This part represents the continuation of interviews with auditors, however, it is devoted to the specifications inherent to the specific country. The differences noted are in most cases coming from the regulation of each country and its general attitude towards technology integration in each sector of the economy.
Russia
As stated on the website of the Ministry of Finance of RF, the audit market in Russia currently has 4,7 thousand registered audit firms, 4,1 thousand of which are audit organizations and the rest 0,6 thousand are individual auditors. In terms of people engaged in audits across Russia, there are 19,5 thousand auditors, 4,3 thousand of which are graduates of the Unified Certificate Examination.
Recent years, the audit industry in Russia suffers stagnation as a consequence of the economic crises and, as a result, there is a need to adjust prices for the services to make them more affordable to the clients and stay competitive. Nevertheless, Russian audit develops with high speed as the government is motivated to make the audit services of the international quality to attract investments to industries.
Education and qualification of auditors
Federal Law #307-FZ “Audit Activity in Russian Federation” provides general requirements to the education of an auditor due to the transfer of many functions to
44 self-regulating organizations. For the purpose of maintaining a common understanding of basic issues and standards, the term of “Education of an auditor” was introduced.
The structure of the standard was developed on the basis of IES (1-8) IFAC and has the following requirements:
• Basic education
o higher economic or legal education
o or secondary specialized economic education
• Practical experience (3 years of last 5) as:
o head, auditor or specialist of an auditing organization;
o accountant;
o economist;
o inspector;
o researcher or teacher of economics.
Full-time and part time employment as well as individual entrepreneurship in these fields are counted as practical experience and the length of the time worked is determined on the basis of actual hours expressed in the working days.
• Special vocational education (recommended but not compulsory) o Full-time program without job training;
o Full-time program with job training;
o Full-time program with combination of distance learning.
The programs and their length are determined by special commissions in the Ministry of Finance of RF and the Central Bank of Russia. The programs include lectures, seminars, business simulations, working on projects and other types of learning activities. The length depends on the basic education and practical experience: from 240 hours to half
45 of a year for those having a degree in the fields of accounting/ finance and experience in a position of manager or an accountant and from one year up to three for others.
• Fluency in business Russian
To the extent required for maintenance of working documents, study of regulations, ability to pass exams in the field of accounting.
Besides that, each certified auditor must complete at least 40 hours of advanced training per year in accordance with the program approved by Committee on Audit Activity of the President of RF.
All these requirements are obligatory for all employees performing audit procedures in small and medium-size audit firms:
“To become an auditor, a candidate must have education in the field of accountancy and economics, moreover, the working experience is also very important. Auditors must represent a high level of proficiency and competency, must have a broader knowledge base than a client has”.
Director, Finex RU
“An auditor can be a person with higher education in fields of economics or jurisprudence”
Director, Interaudit RU Before discussing this topic with auditors, the hypothesis was suggested: “IT education could be accepted alone for candidates to auditor position without a background in other fields, such as accounting, audit techniques or economics in general”. With development of technologies and processes automation, specific knowledge might
become required, moreover, they could become even more important at the start of their career. This hypothesis was confirmed only partially.
Small and medium-size audit firms agreed that an IT specialist might be very useful as an auditor, especially if this candidate shows his interest to broaden his knowledge in accountancy as well. However, according to current legislation, without a university
46 degree in accounting or economics, it is prohibited to employ a person on auditor
position who does not fulfil the requirements:
“The person that is sincerely interested in what auditors do and ready to learn and develop himself in this direction, be ready to what market supplies for him can become auditor despite the specialization, however, the regulation precisely says the
requirements and we as auditors must follow them while hiring new colleagues”.
Director, Interaudit RU Nevertheless, large audit firms which are mostly represented by international giants as the Big 4, consider that at the junior position for audit analysts the university degree in accounting or economics or jurisprudence is not required. This could be explained by the large internal educational programme, which is displayed in requirements to obtain ACCA qualification, which combines the key areas relevant for audit work. The Big 4 provides the training for their employees, supplies the study materials and encourages employees to participate in exam sessions at least twice in a year to be able to pass all 13 obligatory exams in 3-5 years and get the world-wide accepted qualification.
Considering the technical background that some of their employees working as audit analysts have, it does not help much at this moment as the technical advancement in this profession in Russia does not provide them opportunity to present their expertise in this field in full.
Additionally, some of the respondents representing the Big 4 believe that even junior position should be associated with having a degree in accountancy and having only technical skills instead is not sufficient:
“Unfortunately, the real-life experience shows that not everybody can be taught to become a good auditor at the working place without some knowledge in accounting obtained earlier. ACCA does not fully substitute the university degree but rather
supplements it. A person with IT knowledge can contribute at Risk Assurance Services provided also by the audit firm but this position differs from what auditors usually do.
