more junior people that they want to attract into their firms and it’s up to them whether they want to do so.”
Audit may be thankless work but the firms might be surprised what people are willing to endure if paid well enough to do it.
Unpleasant work or low pay? What’s behind the auditor shortage [Australian Financial Review]