State Board Report


In the recently released Forbes study, “The Future is Now,” researched with KPMG LLP, a survey of corporate executives found an increasing number believe the “regulatory environment” is one of the “biggest challenges to enhancing the role of audit/the auditor.” The 200 respondents surveyed in October 2016 included 46 audit committee chairs and members, 62 chief financial officers, 19 chief audit officers, 18 chief tax officers, 21 controllers and 34 directors of financial reporting. All were from organizations with $500 million or more in annual revenue. Nearly 80 percent of the respondents maintain auditors should routinely use bigger samples and more sophisticated technologies for data gathering. The researchers report “while organizations understand that technology will continue to evolve, they want to see some significant changes in approach to audit sooner rather than later.”

When Forbes and KPMG conducted a similar study two years earlier, 59 percent felt the regulatory environment was the biggest challenge to enhancing the role of audit, but in 2016 that had grown to 66 percent. One quoted accounting professor in the recent study believes that some of the best accounting students are going to other financial careers because of better entry-level compensation than public accounting and because the profession has been made less desirable in light of regulators’ oversight. “Many people don’t want to have their judgments second-guessed, and you don’t get that in finance. I think regulators have done a little too much,” he observed.

The study concludes: “Regulatory environments, budgets, data security and litigation can slow progress in enhancing the role of audit. These challenges must be recognized and properly addressed. The audit profession will undoubtedly continue to change, and only those who evolve and innovate will succeed.”

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