PracticeAuditDemand for audit skills exceeding supply

Demand for audit skills exceeding supply

In response to changes in the audit environment, the profession contracted. There is now a gap between supply and demand, with the demand for audit skills far exceeding the supply

Demand for audit skills exceeding supply

Audit thresholds have continued to rise over the past few years, and now over 90% of UK businesses are not required to have a statutory audit. In response to this change in the audit environment the audit field has contracted, resulting in fewer people building up the skillset required for a career in audit. Consequently, there is now a gap between supply and demand, with the demand for audit skills far exceeding the supply. Now more than ever, choosing a career in audit presents lucrative opportunities.

The audit landscape

In response to the perceived lower demand for audit skills, and compounded by the recession, firms drastically reduced their graduate audit intake and fewer students elected to specialise in the field, opting for more accountancy and tax focussed paths.

According to research undertaken by the Financial Reporting Council (FRC), the number of members of the accountancy profession holding audit qualifications fell from 140,135 in 2014 to 129,509 in 2016. Due to this, there is a marked shortage of qualified auditors with the required skillset to lead and manage audit work, particularly at a senior level.

Over the past few years the number of audit firms registered with the RSBs has continued to decline – with only 6,010 registered audit firms in 2016, a reduction of 17% between the years 2012–2016. As a result, many firms are now turning to audit contractors – for whom the pay is lucrative and rewards are high. These roles gain hourly rates of up to circa 50% more than the average employee.

Furthermore, research by the FRC showed an increase in audit fee income across the board – increasing by 2.7% in 2015/16 for Big 4 firms and by 5.4% in 2015/16 for firms outside the Big 4.

What are the most important audit skills?

One of the most obvious disruptors in the industry is the growing role of technology, which is transforming the accountancy and audit professions. In particular, the advancement of accounting software and the budding use of AI means that more tedious tasks such as those based around numbers and compliance can be taken over by tech, leaving the individual to take on a more advisory and strategic role.

However, the growth of technology does not render the auditor redundant, but rather adds IT skills to the list of technical skills necessary in an auditor’s repertoire.

The Chartered Institute of Internal Auditors (CIIA) carried out research into the most desired internal audit skills and found that in the past year the biggest increase has been in respondents pointing to the importance of IT skills.

The FRC also carried out research into the audit quality of top 6 accounting firms, and revealed that embedding data analytics for use in the audit of revenue was a key indicator of audit quality, showing that the auditor of tomorrow must be able to grapple with technology and data analytics.

However, also becoming an increasingly important weapon in an auditors arsenal is a developed set of ‘soft skills’. Research by the CIIA found that “communication skills” consistently ranked ahead of all other skills as the most important over the period 2013–2016.

The importance of these soft skills, particularly ones relating to judgement, were also shown to be crucial in the FRC’s research, as a key area for audit improvement across the board was “management in relation to areas of judgment”. Other key soft skills that are of emerging importance include lateral thinking / problem solving, commercial acumen, business development and leadership.

Finding a recruiter who understands the market will be crucial to developing your audit career.

Public Practice Recruitment Ltd are specialists in accountancy practice recruitment, with over a decade of experience in recruiting across audit, accounts, tax, corporate finance, VAT & employment tax. Due to our specialised focus we have a unique view of the market and have a number of vacancies that we are currently looking to fill. Please have a look for yourself.

Related Articles

EY to audit Standard Chartered bank

Audit EY to audit Standard Chartered bank

1w Alia Shoaib, Reporter
KPMG replaces PwC as Croda auditor

Accounting Firms KPMG replaces PwC as Croda auditor

1m Emma Smith, Managing Editor
FRC closes investigation into PwC over Barclays compliance

Accounting Firms FRC closes investigation into PwC over Barclays compliance

1m Alia Shoaib, Reporter
PwC to audit BBC pay policies following gender pay gap outrage

Accounting Firms PwC to audit BBC pay policies following gender pay gap outrage

2m Alia Shoaib, Reporter
PwC to take over from Deloitte as Diploma auditor

Accounting Firms PwC to take over from Deloitte as Diploma auditor

2m Alia Shoaib, Reporter
KPMG rocked by South African corruption scandal

Audit KPMG rocked by South African corruption scandal

2m Alia Shoaib, Reporter
BDO replaces Deloitte as Mitie auditor

Audit BDO replaces Deloitte as Mitie auditor

2m Emma Smith, Managing Editor
FRC closes KPMG HBOS audit investigation, Treasury Committee expects ‘full explanation’

Accounting Firms FRC closes KPMG HBOS audit investigation, Treasury Committee expects ‘full explanation’

2m Emma Smith, Managing Editor