Considering dealing with big data, the programs that auditors use for this are not so sophisticated to require IT education and can be learned in-house”.
47 Senior Auditor, PwC RU This statement is also supported by another respondent:
“The education in the field of IT serves for the IT audit, where the main effort is put on audit of controls, systems reliance and effectiveness. An accounting degree would be insufficient in this case; however, IT audit is not for programmers, rather for those who work with different systems and are able to find their deficiencies”.
Manager, EY RU To improve the skills of employees of large audit firms do technical training in online and offline formats on a regular basis. They are related not only to expanding audit knowledge, methodologies, updates in standards but also to technical skills which are often useful at engagements. Some of them are obligatory and must be completed by a certain deadline, some are optional, and employees are free to choose those which are the most interesting and relevant for them. To promote them among employees, a team responsible for learning and development of specialists do news posting with latest updates, webinars and study materials applicable to any relevant and newly appeared automation tools.
“If any staff member displays his interest in learning a new skill, including
programming, and if this is related to the job he does, the firm offers an option of covering the costs up to 50% if they are purchased on other sources than internal such as Coursera. Our team members, especially junior staff, demonstrate great interest in programming and other IT skills and use this option very often”.
Senior Associate, KPMG RU Smaller firms usually cannot afford holding regular trainings and exploring new
automations due to licenses cost and uncertainty of their usefulness during
engagements. This is also explained by the fact that small businesses that represent the clients of such audit firms keep their documentation in paper format, which creates obstacles to use of technologies without prior making of a digital copy.
Working with data
48 Having said about paper documentation for majority of small enterprises in Russia, representatives of the smaller audit firms highlight the importance of the currently existing Microsoft office applications such as MS Excel and MS Word, however, they also note that creation of internal tool for keeping the database is also existing and intensively used in the audit projects. The security of these databases is ensured by internal IT specialists, and, in addition, all information is stored at paper files.
On other hand, the Big 4 do investigate new tools, however, their integration into the processes is always determined by the time needed to ensure usefulness of a tool and its practical applicability. Despite that, tools need to be checked by IT specialists for
reliance and data security and approved by top management in terms of resources needed for integration.
The audit specialist of the Bg4 in Russia also noted that due to specifics of the Russian business sector and both domestic and international negotiations in terms of
cooperation, attitude to the use of technologies in audit procedures varies from that common in the West. People are less focused on sharing and cooperation on exploring new features, instead they try to do their best to perform the work in a timely manner with the highest possible quality on their own with the tools that proved their necessity and efficiency in the working place earlier.
The large audit firms have successfully integrated new external programs as Alteryx and Power BI as these programs expand opportunities for working with data.
“The firm, for example, currently offers an option to learn how to use Power BI, how to correctly upload the data there for all junior members. It was not applicable a few years ago, and it is great that the firm is developing in this way, moreover, it is appreciated by those for whom these courses are created”.
Senior Associate, KPMG RU Apart from external tools, the audit firms develop internal applications used widely in audit procedures and are applicable only for them. These can be programs for working with journal entries, inventory counts or aggregation of data collected from a client.
49 Nevertheless, considering the global scale of these companies, these are attributes for entire corporations working in different parts of the world.
Czech Republic
Based on the figures of Accountancy Europe (2020), the Czech Republic currently counts 1160 qualified statutory auditors, members of the Chamber of Auditors (KACR).
The number of professionals has grown from 1350 in 2002. The number of new trainees is around 80-90 each year.
Education and qualification of auditors
According to the law 93/2009, the education requirements to a person who can be granted with audit authorisation (license) at his request:
• completed University degree (Bachelor or master’s degree in the Czech Republic or foreign equivalent accepted by the Czech Republic)
• completed professional experience for at least 3 years as an assistant auditor or has professional practice in a similar job position in another Member State, to the extent of at least 35 hours per week or for an equivalent time 3 years if the internship was shorter within a week
o according to the law 299/2016, which changed the already existing law 93/2009 on audit activity in the Czech Republic, defines the education
requirement for the performers of audit activities as assistants: completed secondary education, or specialized secondary education, or study equivalent to them
• passed the audit exams set by the Chamber of Auditors in the Czech Republic The exam represents a set of 12 subjects needed to be passed during the time range of 5 years and consists of micro and macroeconomics, financial and managerial accounting, consolidations, taxes, business law, statistics, audit (in two parts) and information technologies.
The last one is aimed to ensure the knowledge in informatics, performance of business information systems, applications, data processing and traffic management.
50 Additionally, the pass of this exam should confirm the knowledge of legal requirements for use of technologies for bookkeeping, data security, data archiving and electronic signatures. The part related to audit of informational systems and controls is also included.
Inclusion of this subject into the list of the obligatory exams indicates that the Chamber sets high standards for auditors to ensure their compliance with promptly changing business environments.
