Audit partners concerned about 2025 risks

A potential recession is the biggest economic risk factor that audit partners foresee over the next 12 months, followed by regulations and geopolitical instability, according to a survey released Wednesday by the Center for Audit Quality.

The CAQ's Audit Partner Pulse survey found that despite those potential risks, audit partners' outlook for the U.S. economy over the next 12 months is trending neutral.  

Auditors are feeling less positive about inflation, however, with the majority believing it will continue to impact businesses in their primary industry sector for the next six to 12 months.  

Courtesy of the Center for Audit Quality

According to the 1,228 audit partners who responded to the survey, most businesses are concerned about the potential impact of the U.S. election on their financial performance over the next 12 months (65%). Nevertheless, the respondents indicated their companies are not adjusting their business strategies and they don't foresee direct disruptions to their business as a result of the election.

"Public company auditors are in every public company, of every size, in every industry, in the U.S.," said CAQ CEO Julie Bell Lindsay in a statement. "This breadth and depth provides public company audit partners with unique insights into how America's businesses operate."

Upskilling employees is the top human capital action that audit partners are observing among companies in their industry sectors (66%), closely followed by reducing headcount (59%) and decreasing workplace flexibility (51%). Labor shortages have dropped significantly from the audit partners' list of key economic risks. Instead, they're more focused on cost management, financial performance and growth.

The shift in labor strategies may be influenced by public companies' use of technology. According to the audit partners who responded to the survey, 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 seem to be losing interest in cryptocurrency, with most of the survey respondents (83%) saying that organizations in their industry sector have no exposure to it.