Joint ICAS and FRC reports into audit skills of the future

  • ICAS (Institute of Chartered Accountants of Scotland) (lt green) Image
  • FRC Image

07 Apr, 2016

The Institute of Chartered Accountants of Scotland (ICAS) and the Financial Reporting Council (FRC) have published the results of two independent studies, commissioned in 2013, which investigated what mix of attributes, competencies, professional skills and qualities need to be combined in an audit team in order for it to perform a high quality public interest audit in a modern and complex global business environment.

The first independent research report, The Capability and Competency Requirements of Auditors in Today’s Complex Global Business Environment, explores the views of key audit stakeholders from Australia, South Africa and the UK.  Interviews were focused on six of the most significant public companies from different sectors in each of the countries.  Interviews were conducted on the audit engagement partners, the Chief Financial Officer, the Audit Committee Chair and the internal auditors.  Additionally, individuals who had some oversight, public policy or educative role with regard to audit in each of the three countries were also interviewed.  Questions focussed on the current and future role and responsibilities of the auditor, what capabilities auditors need to perform their role now and in the future, how recruitment models should be adapted to ensure that those recruited can meet the demands today and in the future and how should training and development programmes be changed to ensure that auditors are appropriately trained to perform their roles today and in the future.

The report concludes with a “proposed strategy to ensure that auditors of today and tomorrow have the necessary capabilities and associated competencies to deliver high quality public interest audits”.  Among other things the report recommends (taken directly from the report):

  • A need for constructive debate around the future of audit
  • An increasing need in audit teams for people with more diverse backgrounds
  • That specialists should be recruited and then trained in audit to become an effective part of the audit team
  • That 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
  • That there should be more focus on the development of mid-career professionals
  • With the exception of the financial services industry, audit trainees should be exposed to a wide range of industries before specialising as specialising too early “can sacrifice breadth of experience”. 

The second independent research report, Skills, Competencies and the Suitability of the Modern Audit, explores the views of key audit stakeholders from the UK, Belgium, France, Germany and Sweden which were gathered as part of focus groups.  Rather than identifying a list of specific skills and competencies required of auditors, it identifies 11 “pressure points” or areas of difficulty where the challenges lie for auditors.  These cover four broad categories namely, the context of the specific audit engagement, the development of audit personnel, firms as suppliers of audit services and interactions with stakeholders and society.  

This report indicates that:

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 for auditors, according to the report, revolve around (taken directly from the report):

  • 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.

Both reports have been overseen by a Steering Committee which intends to publish its own report based on the results of these findings. 

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