The accountancy profession, and audit in particular, is under scrutiny as never before, in the wake of high-profile corporate failures and criticism of the role of auditors. Yet at the same time, the need to attract and retain top talent is as important as ever, and the sector must adapt to the changing priorities of a new generation of employees. These issues – and some potential solutions – were all up for debate at a recent roundtable hosted by economia and held at PwC’s offices in Derbyshire.
The accounting and audit sector has always faced scrutiny, says Kevin Harris, managing partner of RSM, Leicester, but there is currently a bigger expectation gap than ever. “I don’t think it’s ever been as wide as it is now, in truth,” he says.
“There’s still this feeling outside the sector that the audit is something that it isn’t, and that gap is really problematic, especially when you see collapses of major organisations and the spotlight shines down on the profession again.
“When a major collapse happens, there’s a perception that the auditors have a wider responsibility while auditors will say they do what they’re legally required to. We’re not going to solve it by putting more regulation in; we’ve got to have a sensible, open discussion and debate about this. People coming into the audit profession shouldn’t have to worry that by following all reasonable steps expected of them, they could still end up in Court explaining themselves.” This is certainly a concern for Hasnain Iqbal, a final-year student at Nottingham Trent University studying accounting and finance, who undertook a placement with PwC last year.
“Because of the risk when you actually get to a partner/director level, I don’t think I want to get that far,” he says. “There’s a lot of blame on the auditors. I feel as if the highest I’ll go to is manager and then that’s enough risk for me to take on. Maybe I’ll try something else then, such as working in the public sector.” Thomas Spencer is course leader for the undergraduate accounting and finance course at Nottingham Business School. He believes there should be a shift away from viewing audited companies as clients, and for auditors to see shareholders as their true clients.
“That goes back to reassessing the requirements of auditors to engage more with shareholders than they currently do,” he says. “It’s all about the perception of what an auditor is, considering what risk means in today’s society for a business and how that differs at different levels. But that’s not something that can be solved in a short period of time.” Dawn Conneely, director of cost – UK cards finance at Capital One in Nottingham, draws a parallel with the wave of regulation that hit the financial services sector in the wake of the financial crisis.
“The level of regulation following the financial crisis was significant. While most of it was necessary there were possibly elements that had an un-intended impact. We need to be careful in viewing additional regulation of the audit profession as solving the issues.” Abi Bown, chief digital officer at Cooper Parry, believes there is an opportunity here for accountancy firms to re-define what they offer clients. “If it’s the legal requirement to have an audit, that’s one thing, but there is so much more around adding value and solving problems,” she says. “That’s much more interesting to me than talking about regulation of the Big Four.”
One of the challenges the audit sector faces is attracting and retaining talent. Demand for the accountancy course at Nottingham Business School has increased by 13% in the last year, says Spencer, against stagnating overall numbers going to university, but retention once people are qualified with the ACA can be an issue. “It’s such a fantastic door-opener that people can walk out, so you lose the brightest and best,” he says. One issue is the perception that audit retains a long-hours culture, he adds.
“It’s more common now for people to want to find that work-life balance. They’re looking for life satisfaction, not just being at the top of their profession.” This is one advantage mid-tier firms may have over the Big Four, suggests Harris.
“The work/life balance can be very different; let’s be honest,” he says. “A lot of people aren’t prepared to make the sacrifice. They may have less money and fewer opportunities to work on PLCs or be in London but it’s a shift a lot of people are prepared to make.” Hannah Smith is also a final-year student at Nottingham Business School and undertook a placement last year in RSM’s corporate finance office in London.
“Some of my peers aren’t going to apply to the Big Four,” she says. “I’m going back to RSM and I didn’t even think of trying for a Big Four firm, because the culture and the people at RSM kept me there. It isn’t really about salary or even where it is any more but whether I want to work there every day.” The prospect of being able to travel is also appealing to this generation. George Acquah was until recently marine finance manager at Rolls-Royce, having previously started his career with PwC.
“When I was at PwC I had the opportunity to work in the US a couple of times and around Europe, and one of the reasons I joined Rolls-Royce was because they offered those same opportunities,” he says. Now in Paris as group business manager at Aero Gearbox International SAS after the unit he worked in was sold, he says: “They offered me an opportunity internally for a lot more money but it was a job I just didn’t want to do,” he says.
