Major ICAS/FRC research explores audit skills of the future

Major ICAS/FRC research explores the ideal composition of modern audit teams and how they can best meet future demands.

New research by ICAS and the UK Financial Reporting Council (FRC) has investigated the skills required for the audits of the future.

In 2013 ICAS and the FRC commissioned two international teams of researchers to investigate what mix of skills and qualities are needed in an audit team for it to perform high quality public interest audits in a modern and complex global business environment. The resulting independent research reports have now been published:

• Skills, competencies and the sustainability of the modern audit: Professor Stuart Turley, Professor Christopher Humphrey, Dr Anna Samsonova-Taddei and Dr Javed Siddiqui (Alliance Manchester Business School, University of Manchester); Professor Margaret Woods and Dr Ilias Basioudis (Aston Business School, University of Aston); and Associate Professor Chrystelle Richard (ESSEC Business School).
• The capability and competency requirements of auditors in today’s complex global business environment: Professor Karin Barac (University of Pretoria, South Africa); Professor Elizabeth Gammie (Robert Gordon University, Aberdeen); Associate Professor Bryan Howieson (University of Adelaide) and Professor Marianne van Staden (University of South Africa).

The main findings from the Barac et al. study are:

• There is a need for a constructive debate about the future of audit.
• There is an increasing need in audit teams for people with more diverse backgrounds.
• Specialists should be recruited and then trained in audit to become an effective part of the audit team.
• Competency maps and frameworks, and CPD offerings should be adapted for the development of data interrogation and analytical skills, broad business acumen and forensic skills.
• There should be more focus on the development of mid-career professionals.
• That - with the exception of financial services – specialising too early can sacrifice breadth of experience.

The main findings from the Turley et al. study are:

• Eleven ‘pressure points’ or areas of difficulty where the challenges lie for auditors are identified, covering four broad categories: the context of the specific audit engagement; the development of audit personnel; firms as suppliers of audit services; and interactions with stakeholders and society.
• The challenge 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 revolve 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.

The research projects have been overseen by a Steering Committee, chaired by Richard Fleck, and the Committee will publish its own report based on the findings of the two research reports, and the collective knowledge and experience of the members of the Committee.

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?  We are delighted to have had the opportunity to collaborate with the FRC and the researchers on this vital global issue.”

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.”