Will there be a shortage of auditors?

Until recently, the market for assurance services for sustainability reports in Poland was virtually non-existent. In the absence of an obligation to audit non-financial reports compliant with the NFRD directive, few companies commissioned them voluntarily. Their number has gradually increased in recent years, but we are talking about a few, then a dozen and finally the bottom few dozen reports per year.

According to the CSRD, sustainability reports for 2024 will already have to be reviewed by some. 150 of the largest listed companies. A year later, the obligation will apply to about 3,500 companies. This is about 30% more than there are active auditors (according to the PANA reports for 2022). And yet not all auditors will undertake to verify sustainability reports.

Major auditing firms have been training teams intensively since last year to support auditors in verifying reports that comply with ESRS standards. However, anyone involved in creating ESG reports knows how long it takes to understand the reporting standards, and how long it takes to become so proficient in environmental topics or due diligence processes that they know how to apply them correctly. The concern is that for many reports, the actual investigation will be conducted by people with some theoretical knowledge, but not enough experience. So let's be prepared for poor quality attestation and for difficult discussions in which we will have to explain to the audit firm's employee the specifics of our enterprise and the resulting approach to reporting certain indicators.

The shortage of auditors will, of course, also result in price increases. It has already affected those companies that have undertaken to prepare ahead of the new obligations an ESRS-compliant report for 2023 and have it externally verified. We should expect the price increase to culminate with regard to 2025 reports.

All of the above problems are not unexpected. I have raised them many times, both in the EU and Polish forums over the past three years. Now the problems are beginning to materialize. One of the main actions worth taking at the level of individual companies, therefore, is to start looking for an auditing firm as early as possible and ensure in advance that we will have access to attestation services performed by a solid team and at a price that may be high, but is still within reason.