According to the results of a survey released today by the Center for Audit Quality (CAQ), concerns about a potential recession, ongoing inflation, and the U.S. election are fresh on the minds of audit firm partners as the start of 2025 nears.
Now in its third year, the CAQ’s Audit Partner Survey asked 1,128 audit partners at the country’s leading public company audit firms about their views on the current business environment in the U.S. Topics covered include U.S. economic health, challenges and risks facing businesses, and how they see business leaders adjusting their strategies in the current environment.
“Public company auditors are in every public company, of every size, in every industry, in the U.S.,” CAQ CEO Julie Bell Lindsay said in a statement. “This breadth and depth provides public company audit partners with unique insights into how America’s businesses operate.”
The following is a summary of how audit partners felt about the topics presented to them in the survey:
Partners neutral on the economy despite perceived risks
- A potential recession is the largest economic risk factor audit partners foresee over the next 12 months, followed by regulations and geopolitical instability.
- Despite the risks, audit partners’ outlook for the U.S. economy over the next 12 months is trending neutral.
- Auditors are less positive about inflation, with the majority believing it will continue to impact businesses in their primary industry sector for the next six to 12 months.
Businesses are concerned for the U.S. election
- According to the audit partners, most businesses (65%) are concerned about the potential impact of the U.S. election on their financial performance over the next 12 months.
- Despite this, most public companies are not adjusting their business strategies and don’t anticipate direct disruptions to their business are a result of the election.
Labor strategies signal mixed news for workers
- Audit partners report a significant shift in labor priorities, with labor shortages dropping down considerably among their list of economic risks.
- Upskilling employees is the top human capital action they are observing among companies in their industry sectors (66%), closely followed by reducing headcount (59%) and decreasing workplace flexibility (51%).
Technology shifts in AI and cryptocurrency
- The shift in labor strategies may be influenced by public companies’ use of technology. According to the audit partners, process automation (62%), customer service (52%), and predictive analysis (34%) are all areas they see companies increasing their utilization of artificial intelligence.
- While the audit partners reported an increase in the use of AI, organizations appear to be losing interest in cryptocurrency, with most (83%) reporting that organizations in their industry sector have no exposure to it.
“Despite media excitement surrounding cryptocurrency, most public companies remain largely uninvolved, according to audit partners,” the CAQ says. “Earlier iterations of the Audit Partner Survey indicated that some sectors, particularly technology and finance, were exploring this digital currency, but recent findings suggest a shift in sentiment. Notably, several major scandals—most prominently the collapse of the FTX cryptocurrency exchange and hedge fund—may have contributed to this decline in interest.”
The survey was conducted in September and October, according to the CAQ.
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