New reality for the auditing profession in light of periods of prolonged uncertainty

Abstract

PURPOSE: The intent of this study is to dive deep into the oriental change that the auditing profession in Malta has experienced as a result of the endured prolonged times of uncertainty, these being mainly attributed to the COVID-19 pandemic, the war in Ukraine, as well as the notable recent spike in inflation rates. This study also aims to provide an insight into what practitioners in the field can adopt now that can serve as a weapon to defeat any likewise future occurrence or disruptions. DESIGN: Given the nature of this study, a qualitative methodology was followed whereby 11 semi-structured interviews with auditors from the big four firms, as well as other mid-tier audit firms were carried out. Participants were chosen on the basis of their degree of involvement in auditing procedures in such crucial times. Interviewees were made up of a mix of individuals occupying different hierarchical positions including audit partners, audit directors and audit managers. FINDINGS: Findings indicate that such unfavourable events adversely impacted the auditing profession in diverse aspect, primarily disruptions caused within areas of client relations and production supply chains. It was also found that the degree of risk during such times was heightened and thus, added procedures such as those attributed to client screening prior to onboarding had to be put in place. Furthermore, another finding that emerged from this study was that of the lack of technological capacity within local audit firms. Interviewees spoke of diverse available means of technological advancements that can be incorporated withing the carrying out of an audit such as data analytics and artificial intelligence, however, they admittedly state that knowledge amongst practitioners in informingly making use of these tools is presently still lacking. CONCLUSIONS: This study concludes that such events that brought about prolonged periods of uncertainty have proven that further investment and reliance on technology in the profession is of essence. Furthermore, all participants view this as a competitive edge in the field that is crucial in paving the way for guaranteeing adequate auditor’s skill set within the forceable future of the profession. IMPLICATIONS: This study reveals the importance of agility in the realm of auditing when hit by periods of uncertainty. It is of imperative importance that practitioners are fully equipped with both academic and technological expertise to fully master a high-quality audit even in arduous times.