Audit profession must ‘face up’ to common issues causing accounts delays, experts say
September 13, 2023
Superdry’s failure to publish its accounts in a timely fashion is the latest in a string of errors
A recent string of high-profile audit delays highlights how staffing issues, remote work and economic volatility are impacting auditors’ ability to deliver for clients in a timely fashion, industry experts have argued.
This reaction comes after the fashion retailer Superdry suspended trading in its shares in August having missed its account publication date, stating that normal procedures were taking longer than usual.
The Gloucestershire-headquartered firm is not alone in its auditing struggles.
In 2022, rail and bus operator Go-Ahead stopped shares trading after it was reported that the business was locked in negotiations with Deloitte on how to treat unreported taxpayer funding while in 2020 ad agency M&C Saatchi was also impacted by audit delays.
According to Theo Theodoulou, chair at accountancy network Kreston Global, while each delayed publication of financial accounts rests on its own details, such as the concerns driven by debt restructures at Superdry, staffing and economic issues are big industry concerns.
“General weaknesses at the moment are the significant lack of audit resources, the pressure from regulators to enhance quality and the turbulence in the markets and a combination of all these will impact the completion of the audit work in a timely manner.”
Theodoulou adds that high inflation, high interest rates and uncertainty in future forecasting are also causing fewer firms to retain their audit status, which can add to auditing firm workloads – which is also exacerbated by recruitment problems at both senior and junior levels.
Indeed, 2022 research from job board Broadbean Technology shows the audit and accountancy sector has been hit by hiring struggles with a 36% drop in the number of applicants between June 2021 and June 2022.
This is then compounded by retention, skill sharing, development and productivity struggles, argues Vipul Sheth, managing director of accountancy and audit services provider AdvanceTrack.
“The [post-pandemic] hybrid model or a fully remote model of working is less productive than an on-site approach and this has meant that younger members of staff don’t have experienced colleagues to bring them through,” he says.
With Barclay Simpson data from earlier this year finding that almost six in 10 audit candidates would consider quitting if they didn’t get the remote set-up they wanted, Sheth adds that the post-pandemic reduction in client-auditor face-to-face interactions is also creating difficulties.
“The ‘human’ piece that is so important to many was removed and that skill of face-to-face engagement is being lost, and it’s greatly missed.”
Technical issues and complexity also create problems
Superdry cited various technical points in its reasoning for the suspension in trading, while the company’s auditor, RSM, also failed to meet accounting deadlines.
Indeed, procedural issues, accounting complexities and technical discrepancies can play a key role in audit timeliness, according to Paulo Andrade, lead consultant at finance software provider Aurum Solutions.
“If documents are not easily accessible it will most certainly lead to delays as can the complexity of transactions as some can prove particularly difficult to analyse as they can sometimes be judged differently by the customer and the auditor.”
Andrade adds that the ways in which businesses store data can make it more difficult for auditors to access records, or even lead to incompleteness, and suggests that one of the best ways to stop this impacting audit deadlines is to ensure training is up-to-date, that auditors have the best industry knowledge, and can use the latest time-saving technology.
“It’s important to empower auditors with ways to work around issues by staying up to date, learning more about technology and the standards the clients set.”
Sheth adds that a back-to-office approach could also help with retention and delivery for clients.
“What the industry needs now is a culture that requires all staff to be in the office, at least part of the time and senior staff, working from a comfortable home office, need to understand that they had the benefit of older heads through their career [and need to share knowledge].”
For Theodoulou, audit timeliness can also be solved by a better understanding of the impact of market turbulence, better forward planning and realism in the face of deadlines – and he is an advocate of implementing technology to assist this.
“Increasing use of technology in the audit profession with the support of artificial intelligence as this will improve efficiencies and will support the auditor in times where we see lack of audit resources.”
However, with increasing scrutiny on auditing standards –some experts argue that reporting tardiness might be forgivable.
Mike Suffield, director of policy and insights at the Association of Chartered Certified Accountants (ACCA), adds that lack of timeliness might not be a bad thing, although ACCA does advise that the value of an audit is, in part, due to it being delivered on the right dates.
“While meeting the timing requirements of the companies that they audit is important when the markets are waiting for results, the ultimate focus should always be on audit quality and audit