Attracting and Retaining Staff Are By Far the Biggest Problems at Audit Firms

Thomson Reuters has another survey to share with the world and that’s the 2024 Audit Survey Report from the TR Institute. Like the State of Tax Professionals and Future of Professionals reports, it gives us a birds eye view of the issues these segments are facing and what they’re doing to address them. It’s 2024 so of course generative AI comes up a lot. So let’s talk about that, shall we?

The current state of audit technology is not static. With a number of different solutions rapidly becoming available — some of them containing more advanced technologies such as generative AI (GenAI) — audit firms are looking to adopt new tech for a number of reasons that come down to one overarching theme: doing work faster, but at the same or better quality.

Indeed, according to the survey, technology adoption benefits cited by at least half of respondents include improving efficiency, freeing up an auditor’s time to address more complex issues, streamlining processes, and improving quality. “Audits of the size we perform are high in hours and low [in] recovery based on the high level required to meet compliance standards that provide little value to the audited client,” said one survey respondent. “It would be beneficial to have tools to increase the efficiency of audits.”

The issue is, however, that efficiency is needed for a number of different use cases. When respondents who said they use AI or GenAI and were asked how they were using the technology, they responded in a number of different ways. Some said their efforts were focused on back-end, internal data management and processing. Others said they were more client-focused, with risk management and customer support. Still others said they were looking to be more forward-thinking with the technology, using predictive analytics and modeling.

Here are some of the things the 180 audit professionals in the US, Canada, and UK surveyed are using — or plan to use — AI for at their firms:

Almost half of respondents (44%) said their firm has implemented or is starting to implement progressive tech while 36 percent said their firms are considering it but haven’t taken action. Peep this though: 21 percent or about one out of five respondents said their firms either haven’t even considered it or outright ruled against it. Best of luck to them.

Let’s revisit this quote from earlier: “Indeed, according to the survey, technology adoption benefits cited by at least half of respondents include improving efficiency, freeing up an auditor’s time to address more complex issues, streamlining processes, and improving quality.” That bit about freeing up time to let professionals focus on more complex issues comes up a lot whether it’s audit or tax. Here are just a couple excerpts that show up in a cursory Google search:

• AI frees up accountants to think strategically and focus on high-level tasks such as preparing assets and capital account entries. [BankBeat]
• With AI and machine learning in place, these tasks have been automated, freeing up accountants and bookkeepers to focus on higher-value tasks. [New Jersey Society of CPAs]
• AI can automate repetitive tasks such as data entry, invoice processing and reconciliation. This frees up accountants to focus on more strategic activities. [University of New Haven]
• AI is a tool that streamlines tasks, freeing up accountants to focus on higher-value activities and strategic decision-making… [Accounting Today]

This may be why 54 percent of respondents to the survey said their firms are looking specifically for staff with critical thinking and problem-solving skills. Anyone who’s dabbled in AI will tell you neither of those are the technology’s strong suit. Then again, those traits can be hard to find in auditors, too. “It may seem that audit teams want to use these new technologies, but they might not have the personnel to do a full rollout,” wrote TR.

To get around this issue, the report suggests the following:

Firm leaders and managers can look for the most time-consuming, repetitive tasks being done by their audit professionals — such as data entry, data cleansing, reviewing documents, and more — and determine for each task whether technology could provide a way to do the job quicker, at the same (or better) quality, in order to free up personnel for more client-centric tasks.

As for the top challenges facing audit firms, the headline of this post spoiled it. Attracting and hiring skilled professionals (58%) and retention of staff (41%) dominate the list.

Anecdotally, we’ve been hearing from recruiters that audit is becoming increasingly difficult to staff beyond the usual “there’s a shortage of accounting graduates” talking point. These days, auditors seem to be bailing out in large numbers and trying to pivot to regular accounting work, even if it’s way outside of the scope (no pun) of what they’ve always done. Hell, even firms are bailing out of audit. This is an interesting phenomenon that could potentially be disastrous not just for firms but to capital markets unless the technology suddenly gets really, really good at doing the work of dozens of human auditors. Just something worth mentioning. If any audit refugees would like to share their story of why they got out and where they landed, please get in touch.

Beyond talent both new and experienced, here’s a breakdown of how many respondents listed the following topics as top challenges:

We can see at least two or three items on that chart that can be effectively made less of a challenge by existing AI technology without too much hassle, how many do you see?

Audit firms have hiring challenges — Is this where technology can help? [Thomson Reuters]