Continuous Professional Improvement and Technology on the Agenda for Brazilian Audit Firms
IBRACON (the Instituto dos Auditores Independentes do Brasil) recently conducted unprecedented research with results that surprised many. In the midst of one of the most serious economic crises in Brazil's history, the independent audit firms associated with IBRACON have indicated that they are investing 8% of their gross revenues in technology and 9% in professional qualification. Consistent with this data, 79% of these members affirmed that they encourage their employees to participate in educational and training courses (all of which are approved by the Conselho Federal de Contabilidade, Brazil’s accountancy governing body).
Regardless of external difficulties, the sector and its professionals are preparing themselves adequately for significant transformations, which are increasingly provoked by technology—including the digitization of systems and advances like big data, automation and artificial intelligence. Both the indispensable human talent and technological contributions are essential in facing current disruption process and overcoming difficulties.
The survey indicated that the main challenge the profession and firms face is to attract new clients—25% of respondents ranked this as their main challenge. Other obstacles include technological development, servicing international accounts, client-base retention and compliance with norms and regulations. In this last item, it is interesting to note that 21% of IBRACON’s non-member firms reported difficulties, compared to 10% of member firms. The contrast in this data shows the importance of IBRACON’s continuing work to keep independent auditors up to date and aligned with legal and regulatory changes and advances.
The report also showed that the Brazilian independent audit market is solid and consolidated: among IBRACON’s member firms, 69% of employees are accounting professionals and 73% have been in the market for 20 years or more. This data delineates the profile of an experienced business segment, with the credibility and ability to fulfill the most complex demands. Seventy-six percent of member firms have two or three partners, characterized as small and medium sized—a segment that has received increasing attention from the IBRACON.
Also among member firms, 55% report annual revenues of up to R$ 3.6 million; 6% from R$ 3-10 million; 6% from R$ 10-300 million; 18% more than R$ 300 million. Among these firms, 61% of this revenue comes from audit, clearly demonstrating the relevance of this service. The consistency of these data points as well as additional research is also corroborated by the responses of the non-member firms, which were very similar to those of the member firms.
The study also ratified IBRACON’s agenda, developed to increase independent auditor activity and promote recognition. These actions include greater attention on small- and medium-sized auditing firms, wide offerings of Continued Professional Education activities, permanent interaction with regulatory and governmental bodies, communication initiatives with several stakeholders, and timely technical guidance to independent auditors and the market.
As part of its work focused on advocacy, strengthening of the profession and contribution in facing the market challenges, IBRACON holds the annual Brazilian Conference on Accounting and Independent Audit, in its eighth year. The conference this year had more than 800 participants and focused on the transformations that technology is promoting. Among the speakers were experts from Rutgers Business School in New Jersey.
The conference’s high attendance reflects IBRACON’s investment in professional education and training, which was also confirmed in the study. This focus is also reinforced by how many member firms attended the conference: 70% of member firms surveyed sent staff to the 2017 conference (the most recent data available).
At the 8th Conference this year, experts highlighted the significant impact of technology on auditors' work—in ways that will be profound, broad and diversified. IBRACON’s survey also clearly identifies these changes and points out ways for the profession to fulfill its mission, which is essential for transparency, ethics and compliance in the public and private sectors and, therefore, for improvements in business.