Construyendo confianza y seguridad

In this disrupted, connected and fast-paced world, our clients are increasingly turning to us for advice and insights on how to better manage risk, where to seek growth and how to weave digital into their strategy and operations. Like us, they’re focused on driving innovation — not just in products and services, but in business models too. In this transformative age, we must keep asking ourselves, “What’s next?”

Assurance

For Assurance, advancing technology, tools and skills creates the opportunity to continually innovate, improve effectiveness, enhance perspectives and increase stakeholder confidence.

In Audit, our own transformation and digitalization — through investing more than US$500m in technology in the past few years — has transformed the provision of EY services. EY Canvas is the foundation of our technology, with companies able to receive real-time updates through our Client Portal. Meanwhile, EY Helix allows analytics to be embedded in every significant aspect of the audit. Rather than testing smaller samples, we can now capture, transform and analyze full populations of structured and unstructured data using our Hadoop platform. This helps us to explore both the detail and the bigger picture. EY auditors can now deliver a truly analytics-driven audit. They can identify more easily where to focus their time, and concentrate on auditing rather than the collection of data. With information at their fingertips, auditors’ inquisitiveness and skepticism are enhanced.

This truly digital audit improves audit quality: investors can have more confidence in the financial reporting of EY audit clients; audit committees and management benefit from greater risk insight and new perspectives; and company management and finance teams have time freed up to focus on the most relevant issues. Our skilled auditors, using state-of-the-art technology, are able to bring a new level of insight and perspective to the audit and, in turn, to a company’s business operation.

EY Financial Accounting Advisory Services teams continue to help finance leaders interpret, communicate and shape the strategy around the numbers they report. From advising on complex issues arising from new accounting guidance to improving existing accounting processes, our goal is to help clients find insights that may not be immediately evident. We are not only helping transform the way our clients work, but the way we work. This involves us constantly challenging how we help add value. And with an ever-increasing focus on the environment, health and safety, and sustainability — as well as investor interest in non-financial information — we’ve enhanced EY Climate Change and Sustainability Services to measure value beyond what is captured on the financial statement.     

Tax

In Tax, we help build a better working world by advising our clients on meeting their tax obligations and resolving tax controversy. In FY18, we helped organizations and individuals across the globe meet their tax obligations by filing over 1 million tax returns with more than 180 tax authorities and regulators. We also foster open dialogue with tax administrators, government officials and other stakeholders about tax issues, the impact of policy decisions, and the contributions that companies and individuals make to society by paying the correct amount of a variety of taxes.

In order to keep pace with a changing tax landscape, EY Tax has introduced services and solutions that it can tailor to meet each client’s needs and address their unique circumstances.

A range of converging factors — increasing tax complexity due to significant legislative changes including US tax reform, implementation of  Base Erosion and Profit Shifting regulation, more governmental enforcement of tax laws around the world, a shortage of qualified talent and the proliferation of digital technology in government — is causing companies to rethink the tax department and how to futureproof it for tomorrow. Our clients are demanding better integrated, technology-based solutions to the challenges of their tax operations. For many, that includes closely assessing build or buy in-house models versus outsource and co-source options. The EY Tax and Finance Operate platform of processes, technology and people helps our clients define the right sourcing mix.

EY professionals in Tax Technology and Transformation Services are focused on building the new model for today’s tax function. They’re taking a fundamentally different look at the tax function and what it takes to operate in a hyper-connected global economy. That includes addressing unprecedented strategic and operational challenges, acting on digital tax authorities’ demands for real-time access to data, and responding to rapid innovation in technology.

Advisory

At EY, we are developing our Advisory services to proactively meet the needs of our clients. We’re continuously challenging and enhancing our assets and capability based on our strategic growth drivers — analytics, cybersecurity, strategy and customer, technology and digital. We have also invested in key strategic hires and acquired new talent, insights and capabilities in AI, design, robotics and other transformative disciplines.

We are shifting our ways of providing services by creating ecosystems through strategic alliances, through the use of automation, and through managed services to provide end-to-end services and solutions for our clients.

We are proud of some key capability launches in FY18 that demonstrate how we are enhancing our services. These include: EY Catalyst, a leading operational excellence cloud-based platform that can help clients significantly enhance their performance improvement programs in supply chain and manufacturing; EY Risk Navigator, an integrated solution built on the SAP^®Cloud Platform — SAP’s open platform-as-a-service – that helps EY clients take advantage of predictive analytics to monitor and manage risk and compliance in the digital age; Internal Audit Re-imagined, which infuses new technology solutions — analytics (EY Optix), robotics (Automation Central) and risk assessment (RiskApp supported by ThinkTank) into our core intelligent automation offerings; and EY PathScan, which identifies complex cybersecurity attacks. Flagship cybersecurity centers were opened in Dallas and Muscat, with Melbourne scheduled to open in FY19.

Our network of wavespace™ innovation centers currently operate from 18 global flagship locations, with further centers to open in FY19.

Through these offerings, Advisory is helping organizations solve their most pressing issues, transform themselves and manage change and risk.

To help us do this, we plan to invest US$1 billion in new technology solutions, client services and innovation over the next two years. This is part of EY’s ongoing plans to provide clients with innovative services using the latest disruptive technologies.

The new US$1billion funding is in addition to our existing, significant annual technology investment. We will use it to create new technology-based services in areas such as financial services, cyber, risk management, managed services and software services as well as digital tax and audit services.

Jeff Wong — Innovation at EY

Paul Brody — Blockchain 

This transformative age is shaped by collisions of ideas and technologies, which offer opportunities to catalyze and create growth, reshaping businesses in ways never before imagined. No sector, no country and no business is immune from the impact of disruption. The companies that thrive in this fast-evolving digital world will be those that seize the upside of disruption.

