Auditing challenges during 2021/22

The audit profession has faced intense pressure in recent years. This year, global auditor shortages, staff absences due to illness and isolation rules, lockdowns, and increasing audit complexity due to Covid-19 have all affected our audit service providers’ ability to deliver audits on time. At the same time, public organisations have also faced significant challenges in preparing their financial statements and providing access to information.     

There is a global shortage of auditors, which is affecting the public and private sectors in New Zealand. 

In previous years, senior qualified auditors were either seconded from overseas or recruited permanently to help during busy audit periods. However, in 2020/21 and 2021/22, border restrictions in response to Covid-19 limited access to auditors from overseas. 

Graduate recruitment has also been more difficult. There are currently fewer students studying accounting at New Zealand universities and a tight labour market is giving graduates a wide range of opportunities.

Competition for auditors is also high. Auditors at all levels, including those who have not yet qualified, have many options in both the public and private sectors. Auditors are also leaving the profession. With New Zealand’s border re-opening, auditors are also taking the opportunity to travel and work overseas.

Our auditors have faced increasing complexity as organisations grapple with the implications and risks associated with the pandemic. Fees have also remained under pressure.

There are no quick and easy solutions to these challenges. However, we have worked hard during 2021/22 on matters we can influence. For example, we:

• sought, and were granted, legislative changes from Parliament to extend reporting deadlines;
• reallocated audit work to better balance workloads between our audit service providers;
• significantly increased our recruitment efforts nationally and internationally;
• worked with Chartered Accountants Australia and New Zealand to gain a border class exemption for audit staff;
• worked on secondment arrangements with Auditors-General in Australia and the United Kingdom;
• ensured that audit fees better reflect the scope of the audit and the effort required to complete it; and
• supported our people as they dealt with high workloads.

Quality audits are fundamental to New Zealand's public accountability system. Therefore, to help ensure audit quality is maintained, some audits have had to be deferred from their normal reporting deadlines.

A key focus over the next 12 months will be to clear any Covid-related audit backlogs and to continue to seek ways to respond to the challenges our audit service providers and the audit profession generally are facing.