A study by the Audit Quality Center has revealed that firms are dealing with a range of challenges including inflation, cybersecurity risks, tighter regulation, and the possibility of audit firm default. The twice-yearly Audit Partner Pulse survey conducted by the CAQ shows that organizations are more focused on cost control and financial performance than talent and workforce. This shift in priorities is due to the human capital challenge of talent reduction. The survey also found that less than 1 in 5 audit partners are optimistic about the US economy, with inflation remaining the biggest concern for the second year in a row. Additionally, cybersecurity threats and regulation are also among the top concerns.
In terms of human capital initiatives, increased workplace flexibility and compensation were top priorities a year ago but have since dropped significantly. Instead, job cuts have become the top human capital measure implemented by US companies. Cybersecurity continues to be the top risk, with 54% of CAQ partners reporting an improvement in communication between boards and public company management. However, organizations are still only moderately prepared for cyberattacks.
Moreover, AI adoption has increased with 47% of US companies using it to some extent, and 89% of audit partners surveyed stating that the shortage of accountants is impacting US companies. Finally, plans to adopt cryptocurrencies have decreased across all industries with financial services being the most impacted. For more information, the full survey results can be accessed through the provided link.