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Auditors are feeling a bit more upbeat about the economy, with about 4 in 10 audit partners (38%) saying they’re “optimistic” about the way the US economy will go over the next 12 months, according to a Center for Audit Quality (CAQ) survey. That’s quite a jump from the past two years: Last fall, only 19% of audit partners the CAQ surveyed were optimistic, and, in fall 2022, a dismal 8% were.
That being said, audit partners remain concerned about the possibility of a recession. A quarter of the 1,228 partners surveyed (25%) named a recession as the biggest risk the primary industry they audited would face in the next year—higher than the percentage who saw regulations (21%) or geopolitical instability (18%) as top risks.
A chillier climate for employees. The survey also revealed that the climate is less worker-friendly than it was a year or two ago, when the labor market was tighter. Nearly 6 in 10 (59%) of audit partners said that companies in their sector were reducing headcount, versus 47% in fall 2023 and just 22% in fall 2022. Technology was the sector where auditors saw the most layoffs happening: 74% of auditors covering that industry saw staff reductions happening.
Audit partners are also observing a decline in workplace flexibility. Slightly more than half (51%) said companies in their sector were cutting back on flexibility, and only 16% saw flexibility increasing. Compare that with fall 2023, when 35% of audit partners saw employers making their workplaces more flexible, and fall 2022, when two-thirds (66%) did. (The CAQ survey didn’t ask about decreasing flexibility in 2023 and 2022).
And when it comes time to talk turkey, audit partners said only 24% of employers are increasing compensation this year, versus 34% last year and 62% in 2022.