MBS has completed a major piece of research assessing the skills and competencies needed by the next generation of auditors given the demands of an increasingly complex and global business world.
The research was a joint project between MBS and Aston Business School and co-funded by the Institute of Chartered Accountants of Scotland (ICAS) for the Financial Reporting Council (FRC). The FRC sets the framework within which auditors and accountants operate in the UK, and the research will now help shape future guidance for auditing firms.
Stuart Turley, Professor of Accounting, says there is widespread concern about how well prepared auditors are to deal with the challenges of doing business today, particularly with regards to the higher complexity of global operations.
“In particular, questions were asked about how well equipped auditors were to deal with the circumstances leading up to the financial crisis. Our project involved getting together groups of practitioners, regulators, users and academics across Europe and running focus group sessions to discuss how the practice is evolving, what are the key skills needed, and where the barriers to effective auditing are likely to be.”
One of the key findings of the research was the need for better ‘psychological awareness’ among practitioners. Adds Stuart: “As an auditor it is not just about having the technical expertise, it is about having the ability to read people within a business and negotiate with them, and to understand the motivations behind certain judgements. An audit requires a lot of cooperation to be effective.”
The research points to the importance of making more visible the exercise of professional judgement in the audit and how higher quality reporting can be achieved through persuasion. Rather than just checking that companies comply with rules, auditing can also promote higher standards of reporting behaviour if auditors are in a position to influence those involved in the governance of an organisation.
The FRC and ICAS will be outlining their response to the research later this year.