Unpleasant work or low pay? What’s behind the auditor shortage
Auditing firms are struggling to attract people into the profession because the role is demanding and the work unpleasant, the head of the corporate regulator says.
ASIC chairman Joe Longo told a parliamentary inquiry into the regulator on Friday that the auditing profession also had “long-term staffing challenges”, partly because being an auditor was a “high-risk” occupation because of heavy regulation of the sector.
ASIC chairman Joe Longo says auditing has become an unattractive profession to enter. Alex Ellinghausen
However, Labor committee chairman Deborah O’Neill said the key reason firms had a staffing problem was the low pay of junior auditors compared with the oversized pay packets of partners at the large auditing firms.
She and Mr Longo agreed on one thing: the once sought-after and safe career choice of auditor or accountant did not have the same appeal it did in decades past.
A survey of accounting firms by professional body Chartered Accountants ANZ, published in January, highlighted the widespread shortages of auditors, accountants and tax accountants across the sector.
Firms also complained to CA ANZ that although they received a high number of applications for vacant roles, “only a small number of applicants had the qualifications, skills and experience required to do the job”.
This finding is consistent with the results of last year’s Financial Review Top 100 Accounting Firms survey, in which most firms cited ongoing staffing woes as the biggest impediment to increasing revenue.
Not interested in auditing
Mr Longo said he had been briefed by his staff many times about the decline in interest from university graduates in becoming auditors.
“The audit professionals globally and nationally, [it’s] a challenge for them to attract people into that profession,” he told the joint committee.
“It’s a very demanding role. It’s heavily regulated. It’s high risk. So I think that’s an issue that I know that big firms are thinking about; how they’re going to address moving people around the network, giving them exposure, making it a more attractive role.”
Senator O’Neill responded: “Or they could pay their junior staff a bit better, Mr Longo.”
She said the key reason for the decline in interest could simply be the low pay and onerous working conditions of junior auditors within major auditor training firms such as the big four.
Senator O’Neill highlighted the “huge gap” between what senior partners make and what junior staff are paid at a big firm.
Audit graduates at the big four generally make about $65,000 when they begin and will take home more than $110,000 once they make manager, a process that typically takes at least four years.
This compares to the average pay of equity partners at the big four ranging from $700,000 (KPMG) to $810,000 (Deloitte) and more than $900,000 (EY and PwC).
She said junior staff were “being underpaid for the skills that they’re bringing to the equation, and partners are being paid a fortune to sign off on the sweatshop work of young people”.
Mr Longo responded: “Well, clearly compensation is a key part of anybody’s attraction to any particular role. As far as audit [goes] ... a lot of the work itself isn’t entirely attractive.”
He said he was not “an expert on the life of a young auditor” but that the profession had “long-term staffing challenges to deal with, and part of that might be paying people more”.
“But we all know that sometimes paying people more doesn’t mean you’re going to get people to do that work or attract the right people,” Mr Longo said.
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