At a recent ICAEW conference on the future of auditing I realised how what was once a traditional service provided by most accountants, is almost extinct. It won’t die out completely but it’s certainly becoming more specialised as the number of companies requiring audits has fallen dramatically in recent years. And that trend is set to continue.
Not only is the audit landscape shrinking but the principles are changing. I won’t pretend to fully understand the new “Clarity ISAs” (International Standards on Auditing) but I understand that the UK will be an early adopter within the next two years. Audit firms will need to invest in new training and systems to comply – but there won’t be any additional fees so this is simply an additional cost to be covered.
I’d also mention that earlier this year the Treasury Select committee asked the FRC to review the level of non-audit work that auditors should be permitted to undertake for audit clients.
And the outlook on the financial reporting side is also changing. A recent EU proposal would exempt micro-companies from the financial reporting obligations in the 4th and 7th directives. The current UK Government sees this as deregulatory; Just think about the implications for your practice if smaller companies were no longer required to produce formal annual accounts other than for the taxman.
How will these developments impact your firm? Have you yet undertaken any form of strategic review, perhaps comparing your current structure with that which you will need in 2 or 3 years time? And how will you evolve over that period? Will your firm be one of those that offers alternative assurance products – such as The Assurance Report? Will you be competing with other firms that do offer this service? Whilst you may think you know what your current clients want in this regard, what about prospective clients?
Please share your views and comments below.