Australia ‘cannot migrate its way out of auditor capacity challenge’, warns CPA

In its second response to the Treasury’s Options paper on audit and assurance regulation, CPA Australia has said that the reform to the registered company auditor pipeline needs to occur to address the sector’s talent shortage.

According to CA ANZ research, there is an acute shortage of professionals in the accounting, auditing, and finance sectors by 2035.

CPA Australia modelled the current number of registered company auditors (RCAs) at 2,963, down from approximately 7,000 in October 2001, a 57 per cent decline. This is in the backdrop of the Australian National Audit Office’s (ANAO) latest figures, which show that RCA numbers fell from 3,817 in 2019–20 to 3,177 in 2023–24, a reduction of 16.8 per cent in four years.

This is all while audited financial reports per registered RCA increased from approximately 6.56 to 7.06, taking the estimated demand per RCA to 9.6.

A tiered auditor framework

To make auditing a more viable and appealing career path for potential entrants, CPA Australia recommended that it prioritise attracting, developing, progressing, retaining, and deploying auditors into the profession.

In addition, the accounting body said that Australia could learn a thing or two from New Zealand’s tiered auditor framework to make better use of its scarce audit capacity, particularly the division between RCAs and appropriately qualified auditors to carry out higher-risk and lower-risk work respectively.

“It should be to ensure that the highest level of auditor qualification and regulatory oversight is concentrated on engagements where the public interest and systemic risks are greatest, while appropriately qualified auditors can undertake lower-risk statutory assurance work,” the submission said.

The accounting body said that the tiered framework would contribute to making the RCA framework more attractive, and relieve pressure on the pool of RCAs.

While it noted that skilled migration could address auditor capacity, it said that migration should complement rather than substitute for a sustainable domestic audit pipeline.

“Skilled migration can help attract experienced auditors — but Australia cannot migrate its way out of the RCA capacity challenge,” the submission said.

“We need to attract more people into audit, create clearer pathways for progression and ensure experienced professionals remain in the profession,” CPA Australia audit and assurance lead Tiffany Tan (pictured) said.

"Auditors play a vital role in maintaining trust in financial reporting, supporting investment and helping Australia's markets operate with confidence," Tan said.

With assurance requirements including climate-related reporting obligations entering the picture, Tan stressed that this exacerbates a sector already facing capacity pressures.

"If we want a strong and sustainable audit profession ten years from now, we need to invest in the people who will be delivering those audits and assurance services in the future," she said.

"Audit provides a unique opportunity to build deep technical expertise, develop professional judgement and contribute directly to public trust and confidence in Australia's economy.