Closer scrutiny of internal controls adds to the pressure

THE AUDITING profession is facing a major challenge with the worldwide shortage of talent coming at a time when auditors are expected to take on a bigger role, say practitioners.

'We have had to take on additional responsibilities from companies, investors at large and the regulators,' said Richard Ho, audit partner at Deloitte Touche Tohmatsu and a vice-president at CPA Australia.

In his work on listed company audits and initial public offerings, he is expected by company audit committees to have news or to comment on the internal controls of the company and to highlight flaws identified as a result of the audit work.

'It's not that companies want us to be responsible for their internal controls, but they want us to draw their attention to any potential flaws,' Mr Ho said. 'We were never asked for this sort of information as recently as two or three years ago. Now all audit committees ask these sorts of questions.'

The request for additional help from clients is adding to already demanding work schedules and is leaving auditors stretched, especially in the first quarter of the year when the volume of work peaks.

Most Hong Kong and mainland companies end the year's financial accounts in December. Because the Hong Kong stock exchange requires that all basic accounts be finalised by the end of April, the work of auditors is in its heaviest season in the first four months of the year.

Strategies to ease the pressure include spreading the work over interim visits and introducing October year-end audits, which can be rolled forward when an auditor did a December year-end audit for a client.