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Nearly 160 accounting execs and partners were asked about why firms were making more auditing errors.
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The auditors were split on whether a better work-life balance could reduce the number of errors.
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But they have to consider whether remote work could help attract Gen Zers amid an accountant shortage.
US accounting firms are split on how to deal with the shift to remote work, a report published by the Public Company Accounting Oversight Board, a government-backed audit-oversight board, has found.
The report, published last month, was part of the PCAOB’s investigation into why auditing errors had surged following the pandemic and whether internal culture contributed. Though deficiency rates slowed in 2023, they’ve consistently risen since 2020. Accounting errors can lead to embarrassing and costly legal challenges and damage business integrity.
The report was based on inspections of quality-control systems and anonymous interviews with 156 executives and partners at six major firms: Deloitte, EY, KPMG, PwC, BDO, and Grant Thornton.
Sixty-four percent of respondents said that improving work-life balance for firm personnel improved audit quality.
However, roughly one-third of senior executives and partners from the six major firms surveyed said that contemporary remote- and hybrid-work culture had negatively affected auditing firms’ quality control.
They said a loss of in-person interactions was making assimilation into the firm’s culture more difficult, with newer recruits less attuned to the cultural importance of audit control.
Development opportunities were another concern, with some respondents saying firms were losing the “apprenticeship culture” they’ve traditionally favored.
“The delayed development of firm personnel affected productivity and made it difficult for some to meet deadlines and expectations,” some respondents said.
At one of the audit firms, managers and partners were stepping down a level to do audit work traditionally performed by more junior personnel. This led to reduced scrutiny of the audit work, respondents said.
Tied up with the questions about work-life balance and audit quality is another big issue facing accounting firms: how to attract Gen Z talent.
Respondents from all six firms said that “resource challenges” in terms of hiring were a factor in the increasing audit deficiencies or an overall concern for their companies.
In recent years, auditing firms have struggled to attract younger workers, who expect a better work-life balance.