Public companies are shifting their strategic priorities for the upcoming year due to the uncertain economic environment. This is one of the significant findings of the Center for Audit Quality’s (CAQ) Audit Partner Pulse Survey, which is in its third year. A specific area where this shift is happening is in staffing as shortages are no longer the audit partners’ list of key economic risks. Instead, they are more focused on cost management, financial performance and growth.
"Over the course of their careers, audit partners spend decades honing industry-specific expertise on how companies across the economy operate," the report said. "This provides auditors with a thorough understanding of the industries in which the companies they audit function, from financial services to oil and gas to healthcare. By the nature of their work, public company audit partners have unique insights into how America’s businesses operate."
In the fall survey, conducted in September and October 2024, continued concerns about macroeconomic issues like inflation, as well as domestic and international political turbulence, were still on the minds of audit partners.
According to the report, although talent and labor were top concerns in the "Great Resignation" period of Spring 2022, firms are now stressing less on these staff issues. Labor shortages are dipping considerably from the audit partners’ list of key economic risks. Instead, there is an increasing focus on cost management, financial performance and growth.
The survey asked audit partners at the U.S.’s top public company audit firms about their views on the current business environment in the country. The issues covered included the nation's economic health and challenges and risks facing businesses. It also looked into how these professionals view business leaders adjusting their strategies in the existing environment.
Regarding the workforce showing positive and negative outcomes for workers, audit partners said that upskilling employees (66%) has become the top human capital trend at firms in their primary industry sector. Despite this trend, a notable number of audit partners still chose lessening headcount (59%) and decreasing workplace flexibility (51%) as the second and third most chosen actions by firms in their primary industry sector concerning human capital. The fourth choice was increasing compensation (24%).
According to the survey, companies' pullback in labor strategies might be partly due to rising investments in artificial intelligence (AI) technologies. Audit partners said that firms within their primary industry sectors use AI in different business functions. For example, customers who have recently interacted with an automated call or AI shopping assistant will not be surprised that customer service and marketing are among the primary areas where auditors see companies deploying the technology, according to report.
Respondents say that in their primary industry sector, AI was utilized the most for process automation (62%) and customer experience, service and support (52%). Predictive analysis (34%) and targeted marketing (28%) are ranked third and fourth, respectively.