“Once they understood my key drivers they found the right opportunity, which was something that was going to develop me as an individual in terms of the role and the location, including learning a new language. Those are the sorts of things that are going to keep people in the profession.” New ways of working also mean employees no longer need to be tied to a location at all, points out Bown, which can also help to retain them.
“Work is no longer a location. It’s wherever you are, in a coffee shop, a service station or wherever you happen to be travelling,” she says. “You can choose to go to a location for your lifestyle reasons, and that’s what should be driving you and work shouldn’t get in the way of that. In many cases it should actually encourage that and find ways of making sure that you can still deliver brilliantly, no matter where you’re based.”
The sector also has a responsibility, though, to take the time to develop talent and ensure people have the opportunity to gain the experience they need to progress, believes Harris. “What audit is about, ultimately, is judgement,” he says. “It comes down to whether I feel this is really telling me what it should be telling me and there’s nothing else there. That can only come with experience, but there’s a big role for senior people in the profession to help those coming in to try to understand how you build and form those judgements.
It’s a case of just sharing experiences and knowledge, and I think we’ve lost a little bit of that.” Iqbal says he found learning from senior people on his placement invaluable. “I feel I was more engaged because I felt like I was learning so much more from the senior people,” he says. “I felt I could use their experience and that could help my thinking when I was working on audits myself.”
More experienced people can also learn from their younger colleagues, through reverse mentoring, says Bown. “It should be a two-way thing and that makes it really interesting for both sides,” she says. “What can technology do? What do people want? What do our clients and the next generation of clients want from an auditor? It’s not what they wanted in the past. The benefit can work both ways.”
As with many industries, the accountancy sector also faces a battle to build and maintain a diverse workforce, but there are signs things are moving in the right direction. Capital One, for instance, uses videos and online testing to recruit its graduates, says Conneely.
“We don’t get sight of people’s CVs or what grades they got,” she says. “It really is blind and that opens you up. We all have a bias and if you’ve got a strong academic background, for example, you can’t help but be biased to candidates who have really good A-Level results. We’ve just eliminated that.”
It’s also rewriting all its job descriptions and promotional material to avoid any unconscious bias, she adds. Acquah is one of two diversity champions for the East Midlands region at PwC. “When people talk about diversity they tend to mean ethnicity or gender, but there are so many other different forms such as background and location,” he says.
“It’s about making sure your business has as few blind spots as possible, and breaking down the barriers for students that are coming out of further or higher education to understand that those opportunities are open to them.” Gender pay is another issue the sector needs to get to grips with, says Bown. “When you roll it forward 10 years, it will look very different,” she says.
“But all the stats at the moment say it will take 100 years to equal out at the current rate of change, so we’ve got to really kick-start it. There are things we can do to speed it up, such as implementing flexible working and pushing for diversity on boards.”
The use of technology is having a significant impact on the profession, both in helping clients extract vital information and on the nature of the audit job itself.
“Nowadays most forward-thinking companies have got great IT infrastructures and the data analysis is fantastic,” says Harris. “We often find that companies don’t appreciate what tools and facilities they have got and one role for the accountancy profession is to make people more aware of that. That’s a big push in my own organisation.”
Technology can also help organisations attract and retain talent by tackling issues such as repetitive work and work/life balance, believes Bown. “A lot of the basic, more junior tasks could and should be automated and the repetitive, monotonous tasks that you start off with will be replaced pretty quickly, if they have not been already,” she says.
“This could help keep people in the profession because there will be less of that laborious, process-oriented element to the role. That’s when you’re really adding value for clients, and it will be more interesting for our young people in the generations coming through.” This is certainly something that appeals to Smith.
“Sometimes I’ll sit there and plug in a sales invoice and put all the data onto a spreadsheet, and I feel like they’re the type of jobs where it could be done by a robot,” she says. “Once you’ve got all of that data you can then impose your judgement on it and see whether it matches what it needs to match. I could then spend a lot more time analysing that data.” Harris, though, warns against becoming overly-reliant on technology.
“There are certain aspects that you can automate, absolutely,” he says. “But let’s get back to the point that professional services are often about judgement so the one thing you would never want to do in a professional services firm is over-automate. We’ve not invented a robot yet that can sign off on an audit report and be absolutely certain it’s made the right decision. There’s a part that always involves the human.”