“We are excited to launch this first-of-its-kind survey of the U.S. public company audit industry that will provide a comprehensive view of the state of the economy that only auditors can provide,” said Julie Bell. , Executive Director of the CAQ. Lindsay. “We want this survey to be a regular initiative of the CAQ.
Here are the highlights of the survey results:
State of the economy: Most audit partners do not feel optimistic about the economy over the next 12 months, with 84% saying they are pessimistic or neutral. The survey was conducted in the second half of May 2022, at a time when the S&P 500 was experiencing its weakest performance since early 2020. The Covid-19 pandemic, shifts in demand and spending, and the war in Ukraine have led to higher inflation. ; 75% of partners think inflation will be a factor beyond the next 12 months, and 77% expect companies to raise consumer prices in response.
The main economic risks faced by companies identified in the study were inflation (62%), labor shortages (52%), supply shortages and supply chain disruptions (50%).
To address these economic risks, the top business priorities identified for 2022 were talent and workforce (53%). Audit partners observed that state-owned companies are facing challenges in attracting and retaining talent due to the so-called ‘Great Resignation’. The top retention methods used by companies are increasing workplace flexibility (75%) and compensation (73%).
Other priorities noted were growth (40%), cost management (38%) and financial performance (38%).
cyber security: There has been a significant increase in threats from cyberattacks, and government and business have intensified their focus on cybersecurity in response. Cybersecurity was cited as a top business risk by 39% of audit partners surveyed, with perceived risk highest for the financial services and technology, telecommunications, and media and entertainment industries.
Partners indicated that more progress is needed in this area, and state-owned companies across all industry sectors are only moderately prepared overall, although higher-risk sectors are better prepared for cyberattacks.
Half or more of companies surveyed said companies still have work to do in the areas of managing cyber risk, aligning cybersecurity with business goals and culture, and improved related disclosures. On the positive side, 54% of partners noted that significant progress had been made in communications on cybersecurity issues between management and the board.
Climate change: Partners noted that climate change is a short- and long-term priority for public companies, including improving reporting on sustainability (47%) and climate-related risks (46%). Overall, 63% of respondents said that public companies incorporate climate into the development of their corporate strategies, with variations by industry and market capitalization.
Company actions related to diversity, equity and inclusion are also increasing, including board diversity, tracking measures, transparency and DEI disclosures.
Respondents indicated that companies are facing reporting challenges to meet the growing demand for environmental, social and governance (ESG) information and potential regulatory changes. These include the lack of tools for collecting and analyzing ESG data (49%), the diversity of standards and frameworks (40%) and the lack of expertise (38%).
Cryptocurrency: Public companies do not prioritize accepting cryptocurrency as a method of payment, according to 69% of partners, although financial services and telecommunications, media and entertainment sectors are more likely to do so TO DO.