Only 28% of inspected audits met the relevant audit standards in 2025.
So finds IRBA, the Independent Regulatory Board for Auditors, in its latest public inspections report.
It’s a damning statistic, but with two of our founders being ex-auditors themselves, we remember all too well the challenges faced by the industry. It comes as no surprise that IRBA further reports that the number of auditors fell by 14.9% from 2019 to 2025.3 Regulatory pressure has dramatically increased (thanks Steinhoff and VBS!) and the data underpinning financial statements have exploded in volume and complexity. Overall the trends do not paint a pretty picture.
The audit industry is at a tipping point…
Long criticised for being repetitive, time-pressured,and slow to evolve, it now faces growing pressure to modernise. This industry has been increasingly strained with expectations that traditional processes struggle to meet. The world’s leading firms have recognised this and are placing bold bets on artificial intelligence — a clear signal that change is no longer optional.
- PwC (US) has committed $1 billion to generative AI, including the launch of its internal platform ChatPwC.
- EY has announced a $1.4 billion investment in technology and AI.
- Deloitte has introduced PairD, supporting professionals with everyday tasks like email drafting, coding, and research.
- KPMG, through its alliance with Anthropic, is embedding Claude AI into its Digital Gateway, scaling AI capabilities across 276,000 employees.
These investments highlight a shift from experimentation to real adoption. As AI models mature, becoming more accurate, more reliable, and better equipped to handle complex inputs, the opportunity to transform audit processes is rapidly becoming a reality.
Relay enables firms to evolve and face these challenges head-on.
What are the macro issues facing the industry?
The audit profession has faced a steady decline in qualified graduates entering the field. Additionally, recent insights indicate that over 300,000 professionals have exited the field, alongside a notable decline in CPA exam participation. The journey has become increasingly demanding and time-intensive, while the profession itself has struggled to keep pace with the appeal of more dynamic and innovative industries.
At the same time, the nature of auditing has grown significantly more complex. As businesses innovate and expand, financial reporting frameworks and internal control environments have become more intricate, while regulatory expectations have intensified globally. This has elevated the level of expertise required from auditors, who must now possess not only strong industry knowledge but also a deep understanding of evolving financial regulations.
The audit industry is constantly under reputational and professional pressure. Auditors operate in an environment of accountability, where the expectation to ensure accurate financial reporting and regulatory compliance is high. A bad engagement will leave a lasting impact on public trust and ruin a firm's reputation. These pressures are intensified by demanding workloads. Peak audit periods often require long working hours, placing strain on work-life balance, particularly among younger professionals entering the field. Surveys have consistently highlighted this as a key concern, emphasising the decline around talent retention.
Audit costs have risen due to increasing staff salaries and higher professional indemnity insurance. At the same time, evolving audit methodologies and new accounting standards have made audits more time-consuming. However, clients are often reluctant to accept fee increases beyond inflation. This creates a persistent dilemma—auditors are expected to do more with less. As a result, firms must balance cost, quality, and efficiency. In some cases, the pressure to remain competitive on fees has led to a focus on speed and less resources, at the expense of deeper judgement and audit quality.
Companies, in today’s environment, are demanding faster, more insightful outcomes with minimal disruption to their operations. However, this expectation is not always matched by the level of co-operation required to enable an efficient audit process. Delays in providing information, incomplete or poor-quality data, and limited availability of key stakeholders often hinder progress and introduce inefficiencies. This misalignment ultimately places pressure on audit teams to deliver high-quality results at unreal timeframes.
At an operational level, audit functions are also constrained by fragmented systems, legacy tools, and limited resources. It is no surprise that the main contributor to the dismal 28% pass rate mentioned comes down to audit work and execution. Not planning, disclosures or the conclusion phase of an audit, but the hard grind of performing testing, building workbooks and compiling evidence. Resistance to adopting new technologies has a tangible impact on audit effectiveness.
So given the future direction of the industry, how can we proactively shape it for the better?
According to a 2020 Wolters Kluwer survey of accounting firms, here are the top five most important areas when completing audit engagements: (Graphs)
- 43% obtaining all necessary data/documents from clients
- 39% data entry and financial statement preparation
- 36% ‘plain English wording’ in checklists and forms
- 30% roll forward key data and the ability to update to newer content
- 28% efficient financial statement disclosure checklist with examples
Here are the four most common audit quality issues, according to the AICPA: (Graph - Radial Chart?!?!)
- 40%: failure to understand client internal controls.
- 24%: failure to address risks they uncover by linking audit steps to risks.
- 14%: incomplete or non-existent risk assessment.
- 13%: insufficient testing of client internal controls and failure to recognise high-risk areas.
At Relay, we didn’t start with technology; our focus was simple: clarify the pain points in the industry, understand what truly makes an engagement flow—and what makes an auditor tick.
Auditing demands mental agility—the ability to respond to the unexpected. To address this, we designed dynamic data environments that evolve alongside the engagement. These systems continuously absorb context, refine their understanding, and adapt —learning the ins and outs of a business over time.
We also recognised that technical depth cannot be compromised. By embedding continuously updated audit methodologies and regulatory frameworks into our architecture, our agents can contextualise risk and align it directly with appropriate audit procedures.
The core of our architecture are the very qualities that define great auditors.
We believe the next generation of auditors won’t be replaced by AI—they’ll be amplified by it. Audit is evolving into a relay of agents and human expertise, with each passing the baton at the right moment. By building seamless workflows, auditors can focus their attention on what they do best: understand risk, exercise professional judgement and continue to deliver trusted insights.
The real question is: will you join our relay?