The capability and competency requirements of auditors in today's complex global business environment

Abstract

Various factors have changed the business environment in which today’s auditors operate. This has resulted in a worldwide challenge to align the capabilities (technical knowledge, skills, values, ethics and attitudes) of auditors to the requirements of this new environment. Questions have subsequently been raised as to whether auditors have adequately responded to this challenge and it is within this context that this collaborative investigation into the current and future capability requirements of auditors performing complex financial statement audits was conducted. This study represents the first part of a constructive debate on auditors’ capabilities to ideally position the audit profession in the 21st century and should therefore not be considered as an end in itself, but as a foundation to foster further deliberations. A qualitative research methodology was followed which entailed 84 interviews with relevant stakeholders in three countries: Australia, South Africa and the United Kingdom (UK). The sample was restricted to audits conducted by the Big 4 auditing firms for some of their largest listed company clients in the aforementioned countries. Therefore the views of the interviewees (auditors, corporate managers and members of corporate audit committees), directly involved in the audit process are representing the higher end of the audit landscape. As such the study does not directly capture the perspectives of non-Big 4 auditing firms or smaller corporate clients. In addition, stakeholders who have some oversight, public policy or educative role in audit also participated in the study. The study adds to the current debate on the impact of a changed business environment on auditors by proposing a strategy to ensure auditors of today and tomorrow, individually and collectively as a team, have the necessary capabilities to perform high quality public interest audits.