Chapter 1
A commitment to quality
The foundation of trust and confidence.
Quality is at the foundation of everything the EY organization does.
The execution of high-quality audits by EY teams underpins the financial and nonfinancial information issued by companies that EY audits. This high-quality information instills trust in these entities, which, in turn, drives confidence in the capital markets and best serves the public interest.
Investors are not the only stakeholders who depend on high-quality auditing and financial reporting. Employees, retirees, suppliers and lenders, among others, rely on high-quality audits to make important decisions. These decisions involve who to work for, whether vendors will be paid on time and the safety of investments. In a dynamic world and ever-changing business landscape, the EY organization must continuously evolve to deliver high-quality audits and respond to the new, emerging risks.
The EY organization is committed to continuous improvement and providing an environment in which auditors can thrive. This includes recruiting, developing and retaining talented people and nurturing their careers, embracing innovation, encouraging simplification, and critically evaluating the work of audit teams to identify areas for improvement. The aim is to exceed regulatory benchmarks and produce audits of high quality.
The EY organization has put in place processes and policies to identify, understand and mitigate risks to audit quality, and to drive continuous improvement in the audit. These include robust global independence policies, practices and systems, mandatory audit partner rotation to help reinforce auditor independence, and rigorous risk assessments before EY member firms accept initial audit engagements, and then again annually before each audit engagement period.
The EY organization puts its focus on audit quality into action through a set of audit quality indicators (AQIs) that help leaders monitor the execution of strategy and quality priorities, in-depth assessments of the root causes that underlie an audit’s positive or negative inspection outcome, and responsive plans to remediate findings.
EY teams also monitor in-progress audits to identify areas that require additional attention before they are completed. Tools and processes used to help achieve this include the Milestones project management program, facilitated through dashboards in the global audit platform (EY Canvas), the use of the EY Canvas Client Portal to more effectively to help manage the exchange of audit support documentation received from clients, and coaching to help EY teams navigate critical accounting estimates, judgments and execution challenges.
Testimonial
Constructive challenges and real-time feedback
Mary Gray DeMetz, a Senior Manager at Ernst & Young LLP in London, worked on the first-year integrated audit of a large global public interest entity. It was a challenging engagement, so she was grateful for the support and mentoring her team received as part of the EY coaching program. Read Mary’s and other professionals’ full stories in the report.
This focus on quality and continuous improvement is reflected in the results of external inspections of EY audit engagements. The International Forum of Independent Audit Regulators (IFIAR) issued the first reduction challenge following their 2015 survey: the EY rate in that survey was 43%. With a continued focus on quality, the EY organization achieved the first IFIAR 25% reduction in inspections findings reported in the 2019 IFIAR survey, and the EY deficiency rate for the last released IFIAR survey (2021) was 20%, as compared with the 30% aggregate rate for the six largest firms.
Inspection findings provide valuable information about how the organization can continuously improve. EY teams actively track inspection-related activity across the more than 150 external regulators (IFIAR and non-IFIAR members) that inspect audit engagements across more than 150 countries. This activity informs the EY Quality Enablement Leaders (QEL) network of key audit quality trends, which in turn helps enable it to quickly respond to and remediate deficiencies.
The new International Standard on Quality Management 1 (ISQM 1) will play an important role in furthering quality. Through its implementation, the organization is capitalizing on the opportunity to drive consistency and improve audit quality. The global connectivity of the EY organization puts it in position of strength as it builds on policies and procedures already in place to enhance its system of quality management, including consistent policies, frameworks, technologies and enablement for implementing the standard within EY member firms.
Chapter 2
Exceptional people
At the heart of high-quality audits.
Talent is at the core of the EY organization’s commitment to sustainable audit quality. The EY organization recognizes that its people are its most important asset and is committed to attracting exceptional and diverse people and investing in them, to help ensure they have the skills they need to develop the careers they want for themselves.
The EY organization continues to seek out diverse talent, because it believes that diverse teams produce better results. It therefore seeks to recruit people with a wide range of relevant skills, including those with a STEM (science, technology, engineering and mathematics) background, who bring a deep understanding of data and technology to the audit. This also includes people with knowledge of emerging areas such as sustainability and Environmental, Social and Governance (ESG), which is becoming ever more important as the demand for nonfinancial reporting, and the number of disclosure requirements in these areas, increase. Discover how a career in EY Assurance can build a better working world.
