For many auditing firms or divisions, now is a critical time to reassess the value, cost and risk of continuing to provide independent audit services.
The emergence of new audit technology, combined with new SMSF Audit Independence Standards, has had a profound impact on the way accounting and audit firms view their services and the relationship with their clients.
If you’ve developed a reputation for high-quality service but find it difficult to keep up with this aspect of the business or are unable to meet the Australian Auditing Standards, you’re not alone. Audit and assurance services can be a challenge for several reasons, and it may be worth considering succession planning and seeking the support of a truly independent audit service provider when considering your future as an auditor.
How are you coping with these changes to the audit profession?
Clearly, any firm that provides audit services directly to clients or directs clients to a third-party for audit and assurance services must ensure the new independence rules are being followed.
In response, top-tier firms like KPMG, Deloitte and BDO have already reconsidered their role as independent auditors, given potential conflicts of interest with accounting and consulting services, which they also provide. Every firm providing SMSF audit services should be reviewing the potential for independence threats if they have not already done so.
Failure to adopt technology aimed at increasing the efficiency of production will inevitably lead, at best, to reduced margins of profit. At worst, an overall reduction in the value of service will force clients to look elsewhere for auditing services. And progressive clients who want more than just pure assurance will go elsewhere.
For many auditors in public practice, the best way forward is a partial or full sale to an internal partner with the skills and capabilities for the future, or to an external practice with stronger systems and processes. This is a decision that some practitioners are making 10 years out from retirement, on the basis that their ongoing involvement as a sole auditor will result in more stress and less profit.
The auditor of the future and what it means for your firm
The role of the auditor is more specialised and complex than ever. With the revised ASA 240 now issued and mandatory sustainability reporting being introduced under the Corporations Act 2001, firms are no longer assessed solely on technical compliance. They are now expected to handle increasingly complex financial and non-financial data, including sustainability disclosures.
This shift reflects broader regulatory expectations. Audit quality, documentation, and independence are under closer scrutiny, and firms must demonstrate that their methodologies can respond to emerging risks. For many, this raises a practical question: does the firm have the capability and structure to meet these expectations internally?
Audit expertise focus and regulatory expectations
In Australia, this shift is being driven by ASIC’s 2025–26 surveillance program, which now includes random file reviews across all regulated populations, along with a continued focus on auditor independence under APES 110.
At the same time, evolving auditing standards are increasing the depth of work required. Requirements under ASA 220, ASA 315, and the updated ASA 240 now demand:
- Stand-back evaluations, requiring auditors to assess whether fraud risk has been sufficiently addressed across the entire engagement
- Greater emphasis on professional scepticism and documentation
- The ability to support assurance over non-financial data, including sustainability reporting under AASB S2
- More robust, data-driven audit methodologies to identify anomalies and risk indicators
Maintaining an audit expertise focus is critical in this environment. Firms must ensure they have the systems, processes, and technical capability to meet these expectations consistently. Industry trends highlight a clear move towards specialisation, increased regulatory oversight, and higher expectations around audit quality.
Your future as an auditor: operational realities
Your future as an auditor involves higher expectations with reduced tolerance for error. Audit engagements now require deeper analysis, stronger evidence, and more consistent application of judgement.
The introduction of sustainability reporting requirements is a major shift. Auditors must now consider how to approach assurance over environmental and governance-related disclosures, which often lack the structure and historical consistency of financial data.
At the same time, the revised ASA 240 introduces more structured fraud risk procedures, including the requirement to perform a final “stand-back” assessment. This requires auditors to evaluate whether sufficient work has been performed to holistically address fraud risk, rather than relying solely on individual procedures.
These changes increase both the complexity and accountability of the audit process.
Practical options for firms
Given these pressures, firms are reassessing how audit services are delivered.
Common approaches include:
- Investing in internal systems and training to support sustainability assurance and advanced audit methodologies
- Strengthening independence frameworks to address ASIC’s enforcement focus
- Transitioning higher-risk engagements, such as RSE (superannuation) audits, to specialist providers
- Reducing audit exposure and focusing on core advisory or accounting services
- Planning succession or partial exit strategies
Engaging specialist audit providers can help firms maintain compliance while managing resource constraints and regulatory risk.
Are you thinking about outsourcing audits or transitioning to retirement?
Are you looking to continue working for the foreseeable future, or do you plan to retire within the next 3-5 years? These decisions are increasingly influenced by the demands placed on the auditor of the future. If the decision you’re considering relates to succession, then ask yourself, ‘What do I want to get out of this process?’
It’s important to have a clear understanding of your requirements before you start talking with potential equity partners or buyers. If you’re looking to sell, it makes sense to approach firms that see a strong benefit in acquisition strategies for growth. It’s likely these firms will be other, larger, audit-only firms.
Some of the questions you should consider include:
- Who do you know in your professional network with whom you are confident working in relation to the transition of clients and workflow? Consider the cultural change that will be required to ensure a successful transition.
- Are your audit and assurance-based clients easily transferrable to a new firm? Identify the actions that you should take now to ensure the transition takes place with minimum discomfort to clients.
- What is involved in the transaction process, and how long is the expected time period? It’s important to understand the expectations of potential buyers.
How to begin the transition from audit services today
If you’re considering transitioning from audit services to focus on core accounting work, or if you simply want to start work on your personal succession plan, consider how National Audits Group can assist with your audit expertise focus.
In an auditing climate where trust and independence are the core governing principles of behaviour, the role of the company auditor has never been more important. The team at National Audits Group has more than 60 years of hands-on experience working within all areas of auditing, including operations, strategy, reporting and management. We are committed to engaging with the profession to ensure that client needs are always managed in a professional and proactive manner.
If you’d like to discuss your audit succession plan, we welcome the opportunity to invite you to a confidential meeting with our Managing Director, Steven Watson.
Contact Steven Watson on 0459 053 620 or visit our website www.audits.com.au
Disclaimer: This article provides general information only and does not constitute professional, legal or financial advice. Audit requirements and obligations may vary depending on the specific circumstances of each firm and engagement. Readers should seek independent professional advice to ensure compliance with applicable standards.