Despite awareness about the necessity of IT knowledge nowadays, the education in fields of accounting or economics is still relevant and much desirable as was confirmed by one of the respondents representing the audit company in the Czech Republic NEXIA AP.
Other respondents confirm that university degree is a must (KPMG CZ, PwC CZ and APOGEO CZ), however, they and other audit firms also note following:
“IT education will be a good trend for the future in the audit profession.”.
Partner, APOGEO Audit CZ
“IT specialists need some training that can be provided in-house, but their education should be sufficient for the start.”
Partner, KPMG CZ
“Even now economics / accounting education is not a necessary prerequisite for joining the profession. These are hard skills / knowledge that can be obtained after starting to work in a profession. It is more soft-skills and personality attributes that are important for being a good auditor. So, a person educated in IT (which is an advantage by itself) who is willing to learn accounting / auditing while working as an audit assistant can become a good auditor”.
Director, Deloitte CZ Although, it could also indicate a split in the profession for audit of financial statements and IT audit. For the first one the special IT education is not required as necessary technical skills can be taught internally within the firm:
51
“Technical skills are becoming more and more important; however, nobody expects the ability to write a code or make some robots [do comprehensive automations of processes] from an auditor”.
Manager, PwC CZ To expand the knowledge base of auditors, firms provide them many opportunities to learn new things. Among them are technical trainings, provided a few times a year but usually during the summertime when the workload is reduced due to seasonality.
In order to promote them and increase involvement of staff into the learning process and encourage it to suggest and create new solutions, audit firms arrange special programs, workshops and events, new ideas and solutions can be appreciated also in terms of bonuses or more rapid progression. Nevertheless:
“That will be appreciated approximately next couple of years, after it will be already expected and will not be something special anymore”.
Manager, PwC CZ
“For more sophisticated tasks there is a need to create a specialised IT audit department”.
Partner, KPMG CZ Smaller firms, other than the Big 4, also utilize external courses provided by the
Chamber of Auditors (KAČR) and share the newly obtained knowledge through internal experience.
Working with data
The big audit companies in order to perform the procedures for their clients, which are often represented by large companies, create entire platforms and integrate them in daily activities. Among them are databases such as Clara by KPMG or Aura by PwC.
They automate a significant portion of the work needed to be done before issuance of the final audit report and minimize the risks caused by human factors. The regular updates are aimed to simplify the navigation process and exclude mistakes that can appear due to various reasons. For example, among such updates are those which do
52 not allow auditors to change the level of risks assigned to different financial statement line items, which were set during the planning. This should result in more thorough analysis in the very beginning and better results in the end.
Apart from them, these companies create additional platforms for testing of journal entries, collect information for stock counts or to aggregate the support obtained from a client at one place available for both an auditor and client. The last one is especially important for those audit companies who perform audits for certain companies from year to year or for those who perform procedures for large clients which spread their business across the world and needed to be audited in several countries by different teams of the same audit firm.
Smaller companies, in their turn, also integrate software such as IDEA created by
Canadian CaseWare or Datev created by the German company specially for accountants, auditors, tax advisors and attorneys. The knowledge spread of working with them is implemented throughout the internal experience.
The creation of internal tools is still not realised but very possible in the future.
Apart from data analytical tools successfully integrated such as Alteryx, auditors also highlight the importance of data visualization tools such as Power BI and Tableau and tools for building algorithms for data analysis, which can shift the relevance from MS Excel to the new solutions.
United States
The United States is one of the largest suppliers and at the same time one of the largest consumers of audit services due to the business conditions created by this country.
According to Statista (2021), the accounting and audit industry currently counts around 1.27 million people in 2020, most of them are employed by the largest provider of such types of services - the Big 4.
The industry suffered a shortfall in the number of new hired specialists in 2012 but the situation has changed, and the number recovered in 2020. It is expected to continue rising in the nearest future.
Education and qualification of auditors
53 The United States as previously mentioned countries also have some minimum
requirements to the education of those who would like to join the audit profession.
According to these requirements, a candidate has to have completed at least bachelor of accounting or business, much more preferred would be master’s degree in accounting.
In order to obtain a license, a candidate has to have at least 150 college credit hours with concentration in accounting.
After joining the position, an associate auditor has to apply for mandatory participation in a Certified Practising Accountants (CPA) program by AICPA. This program consists of the education process, examination, which comprises four sections (Auditing and Attestation, Business Environment and Concepts, Financial Accounting and Reporting, and Regulation) and practical experience. The practice should be represented by at least 2000 working hours verified by a licensed CPA.
Additional requirements can be provided by specific state jurisdiction and can be monitored at NASBA (National Association of State Boards of Accountancy).
For confirmation of qualification and its improvement, auditors must participate in educational programs and complete at least 120 hours of training each three years.
For confirmation of qualification and its improvement, auditors must participate in educational programs and complete at least 120 hours of training each three years.