Overseas worker shortage woes

AUCKLAND: A major financial services firm says it is looking to shed about 10% of its audit clients because it cannot bring in skilled people from overseas to do the work.

KPMG, one of the big four accounting firms in New Zealand, would normally bring in 10 to 12 shortterm workers to help it cover the busy audit season from March to August.

But this year New Zealand’s borders being closed due to Covid19 meant it could not bring people into the country.

KPMG head of financial services John Kensington said the firm had had a little bit of staffing relief from New Zealanders not heading off overseas to do their OE.

But not being able to bring people in was one of the most worrying issues for it.

‘‘We’re basically told by Immigration there are plenty of people in New Zealand that don’t have a job and to retrain them.’’

However, because the roles the firm was trying to fill were at a junior level, not many experienced people would want to take the work on.

‘‘It’s a bit like it is a startout phase for most people and once they have learned a lot they don’t want to come back to it.

‘‘So the bottom line is, we are going through our client base and ranking them from top to bottom in terms of risk, ranking them from top to bottom on profitability and getting rid of the 10 or 20% that might not be profitable.’’

Mr Kensington said essentially KPMG would be getting rid of the most risky, least profitable and difficult to deal with clients and those which had a smaller revenue base.

‘‘That is going to ricochet through the market at some point because there is going to be people out there who can’t find an auditor because we are not the only firm that is doing that — we are all being forced to.’’

Deloitte head of audit and assurance Melissa Collier said the level of work for its auditors had definitely increased.

But ‘‘we haven’t turned away any clients or exited existing clients because of that’’.

Ms Collier said at present Deloitte was not having issues with its audit headcount, which totalled about 300 out of the 1400 staff who worked at Deloitte.

‘‘Like other businesses in New Zealand, we would absolutely benefit from open borders and we look forward to them opening in due course at the right time.’’

Ms Collier said Deloitte usually brought people into the audit arm in two ways: reciprocal shortterm secondments for the busy season and more permanent hires, who often came from its overseas network.

It did that because it typically lost many New Zealand staff once they had qualified as chartered accountants and wanted to head off for an OE.

‘‘A lot of those hires are to supplement the departures we get with people going to work overseas. What we are seeing so far is the team are putting those plans on hold for the moment because of the travel restrictions.

‘‘On balance our headcount is similar at moment.

‘‘But like every business in New Zealand we will just need to closely monitor how the pandemic continues to unfold over the next period of time.’’

Ms Collier said Deloitte would continue to adapt if need be.

‘‘I think we would just need to see what happened and then see what options we had in the virtual space to help supplement. Then really continue to invest in our homegrown local team, which is really critical.’’

PwC assurance managing partner Lisa Crooke said PwC had also had to put its international secondee programme on hold.

‘‘We did have a number of people due to join us across the business from outside New Zealand whose placements have had to be put on hold due to the border restrictions currently in place.

‘‘We look forward to being able to restart our international secondee programme again as this is a key part of the firm’s learning and development opportunities. We have also had some New Zealand resident staff return from our overseas network.’’

Ms Crooke said given PwC’s size and scale, it was able to manage the additional audit complexities brought about by the impact of Covid19 through using technology and its auditors across the country.

‘‘PwC has not turned audit clients away because of Covid19 resource constraints.’’

But Covid19 and the associated lockdowns had led to new challenges for audit work, she said.

‘‘These include how long audits have taken to complete, combined with practical challenges such as the ability to carry out inventory counts and auditing when both client and auditor are remote.

To address the challenges PwC had bought in additional measures, including an extra level of review by senior partners for all public interest entity audits, Ms Crooke said.

EY managing director Simon O’Connor said Covid19 had resulted in much more complexity and more judgements that directors and management were having to make in terms of preparing financial statements.

‘‘Some of those have been around are they [entities] going concerns; do they have impairment issues? There is issues like are they satisfactorily provided for debtors? There is a whole raft of things,’’ Mr O’Connor said.

Some entities did not have any issues, while others had many.

‘‘What that has meant is even where they don’t have those issues, there is quite a lot more work that is undertaken to make sure they don’t have those issues.’’

Mr O’Connor said EY had leaned heavily on its technology to deal with the challenges of Covid19.

‘‘As long as we can get the data and have got the smart tools, we have still been able to utilise that. That meant we have been able to use different resources across the country depending on what the needs were.’’

EY had also used some staff out of Australia, and likewise had helped its Australian colleagues where they were struggling resourcewise.

Mr O’Connor said while EY had met reporting deadlines it had meant people were working harder and longer.

‘‘That’s the reality.’’

Usually, EY would bring people from overseas for periods of time as well as sending staff for 18month to twoyear secondments overseas.

‘‘We clearly can’t get those people in but we haven’t had the people going out the door either.’’

EY usually brought in about 20 people across the country.

He said not being able to bring those people in was not causing any problems at the moment.

‘‘If we suddenly ended up in a situation where we had a whole lot of people leaving, then at some stage down the track you might have a problem if you couldn’t get people through into the country.’’

But EY’s technology and global consistency would give it some options for tapping into people around the globe to do things differently and could mean it used remote workers to do some of the basic work, he said.

‘‘To me it is the key judgements where you need the relationships and interaction with people — that would be harder to do. But data that needs to be analysed — that could be done [from overseas].’’ — The New Zealand Herald

❛ That is going to ricochet through the market at some point because there is going to be people out there who can’t find an auditor because we are not the only firm that is doing that

John Kensington