THE REGULATORY ENVIRONMENT It is now a given that policymakers and regulators are expected to regulate all aspects of the economy, notably those areas considered systemic, including professional services associated with those sectors. As a consequence, regulatory and public policy matters are now, more than ever, a strategic factor for BDO and for its clients. The tremendous pace of change brought about by new technologies is dramatically impacting the world in which we live and work - and the world of professional services is no different. Technology is already ensuring that the audit of the future will not look like the audit of today and be unrecognisable from the audit of yesteryear. In addition, the delivery of tax compliance and advisory services is increasingly subject to heightened regulatory scrutiny to reflect societal needs, reaction to past failures and in response to increasing global inequality. It is very likely that future regulators will seek to move from regulating national entities in a sector, to regulating activities across jurisdictions and across clients as protocols, structures and technology are put in place to enable them to regulate in a way that matches the nature of the tech-enabled business environment of the 2020s. This is already evident in how ‘colleges’ of audit regulators in Europe collaborate on inspecting the fles of high- risk audit clients across borders and in joint inspections of audit frms by US and third country audit regulators. Mirroring the globalisation of the business world, regulators now routinely share best practices, regulatory philosophies and results of inspections with each other. The reality is that this trend will continue and be further enabled as regulators increasingly apply technology in carrying out their roles. Meanwhile, public policy thinking on market issues - including concentration and choice in the public company audit market - continues to evolve. Blunt interventions have been proposed in some jurisdictions but are unlikely to improve choice or competition in the market or to have a positive impact in elevating audit quality. In a number of jurisdictions, policymakers also seek to link providers of ‘aggressive tax planning’ advice or high profle business failures with punitive interventions in the audit and public procurement markets. Signifcant regulatory developments in countries such as UK, India, South Africa and Korea have shown that the world of professional services is heavily exposed to public policy imperatives, regulatory response to business failure and changing societal expectations of the business community.
GLOBAL REVIEW | 2018
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