Auditing Solutions for the Great Resignation and Beyond

Internal auditing departments have always been on the front lines of ensuring compliance with government regulations and reporting. This is especially true for companies that do business in financial services, including banks and fintech companies.

The constantly-evolving sector and ever-changing reporting landscape presents unique and ongoing challenges for auditing departments—namely the availability of limited resources and personnel to fulfill busy auditing timelines while balancing the need to have an independent party assist with company audits. As a business with extensive expertise in audits, SRG has seen these challenges firsthand.

Historically, auditing departments dealt with (and continue to deal with) this saturation by outsourcing auditing functions to major accounting firms, including Deloitte, KPMG, Ernst and Young, and PricewaterhouseCoopers. Collectively these “Big Four” firms accounted for 47 percent of public company audits in 2021.[i] It is often standard practice for these businesses to embed auditors within a company—known as co-sourcing—to help facilitate and expedite the auditing process. Audit support is often handled by junior auditors and overseen by a seasoned veteran.

The effects of the great resignation[ii] coupled with employees’ abilities to command substantial pay increases created a vacuum for talent in many industries as employees jumped to new roles with higher salaries or quit altogether. This trend will almost certainly continue in the near-term as inflation eats into employee salaries and purchasing power.

This loss of talent has an overwhelmingly negative effect on companies but is particularly burdensome for banking, fintech, and companies in highly regulated markets that have reoccurring auditing and compliance-related deadlines and obligations. These deadlines must be met, regardless of staffing loss. Herein lies the challenge. Do companies with in-house audit staff risk hiring new talent and investing resources and time to train up new hires to help meet deadlines only to have employees depart as soon as training is complete?

Other challenges outside of training exist that are not necessarily unique to highly regulated industries but can still disrupt business and deadlines. Both in-house junior auditors and those that work for the Big Four may be considered entry-level, but those entry level positions still require the education, industry expertise, and in some cases credentialing that cannot be easily fulfilled, replicated, or even transferred within organizations.

Costs associated with increased salaries can also affect both the Big Four entities and in-house internal auditing staff. The Big Four may be able to pass along costs to clients; however, they also run the risk of driving away clients as they seek out more competitive pricing from competitors that may be more willing to eat those costs. In-house staff are affected when the costs of auditing services increase and eat into budget allocations.

SRG has an untraditional approach for assisting companies with their auditing needs that was adopted long before the pandemic and continues to benefit clients in the age of the great resignation. Rather than augment existing staff with junior auditors that fulfill specific tasks, SRG deploys a diverse array of experienced Subject Matter Experts (SMEs) to advise and work with clients on solutions and remedies to more complex problems and forecasting.

Retaining a network of experts and drawing on talent from outside the traditional audit sphere helps clients achieve their auditing goals by delivering needed talent; it also allows SRG to bring to bear its unique insights, perspectives, and experiences that can highlight opportunities or identify potential pitfalls for our clients in such areas as Anti-Money Laundering (AML), the Dark/Deep Web, and A-BC (Anti-Bribery and Corruption).

This service model continues to assist with project execution and the timely completion of auditing requirements and responsibilities. It also helps our clients think strategically about the future challenges that could affect their workplaces as they continue to grow and evolve.

Sources:

[i] Maria Murphy, “Study: Big Four audit hold still strong despite 2021 dip”, Compliance Week, June 17, 2021.

[ii] Gabriel Rubin, “Record Quitting Fuels Tight Job Market”, The Wall Street Journal, November 12, 2021.