82%
Of audit professionals agree their EY experience is exceptional
Professional development is an important element of the EY experience. The EY organization is committed to investing in its people by providing them with the skills that will allow them to develop transformative approaches to their work, which in turn advances their own careers and helps them to deliver high-quality audits. Auditors are guided to a broad range of sector learning to support their understanding of clients’ businesses, and the organization is also committed to help ensuring they have the technology know-how they need to thrive in today’s digital world. This includes a number of innovative programs, such as EY Badges, the EY Tech MBA and the recently launched Masters in Sustainability.
In total, during the fiscal year to 30 June 2022, EY audit professionals undertook 8.2 million hours of learning, averaging 86.5 hours each.
86.5
Learning hours per audit professional in FY22, accounting for a cumulative total of 8.2 million hours of learning
87%
Of survey respondents said that the EY organization provides them with learning opportunities that build the skills they need to succeed
Testimonial
How the Global Voices group shares global insights
Rushdee Badrul Hisham, a Senior at Ernst & Young PLT in Kuala Lumpur, is part of Global Voices, a group of people from across EY Assurance who provide feedback to senior leadership and contribute ideas. He has found that it has given him a greater understanding of EY beyond audit and assurance work, creating a greater appreciation for it and a stronger sense of belonging. Read Rushdee’s and other professionals’ full stories in the report.
Chapter 3
Leveraging data and technology
To facilitate trust, transparency and transformation.
The EY Digital Audit continues to transform the way that EY teams help deliver the financial statement audit and meet changing business needs and stakeholder expectations.
Today’s EY Digital Audit places the EY organization in a position of strength through the global deployment of a leading-class suite of audit technology that is proven in the market. It is underpinned by a clear strategy built on connecting audit teams and the companies they serve, automating audit procedures and processes, and analyzing data to build audit evidence, all of which help EY teams drive value across the audit.
At the heart of the EY Digital Audit is an ongoing commitment to continued innovation, reflected by the EY organization’s US$1b investment in a next-generation Assurance technology platform.
US$1b
Investment in a next-generation Assurance technology platform
The investment program will integrate existing EY Assurance technologies under one seamless global platform while leveraging advanced technologies to transform capabilities and support a new generation of data-driven assurance services. The EY organization believes these investments will drive quality and greater value for audited companies and stakeholders by facilitating trust, transparency and transformation.
Testimonial
The infinite possibilities of audit innovation
Olga Gapon works in Chicago as a Business Product Manager at Ernst & Young LLP and is developing a new module within the next-generation EY Assurance technology platform. Using advanced technologies has given her a new perspective on the possibilities of a transformed audit experience, and on the benefits for audit teams and the companies they serve. Read Olga’s and other professionals’ full stories in the report.
Chapter 4
Creating long-term value
Through high-quality audits.
One of the key ways EY teams fulfil their role of serving the public interest is by bringing integrity, independence and professional skepticism to help deliver high-quality audits. High-quality audits enhance trust and confidence in the financial and nonfinancial information published by management and used by investors and other stakeholders to make informed investment decisions. They also bolster public trust in the global capital markets, and this drives economic growth and creates long-term value for society.
The global structure and governance of the EY organization is central to helping deliver this value, providing a consistent approach to the audit worldwide and employing an accountability framework that helps drive continuous improvement.
This structure also allows the EY organization to adapt and make changes to resourcing where required. EY audit teams worldwide conduct more than 150,000 audits a year, producing a wealth of knowledge and experience that can be shared around the world.
27%
of the companies in the Fortune Global 500 and 27% of the companies in the Forbes Global 2000 were audited by EY organization in FY22
Additionally, tax, technology, sustainability services and other specialists contribute their knowledge and experience to support EY audit teams, enhancing the quality of the audit. One example is forensic accountants, who often work closely with auditors, adding value by addressing fraud risks – an important aspect of the audit that is coming under increased scrutiny from regulators and other stakeholders.
Testimonial
How Forensics adds value to an audit
Aïsha Brillant, a Senior Manager Ernst & Young LLP in Montréal, leads and conducts complex forensic engagements. She says professional forensic accountancy skills and innovative solutions can provide insights, observations and perspectives of value that go beyond those obtained from traditional audit procedures. Read Aïsha’s and other professionals’ full stories in the report.
Summary
EY auditors leverage data to ask better questions and obtain enhanced audit evidence, and use the knowledge gained through these insights to deliver high-quality audits that help stakeholders make crucial decisions and improve trust and confidence in business and the capital markets. Learn more in the full EY global audit quality report (pdf).
