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. According to Ernest Ip, assurance leader - Hong Kong/China, PricewaterhouseCoopers (PwC), business had become so intense that no period could be considered 'quiet' for auditors these days. 'A lot of auditors are working long hours because of the demanding requirements from clients. When a client is launching an initial public offering or a merger and acquisition, auditors have a very tight time frame in which to complete their work. 'In the past, our activities were concentrated in the first four months of the year, but now work extends to the summer season.' The demanding schedules have been exacerbated by the number of mainland firms coming to Hong Kong to raise funds and the Ministry of Finance's decision earlier this year that the mainland adopted international accounting standards from 2007. This signified a continuing high demand for the services of Hong Kong accountants through 2007 to deal with the new accounting standards. 'It is clear that in Hong Kong, in terms of the auditing services we perform, we cannot forget the China market,' Mr Ip said. 'Hong Kong is closely linked with China. Companies in China are enjoying significant growth because of the country's booming economy. At the same time, Chinese enterprises need capital to expand and compete. Overseas investors are keen to provide the capital. In China, the market offers double-digit growth almost every year, and investors are desperate to increase their presence.' China is generating significant business development opportunities for accounting firms in Hong Kong. PwC, for example, has been heavily involved in initial public offering activities for enterprise capital raisings and merger and acquisition activities, where overseas investors are seeking joint ventures with China-based enterprises. 'The outlook is very, very positive and also very challenging,' Mr Ip said. 'Our challenge is how to get enough qualified people who can do the work in China.'
