New Audit Threshold Reform – a Threat Or an Opportunity?
A survey of mid-level firms was conducted which shows that more than 50% of firms believe that this move will result in loss of their revenue. Some firms suggested that it would affect their recruitment strategy.
The registered audit firms have decreased since year 2009 The Financial Reporting Council observed that the no. of audit firms have lessened by around 11% in the United Kingdom from 2009 to 2013.
The companies being affected by the change ought to review and if possible revise their strategies. The first step could be to focus on specific sectors. Identify sectors which have high demand and develop their skill set based on these sectors.
The firms will have to diversify and expand their services. They will have to look for clients requiring audit other than regulatory requirement.
The audit industry will have to review the existing culture of doing business with clients. Certain firms are moving from chargeable hours culture to one focused on constructing good relations with customers. This helps to add value to services and reinforce the relationship with customers which would eventually result in increased profits.
Spencer Wright, the chief executive of the Midland-based firm Dains, said that audit clients are normally once-a-year-visit. This culture has to be revised. Audit firms should remain in contact with their audit clients throughout the year so that they are able to provide consultation regarding clients’ financial and commercial matters.
Efficiency and Recovery Rates
Lastly the firms have to be efficient and improve their recovery rates. For this purpose, the firms should design the most efficient and suitable audit procedures, so they can utilize saved time on providing other services and building client relations. Some of the audit firms prefer manual audit procedures over the computerized procedures Making them less effective and less efficient.