ICAS and FRC call for diversity in audit teams

ICASAudit teams need to hire more people from diverse backgrounds, according to research carried out by the Institute of Chartered Accountants of Scotland (ICAS) and the UK Financial Reporting Council (FRC).

ICAS and the FRC commissioned two teams - led by experts at the University of Pretoria in South Africa and Alliance Manchester Business School - to explore the ideal composition of modern audit teams and how they can best meet future demands of public interest audits in a modern and increasingly complex global business environment.

One study, led by professor Stuart Turley of the Alliance Manchester Business School, University of Manchester, identified 11 ‘pressure points’ or areas of difficulty where the challenges lie for auditors.

The research suggested these challenges will not be met by a checklist of skills but rather by more fundamentally considering the ‘functional competence’ of audit and the ‘value proposition’ it offers to business and society.

The issues identified revolved around making sure that audit is recognised as a skilled, judgemental activity; recruiting and developing suitable audit professionals; and managing the delivery of the audit as a professional service.

Professor Turley thus recommended that audit teams should contain people with more diverse backgrounds and more effort should be made to broaden skills.

The second team, led by Professor Karin Barac from the University of Pretoria, South Africa, looked at capability and competency requirements in the course of interviews across the UK, Australia and South Africa, with the focus on six of the most significant public companies, each from a different industry, in each jurisdiction.

Among the findings of the second team, was the “need for the audit process to be far more forward-looking and predictive in nature” which “requires changes in current liability and regulation profiles as these were perceived to be factors hindering change”.

Anton Colella
Anton Colella

Anton Colella, ICAS CEO, said: “As the researchers state: knowing what the capabilities and competencies auditors will need in an uncertain future is difficult, but if we do not start that debate now how will the profession keep pace with changing expectations and evolve to meet the needs of stakeholders and society?”

Stephen Haddrill, FRC chief executive, said: “As we implement significant changes in audit regulation, we hope that the research results will lead to a constructive debate on the future of audit and the competencies which will be required in order to meet that vision to deliver high quality audit and profession-led innovation in the UK.”

The report ‘Skills, competencies and the sustainability of the modern audit’ can be viewed here

The capability and competency requirements of auditors in today’s complex global business environment report can be accessed here

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