A major financial services firm says it is looking to shed around 10 per cent of its audit clients because it can't 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 around 10 to 12 short-term workers to help it cover the busy audit season from March to August.
But this year New Zealand's closed borders due to Covid-19 meant it couldn't bring people into the country.
John Kensington, head of financial services at KPMG, said it 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 re-train them."
But he said it was a completely different skill set and because the roles it 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 start-out 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 per cent that might not be profitable."
Kensington said essentially it 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."
Melissa Collier, head of audit and assurance at Deloitte, 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."
Collier said it was not having currently 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."
Collier said it usually brought people into the audit arm in two ways: reciprocal short-term secondments for the busy season and more permanent hires which often came from its overseas Deloitte network.
It did that because it typically lost a lot of New Zealand staff once they had qualified as chartered accounts 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."
Collier said it would continue to adapt if need be. Longer term, if it couldn't bring in staff she said it would hope to retain more New Zealanders.
"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 home-grown local team which is really critical."
Lisa Crooke, assurance managing partner at PwC, said it 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."
Crooke said given PwC's size and scale, it was able to manage the additional audit complexities brought about by the impact of Covid-19 through using technology and its auditors across the country.
"PwC has not turned audit clients away because of Covid-19 resource constraints."
But she said Covid-19 and the associated lockdowns had led to new challenges for audit work.
"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 Crooke said PwC had bought in additional measures including an extra level of review by senior partners for all public interest entity audits.
Simon O'Connor, managing director at EY, said Covid had meant there was a lot more complexity and more judgments that directors and management were having to make in terms of preparing financial statements.
"Some of those have been around are they are going concerns, do they have impairment issues? There is issues like are they satisfactorily provided for debtors? There is a whole raft of things."
He said some entities didn't 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."
O'Connor said it had leaned heavily on its technology to deal with the challenges of Covid-19.
"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."
It had also used some staff out of Australia, and likewise had helped its Australian colleagues where they were struggling resource-wise.
O'Connor said while it 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 18 month to two year secondments overseas.
"We clearly can't get those people in but we haven't had the people going out the door either."
It usually brought in around 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 though into the country."
But he said its 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.
"To me it is the key judgments 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]."
Longer term, he said, not being able to bring people into New Zealand had the potential to be more challenging.
"It would certainly be a loss if for a five-year period you struggled to get people in. I don't think it would be as vibrant and energetic a place.
"It's the same as all businesses. Fresh ideas are really valuable particularly in a professional services context.
"I wouldn't be fearful we couldn't serve clients appropriately with high quality audits. We might have to think about how to do things differently but I'm confident we could do a really good job of that. We would just have to work at how we did it."