A new audit profession: call the midwife!

There’s certainly been a lot of noise recently around the current BEIS consultation on corporate governance. 

For me though, some of the most intriguing questions about education, training and recruitment are thrown up in section 6.9 – ‘a new professional body for corporate auditors’.

Although the rip-roaring 232-page read draws much from the preceding Brydon, Kingman and CMA reports, this section leans heavily on Sir Donald Brydon’s recommendations to improve the quality and effectiveness of audit. In particular, one of his recommendations is “that ARGA acts as the midwife to create a new profession of corporate auditing, establishing the necessary professional body, to encompass today’s auditors and others with appropriate education and authorisation. ARGA would be the statutory supervisory body for that profession.”

Although we have a long way to go on this, the mere prospect of a new corporate audit institute, new qualification and new profession pose some interesting questions.

1. What might an Institute of Corporate Auditors professional qualification look like? Do we (as current educators within universities and tuition providers) already have the skills, knowledge and materials to deliver the required content? Brydon identifies the ‘psychology of suspicion’ as being a key skill here, and one more common to forensic accountancy. To what extent can this be ‘taught’? Could there be a first mover advantage for universities to develop and market ‘audit-heavy’ degree programmes? Indeed, in the absence of any grandfathering provisions, what part could universities and other training providers play in retrofitting ‘existing’ auditors with the skills and knowledge needed to become ‘new’ auditors?
2. Where would all this leave the current ICAEW qualification? Is the current audit content excised, replaced or just tweaked? Might this actually remove a burden from the qualification that allows it to compete more broadly domestically and internationally? And of course what knock-on impact does this have on all the degree programmes currently mapped to it? More accreditation exercises anyone?
3. Where does this leave non-audit accountants? I certainly recognise that very many successful Chartered Accountants haven’t had any audit work experience. But many of us did, however fleetingly and I certainly feel I benefitted hugely in terms of developing my commerciality, analytical skills and of course professional scepticism! Will many future accountants (including those going on to business director roles) be deprived of this experience? Of course, this may well cut both ways and remove some opportunities that future auditors have to enjoy broader work experience in their careers.
4. How will employers react? I am thinking less in terms of whether they continue to provide statutory audit services or not (a whole other article!), but what impact a new qualification will have on their resourcing plans. Will ‘corporate audit’ become a specialist intake for firms? If the expectation is that more auditors will actually stay within audit post-qualification, will they need to recruit fewer students from schools and universities?
5. Will young people want to become corporate auditors? I think we still have a way to go to encourage many young people to consider accountancy (in its broadest sense) in the first place. I reckon there are plenty of people out there who would have made brilliant auditors, tax advisers and Finance Directors who simply never came close enough to the recruitment channels to be drawn in. Will a ‘narrower’ audit career be a harder sell? Will the ‘non-audit’ route be seen as keeping more doors open for future career development? If so, might the brightest and best young minds simply miss it or avoid it? And if they do, where does that leave the corporate audit profession of the future? Perhaps some way short of the consultation’s aim to “drive a new auditor mindset and to strengthen the resilience and integrity of the audit market”.

I don’t pretend to have the answers to all these questions, so feel free to post your comments and thoughts in the community.

You can access the ICAEW’s resources on the consultation here.

And if you’d like to make a formal response, you have until 8 July. More details here.