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Cheap as chips?

Every day brings another claim from an AI expert that they have the prompts that will “change your life”.

Board Agenda has yet to have its life transformed. There are those, however, in the audit industry still clinging to the hope that AI will make their work less of a chore.

Not so, apparently. The Times reports this week that AI may accelerate audit work, but the fees? Well, the fees will stay the same.

The tech may be doing things “you wouldn’t believe”, but there’s still a cost.

Cath Burnet, KPMG’s head of audit in the UK, tells The Times: “There is a cost to us of developing all of that technology and how we support data.

“Cloud costs, cyber insurance, all the associated costs with how you have a digital audit are not insignificant.”

So, auditco chairs, don’t expect an AI discount any time soon.

A law unto themselves

Debate is set to intensify this year over new EU non-financial disclosures contained in the Corporate Sustainability Due Diligence Directive (CSDDD).

In fact, 2025 will likely start with Ursula von der Leyen’s plan to merge it into a single “omnibus” directive along with other new rules, which some view as an opportunity to soften some of its measures.

Meanwhile, some see CSDDD as ineffectual in any case. Writing for the Oxford Business law blog, Barnali Choudhury, a legal prof at Toronto’s Osgoode Hall Law School, believes the new rules may be big on disclosure but won’t change corporate behaviour.

She says the legislation fails to define a sustainability purpose for companies, fails to deal with directors’ duties, and even has provisions that could help companies evade liability for falling short on their new responsibilities.

Choudhury writes that CSDDD is “unlikely to reorient companies towards sustainability aims, such that they could make a meaningful contribution to the EU’s just transition goals.

“Moreover, with such muted effects, it is unlikely that the directive will have profound impact on affected companies’ corporate governance.”

American metrics

Regulators in the US are currently dealing with distraught letters from accountancy firms looking down the barrel of new disclosure requirements.

The Financial Times goes so far as to claim they are trying to “block” the new rules.

The rules will see firms report publicly on how much of audit is done by senior partners as opposed to junior staff (we all know how that’s going to look), as well as training and workload figures.

The FT reports one accounting firm writing to complain to financial watchdogs at the US Securities and Exchange Commission: “The value of the metrics is speculative and may in fact confuse investors and other stakeholders, rather than benefit them.”

Which is kind of ironic when you consider auditors are there to help their clients make disclosures for… investors.

Who you gonna call?

Forget Dawn of the Dead or 28 Days Later. The movie George Romero and Danny Boyle should have pitched was Beyond the Twilight Zone: The Restructuring and Resurrection of Zombie Firms.

OK, it doesn’t have the ring of the greats—no one’s going to eat your face—but as the title of an academic paper, we think it’s a classic in the making.

US boffins Philip G Berger and Y Christine Liu have been wrestling with how to solve the problem of zombie firms—whose operating profits can’t service debts—and how to bring them back from the dead.

They find that “operational restructuring”, rather than “financial restructuring”, is more likely to breathe life into the undead.

The ghoul busters write that “business (or operational) restructuring activities are crucial predictors of zombie firms’ revival and faster exit from zombie status”.

Anyway, it is something to think about. Fail to do it and, as Officer Ronnie Peterson says in The Dead Don’t Die: “This isn’t going to end well.”

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