The ASIC chairman says Australia is experiencing an auditor shortage because the work is unattractive and underpaid. 

The auditing profession is grappling with a severe shortage of talent, driven by the challenging and unappealing nature of the work, according to ASIC Chairman Joe Longo. 

Speaking before a parliamentary inquiry, Longo has told reporters that auditors face high-risk occupations due to rigorous sector regulations, which contribute to the difficulty of recruiting new professionals.

At the same hearing, Labor committee chairman Deborah O’Neill emphasised a different aspect of the problem. 

She pointed out that junior auditors received significantly lower pay compared to partners at major auditing firms, discouraging potential candidates. 

O'Neill and Longo agreed that the allure of a career in auditing or accounting had significantly diminished over the years.

A survey conducted by Chartered Accountants ANZ in January helps underscore the widespread scarcity of auditors, accountants, and tax professionals across the sector. 

Firms also reported that while they received numerous applications for open positions, only a small fraction of applicants possessed the requisite qualifications, skills, and experience.

Longo also acknowledged the decline in interest from university graduates in becoming auditors. 

He highlighted the demanding nature of the role, its heavy regulation, and high risk. Nonetheless, he suggested that addressing these challenges and making the profession more attractive were on the agenda of major auditing firms.

Senator O'Neill, on the other hand, proposed a more straightforward solution: increasing the compensation of junior staff. 

She argued that the significant pay gap between junior auditors and senior partners at major firms, such as the Big Four, was a key factor driving away potential talent.

Junior auditors at the Big Four typically start with an annual salary of around $65,000 and may earn over $110,000 after at least four years, upon reaching the manager level. 

In contrast, equity partners at these firms earn substantially more, ranging from $700,000 (KPMG) to over $900,000 (EY and PwC).

Senator O'Neill contended that junior staff were being underpaid for their contributions while partners received substantial compensation for approving the work of younger professionals. 

In response, Longo acknowledged that compensation played a vital role in attracting talent and conceded that part of the profession's long-term staffing challenges might be resolved through higher pay. 

However, he also acknowledged that financial incentives alone might not be sufficient to address the broader issues within the field.