Where’s the Economy Headed? Ask Your Audit Partner.
The Center for Audit Quality (CAQ) has released the results of a survey of U.S. public company audit partners on a range of topics, including the overall health of the economy, business transformation, and corporate disclosures. Audit Partner Pulse Survey is based on 700 responses from audit partners who work with small-, mid-, and large-market capitalization companies. The survey was conducted from May 14 to 27, 2022.
Audit partners are rather gloomy about the economy’s prospects for the next 12 months -- only 16 percent have an optimistic or very optimistic economic outlook, while 44 percent are pessimistic, and 40 percent are neutral. Sixty-two percent of respondents listed inflation as the top economic risk facing companies. Other top economic risks, and the percentage of respondents that cited them, were labor shortages (52 percent), supply shortages and supply chain disruptions (50 percent), and cyber-security threats (39 percent). The survey also asked about company priorities for 2022. Talent/labor was selected by 53 percent of respondents, followed by growth (40 percent), cost management (38 percent), and financial performance (38 percent). (Percentages add to more than 100 percent because respondents could select three risks and priorities.)
The survey also asked respondents to identify the short- and long-term ESG priorities of companies in their industry by selecting up to three responses from a list. On an aggregate basis, the top short-term ESG priorities were cyber risk (55 percent), enhancing sustainability reporting (47 percent), and building a more diverse board/leadership team (45 percent). The top long-term ESG priorities were similar, except that climate-risk replaced diversity in the top three: Cyber risk (47 percent), enhanced sustainability reporting (44 percent), and climate-related risk (46 percent). Some industry-based and company size-based differences in ESG priorities are apparent in the disaggregated survey results.
Other topics addressed by the survey include corporate strategy, cryptocurrency, challenges in ESG reporting, cybersecurity, financial fraud risk, and human capital initiatives. The CAQ plans to conduct similar audit partner pulse surveys annually.