Former employee at Deloitte, Sarah* joined the firm as a graduate in its financial statement audit division. She says it was an “unspoken rule” that busy periods would see her working up to 70-hour weeks across six days.
Despite this, she remembers her salary as a graduate was just $55,000 not including superannuation.
Auditors from Big 4 financial services firms lash working conditions at Deloitte, PwC and EY
ASIC cites Australian accounting firms’ problematic audits
Deloitte calls crisis meeting, blames staff turnover for poor audit results
Senior leaders at Deloitte have blamed high turnover, fatigued staff, missed deadlines and significant partner departures for a decline in the quality of the firm’s audit work in a crisis meeting on Monday.
Deloitte is in damage control after the Australian Securities and Investments Commission said the quality of the firm’s audit work had deteriorated.
Deloitte was already among the worst of the major accounting firms.
The quality of Deloitte’s audit work has worsened. Paul Rovere
The firm told attendees at the meeting it was “disappointed” with its results, which show what portion of risk-targeted audits reviewed by the regulator are not good enough, as they had declined on last year’s results.
ASIC is yet to publicly release the results of its latest audit review – it will likely do so this week – but The Australian Financial Reviewunderstands Deloitte staff were told more of its audits had issues than last year.
The commission found Deloitte did not do enough work on 29.4 per cent of the key audit areas it reviewed in 2021, while KPMG fell short in 29.6 per cent of cases, PwC in 25 per cent and EY in 6.7 per cent.
The quality reviews come at a time of unprecedented scrutiny of audit qualityglobally amid high-profile scandals such as the Wirecard saga, parliamentary inquiries and possible regulatory reform.
Reasons listed at Monday’s Deloitte meeting for the firm’s decline in audit quality included tired staff and high turnover, and issues with systems and data collation.
Staff also missed deadlines for milestones in the audits, meaning large portions of the work were done just before they were due for filing.
But the firm also gave an update on a range of policies aimed at improving the quality of the division’s work, saying they were progressing well.
Better workforce planning
Some policies target staffing issues, which Deloitte had blamed for its poor ASIC audit review results.
Meeting attendees were told better workforce planning had improved staffing levels at peak times for the audit team, for example, while pay and recognition for staff had been “significantly” adjusted.
Other policies included enhanced quality control and internal control mechanisms, largely through promoting and recruiting staff dedicated to these areas.
The firm’s internal Project Tiger – in which it is cutting what it perceives as low-value clients – was also “progressing well”, the meeting was told.
Attendees were also told that non-compliant files flagged by Deloitte’s internal review program had dropped nearly 10 per cent to 17.6 per cent, despite its ASIC results saying otherwise.
Partner retirements in the past two financial years posed challenges to audit quality, the meeting heard, as well as fatigue and attrition issues already flagged.
Deloitte’s issues with staff shortages and missed deadlines are not unique, with a federal government inquiry and several advocacy groups warning that overworked and poorly trained junior staff were a common cause of audit quality issues at the big accounting firms.
These issues build on repeated complaints in the past two years that junior auditors are not adequately supervised and that crippling work deadlines make them prone to mistakes.
Accounting firms across the board are also experiencing crippling skills shortages, with ASIC even easing reporting deadlines for all companies last year and unlisted ones this year to support understaffed audit teams.
