Audit partners’ pessimism about the U.S. economy surged from 10% in the fall to 44% today, according to a report.
The Center for Audit Quality’s latest edition of its
Auditors ranked trade issues highest among the most significant economic risks facing companies at 63%, followed by recession (60%), geopolitical instability (44%), cybersecurity (43%), regulation (39%) and interest rate risks (39%).
Courtesy of the Center for Audit Quality
Companies are shifting their approaches to adapt to these changes. Financial performance and impact of external factors on financial performance is the area of disclosure that auditors see companies most likely to voluntarily increase or enhance over the next year (70%). That was followed by business strategy and impact of external factors on business strategy (61%), then cybersecurity (35%) and generative AI (30%).
Talent will see an impact from the economic uncertainty and cost management strategies. Auditors see many companies reducing headcount (54%) and decreasing workplace flexibility (32%) while also focusing on upskilling employees (47%) and maintaining compensation (45%). A minority of auditors said their companies are increasing headcount (13%), increasing workplace flexibility (12%), increasing compensation (11%) or expanding employee benefits (6%).
Meanwhile, the use of AI continues to grow across industries, primarily in process automation (59%) and customer service (48%).
“Audit partners offer a valuable window into today’s complex business environment, helping us better understand the challenges companies face and the strategies they’re using to move forward,” CAQ CEO Julie Bell Lindsay said in a statement. “Despite economic uncertainty, it’s encouraging to see companies investing in innovation, upskilling their workforce, and strengthening cultures of integrity as they build a foundation for long-term resilience and growth.”
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