Brace for impression: What auditors can study from the airline business amid turbulence



When a colleague of mine just lately traveled to one among our member CPA corporations in Northern California, little did he anticipate the surprising twist awaiting him. What started as a routine return flight changed into hours of delays, annoyed passengers and, in the end, a canceled flight. The rationale for the eventual cancellation? Crew fatigue.

Within the airline business, security is paramount. Laws and protocols are in place to make sure that each facet of air journey is meticulously monitored and controlled to safeguard passengers and crew. Crew fatigue, acknowledged as a big threat issue, is taken severely, with mandated relaxation intervals and stringent pointers geared toward stopping fatigue-related incidents. Captain Sullenberger’s “Miracle on the Hudson,” along with his chilling “Brace for impression” name, underscores the significance of pilot alertness, whereas a latest Alaska Airways door panel incident highlights the vital want for pilots to be match for responsibility.

In our career, we encounter frequent challenges resembling compressed deadlines, workers turnover, shopper unresponsiveness, new accounting guidelines and auditing requirements, shock transactions and extra, typically unfolding throughout our busiest seasons. These challenges considerably disrupt the deliberate course of the audit. With every passing billable hour, the trail to the deadline turns into more and more troublesome to navigate. Regardless of mounting stress, engagement leaders typically push groups to fulfill deadlines, prioritizing completion over high quality.

These challenges contribute to extreme workloads, resulting in auditor fatigue. Workweeks typically lengthen effectively past the usual 55 hours throughout busy season, with weekend work changing into a needed evil. This actuality is supported by information publicly disclosed in audit high quality reviews by main corporations. As an illustration, at Huge 4 agency PwC, audit associates log a mean of 220 hours of time beyond regulation yearly, whereas senior associates work 256 hours, and audit companions and managing administrators endure a staggering 349 hours. Shockingly, one regional agency disclosed 816 hours of time beyond regulation for its workers.

Moreover, a PCAOB sanction towards Marcum in June 2023 revealed alarming companion utilization charges, with figures as excessive as 146%. One companion was discovered overseeing 75 issuer purchasers, whereas one other engagement high quality reviewer needed to evaluation the work of 118 issuer purchasers. Equally, a PCAOB sanction towards Withum in February 2024 uncovered equally troubling findings, together with one engagement companion with a month-to-month utilization price of 220% who had been working roughly 100 hours per week for 2 consecutive weeks.

The pursuit of profitability typically drives corporations to maximise audit alternatives with minimal staffing ranges, prioritizing monetary achieve over adherence to ideas and pointers inside the AICPA Code of Skilled Conduct and high quality management follow aids.

Grounded by fatigue

Simply as drained pilots and crew members pose dangers to flight security, auditors fatigued from extreme workloads compromise the standard and reliability of audits, doubtlessly jeopardizing purchasers and stakeholders.

The ramifications of this actuality are evident within the auditing career’s documented struggles with sustaining high quality. In January 2024, the PCAOB launched a highlight on insights from its interim inspection program regarding audits of broker-dealers, highlighting a disturbing pattern: Almost 60% of such audit engagements in 2022 exhibited deficiencies. Equally, the U.S. Division of Labor’s report in November 2023 emphasised the necessity for enchancment in audits of worker profit plan monetary statements, with main deficiencies in 30% of the audits examined.

These statistics paint a sobering image of the challenges our career faces. From our expertise supporting dozens of CPA corporations with PCAOB and AICPA issues, we frequently discover that the true causes behind deficiencies are usually not publicly aired. Corporations might hesitate to acknowledge the impression of workload constraints on audit high quality, opting as a substitute for different explanations. Maybe it is time for our career to confront this actuality head-on and prioritize options that handle one the most probably root causes of poor audit high quality. 

Eyes vast open

As I replicate on my colleague’s flight delay brought on by crew fatigue, it serves as a poignant reminder of the paramount significance of prioritizing well-being in our career. One can solely speculate concerning the potential catastrophe that would have unfolded had the flight not been canceled resulting from crew fatigue. Cheap passengers would not board a flight in the event that they knew the pilots and crew had been exhausted. 

Equally, purchasers and stakeholders ought to demand the utmost high quality in audits to guard their pursuits and investments. Latest inspections and deficiencies forged doubt on whether or not these expectations are being met. It is time to handle the poisonous tradition prevalent in public accounting, the place extreme workloads are normalized and workers are anticipated to prioritize work above all else. It is time to get up.

Whether or not you are a CPA agency or a shopper, earlier than you strap in for an additional bumpy audit experience, your pre-audit guidelines ought to embody these important questions:

  • How does your agency prioritize the well being and well-being of audit crew members, particularly throughout busy seasons?
  • What measures does your agency have in place to mitigate auditor fatigue and guarantee high quality in audits?
  • How clear is your agency in reporting audit high quality metrics, together with companion, supervisor and workers workload?
  • What steps are being taken to deal with deficiencies highlighted by regulatory our bodies such because the PCAOB and the U.S. Division of Labor?
  • What efforts are being made to reinforce the tradition inside your agency?

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