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IRBA: 4th Audit Quality Indicators Report 2022
- 10 February 2023
- Accounting
- South African Accounting Academy
The report is based on data collected from JSE-accredited audit firms. Statistical analysis on data from 13 audit firms from 2018 to 2021 is included in the report.
An area that stands out in this yearꞌs AQI Report is the sharp increase in staff turnover at supervisory and managerial level with several firms experiencing unusually high staff turnover. South African audit firms, not unlike global firms, are reporting that the battle for talent has intensified.
The profession is being impacted by the ″great resignation″ and the risk to audit quality cannot be underestimated. The IRBA is intent on working with the profession to increase the attractiveness of the career, while firms themselves will need to employ retention strategies, looking at benefits, work-life balance, and talent growth strategies.
The lockdown period has seen the average fee recovery dropping from 78% (2019) to 71% in 2020 with only a marginal recovery to 74% in 2021. Non-recovery of fees may indicate, among other reasons, inefficiencies in supervision and project management (time wasted on an audit) or lowballing (discounted fees or fee pressures).
Stakeholders are reminded that undue downward pressure on audit fees and the inability of firms to recover the full cost of an audit may limit the scope of the audit and negatively impact audit quality. The cost of audit quality cannot be discounted - ensuring that firms can allocate an adequate number of hours and appropriately skilled resources to the audit and across audit risk areas is necessary to reduce audit risk to an acceptable level and ensure high audit quality.
Click here to download the AQI Report:
https://www.irba.co.za/upload/2022%20AQI%20Report.pdf
Relevance to Auditors, Independent Reviewers & Accountants:
- Audit audit firms are encouraged to enhance their monitoring resources to distinguish between good and mediocre quality management systems.
- Audit Quality Indicators (AQIs) provide insights; and because they are context specific, the users of this report should carefully consider the context at all times.
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