An existing skills deficit has now become an urgent problem in search of a solution.
By Christiaan Steyn, Product Manager: Assurance, Caseware Africa
Lockdowns and the emergence of the work-from-home (WFH) model is exacerbating a competency problem in accounting and auditing.
Before COVID-19 struck, it was already apparent that students taking the Initial Test of Competency given by the South African Institute of Chartered Accountants (SAICA) were deficient in the requisite skills needed to perform well as accountants or auditors, among them logical and reasoning skills.
The profession is taking steps to remedy a state of affairs that has now become serious. One initiative is the introduction of the new CA2025 training program by SAICA. This includes an updated competency framework that incorporates stronger emphasis on digital and decision-making acumen.
In the past, this lack of skills on the part of those entering the profession was not such a serious issue because they were able to learn on the job as first-year trainees, both from the second and third years with whom they worked daily and, of course, from the senior members of the firm with whom they would have come into contact intermittently. Thus, by the time they had completed the final year of their training contract, they had an acceptable level of competence, and the business world could employ them with confidence.
Research shows that working on projects—the archetypal on-the-job training—is the most effective way of obtaining the professional skills required to be a Charted Accountant. Much of this learning is acquired “by osmosis” through contact with more experienced colleagues, an informal way in which enabling competencies are passed on, as well as subtle lessons about how to conduct oneself as a professional, including the all-important ethical stance so important today.
When the state of emergency was initially declared and the country went into level 5 lockdown in March 2020, this cycle of gaining learning and experience over three years was broken for the 2020 first-year cohort, who began work in February. They had little or no induction and, with clients only being available through virtual channels and audits having to move to online platforms, these trainees were denied any of that vital on-the-job learning and experience. The second and third-year cohorts also would have suffered a proportional diminution of workplace training and experience. In addition, they were struggling themselves – learning how to cope with the virtual audit, the technology and how to support the juniors and how to get support from their superiors.
But of course, the vicious cycle did not end there. Although the lockdown levels were reduced, social distancing remained mandatory, office capacity constraints remained in place and working from home or hybrid work models became normalised. In an effort for clients to minimise exposure, some explicitly requested that audit teams do not visit their premises unless absolutely necessary such as for inventory count procedures.
Much of the audit process, as well as training, remains virtual. In short, opportunities for the traditional, largely effortless but highly effective on-the-job training and experience remains scarce and diminishes each year as the more senior cohorts are less and less equipped to pass on skills to the first years. Of course, one should also not overlook the lost opportunities to interact with clients and to deepen one’s knowledge of how businesses actually function.
In fact, this year’s third years who will enter the financial services profession at the start of 2023 will thus be the first cohorts to miss out on the traditional hands-on training across the whole period of their training contract, with significant consequences for the business world. In addition, those that are behind them—2022’s first and second year trainees—will suffer from the lack of skills and experience the years above them possess.
Anecdotal support for this analysis is offered by the significant rise in calls to Caseware’s support centre. In addition, for the first time, basic audit rather than purely technical questions are being asked.
Looking for solutions
One should not fall into the trap of seeing the pre-COVID period as a sort of golden age. As noted above, there were already signs that skills levels at the entry stage were not what they should be, and possibly also at the exit stage.
One of the reasons for this is the increased burden on partners to not only manage engagements, but also run a business in a difficult economic climate. Increased economic and audit fee pressures saw partners and other senior personnel increasingly less involved in the audits to keep costs down.
I see that part of the solution to the growing skills crisis in accounting and auditing will lie in reversing this trend and finding ways for more senior people in the profession to increase their involvement in audits and the contact they have with trainees. A complementary approach would be for audit firms to establish exactly what the skills levels of their junior staff are, and to put in place targeted training programmes to bridge identified gaps. Professional bodies also have a role to play in working with the audit firms to establish what the future skills gaps are and how best to bridge them—after all, they will certify the competence of those completing their training contracts and entering the broader financial services sector.
It’s not a full-blown crisis yet but that is where we are headed – action is required now.