At EY, we believe that looking at digital from every angle will unlock new opportunities in this transformative age. Organizations will harness the full power of digital only when they see it as part of something bigger. Digital is a way of thinking and acting to be embedded across the whole enterprise, including strategy, innovation, experience, operations and trust. Our view is that organizations do not need a digital strategy — they need a business strategy that is fit for the digital world. It’s about making every part of the organization digital-fit now and seizing the upside of disruption.

EY supports clients as they develop and execute an agile business strategy that helps them to adapt to a constantly changing digital environment, thereby seizing opportunities and managing risks at every stage of the value chain. We look at the whole enterprise and explore key issues like enterprise strategy, innovation, experience and trust. No matter where our clients are on their digital journey, this approach can help them confidently navigate digital disruption.

We’re also leading the dialogue on digital and Innovation Realized™, our uniquely immersive and interactive retreat, is designed to help leaders transform their business and win in a digital world. This year, over two days, an invited group of corporate executives, startup CEOs and market influencers went on an inspirational journey — engaging in small group discussions, collaborating with peers and solving shared challenges.

Richard Suhr — Keeping pace with digital transformation

Expanding our wavespace™ network

EY wavespace™ is our network of global growth and innovation centers, where we bring digital communities together to help clients explore new business models and emerging technologies that can transform their business. The centers are used to create facilitated, immersive pre-sales events for clients, and in carrying out large transformational engagements.

Emerging technologies that we embrace include RPA, AI, intelligent automation, blockchain, advanced analytics, VR/AR and cyber security. We collaborate with our global alliance partners, universities, startups and other providers to bring the latest emerging technology to EY clients. Several new businesses have been brought into EY to add top talent to the fold and expand our emerging technology capabilities. EY wavespace™ currently operates in 18 locations, with a further centers to open in FY19.

Tiago Baccarelli Justino on wavespace™

EY’s leading position in many of the world’s emerging economies is underpinned by our ongoing investment in them. This year, 32% of the newly promoted partners came from the emerging markets, a reflection of the important role these markets are playing in our organization’s growth.

We support companies in developed and emerging markets to improve cross-border opportunities. Our purpose of building a better working world also includes working with companies, governments and non-governmental organizations to support emerging economies in their growth trajectories, improve the business environment, and better understand and manage risk.

The Emerging Markets Center quickly and effectively connects clients to the world’s fastest-growing economies. We share the breadth of our knowledge through a wide range of initiatives, tools and applications, offering businesses in both mature and emerging markets an in-depth and cross-border approach.

And the EY Global Emerging Markets Committee comprises senior managing partners from emerging economies across the globe. Its purpose is to use our global approach to expand and leverage experience and talent in the emerging markets, and to empower our local teams who work closely with clients across the developing world, or those with an interest in expanding into these markets.

In FY18, EY has been expanding the emerging markets offering in digital, analytics and cyber (DAC) to help clients navigate this transformative age. The emerging markets DAC businesses have grown the number of people by 30% and has set up experience labs, aligned to the EY wavespace™ network across the globe, to showcase DAC services across Greater China, ASEAN, India, Africa and Latin America.

EY revenue growth in emerging markets has outstripped our growth in developed markets for several years. Over the same period, largely because of the strength of the US dollar versus other currencies, the proportion of revenue that emerging markets contribute to our total has grown only slightly, to about 18% in FY18.

We are strong believers in our multidisciplinary model — the skills and knowledge of EY people in other service lines provide critical knowledge to EY audits. Quality is a fundamental strategic objective for our entire organization — it’s embedded as one of our six global performance metrics for all of the partners across all of our services. We regularly meet with regulators and standard-setters across the world to discuss our business, emerging trends and opportunities to advance the quality of the audit profession, and our role in it.

Sustainable Audit Quality

Our role as auditors is to serve the public interest and provide confidence to the capital markets by delivering high- quality audits. The Sustainable Audit Quality (SAQ) program is EY’s commitment to conducting globally consistent, high-quality audits sustained over time. SAQ demonstrates EY’s determination to keep audit quality as our primary focus. It is the single most important factor in our decision-making, and the key measure on which our professional reputation stands. Around the world, we now have a network of 500 Quality Enablement Leaders — senior Assurance leaders who provide on-the-ground quality support and guidance to our engagement teams.

Our investments of more than US$500m in audit technology, including EY Canvas, our digital audit platform, EY Helix, our analytics tool and EY Atlas, our research platform are also crucial steps to high-quality audits that are agile, efficient and insightful, while meeting both our expectations and the evolving needs of everyone involved — businesses, regulators and investors. 

The EY Audit Academy offers a consistent audit-training program for all of our people across the world. Our people are given technology-enabled simulations and case studies and work on them in small groups, in the same way as they would in an audit. The blend of learning we provide is intended to teach our auditors not just what to think, but also how to think, since they will be developing the deep, critical thinking skills and business acumen that are essential to delivering high-quality audits.

Our publication, Audit quality: a globally sustainable approach, examines the progress that has been made under the six SAQ components: tone at the top; strengthen people capabilities; simplification; audit technology and digital; enablement and quality support; and accountability. It shows that at EY we provide an environment in which our auditors thrive. We recruit, develop and retain the right people, embrace innovation, encourage simplification and monitor closely what we do.

Our aim is to lead with passion, pride and purpose, to exceed regulatory benchmarks and produce audits of the highest quality. Continuous improvement is critical to the way we operate, and quality is the key to our culture.

External inspections

The International Forum of Independent Audit Regulators (IFIAR) comprises independent audit regulators from 52 jurisdictions in Africa, the Americas, Asia, Europe, the Middle East and Oceania. IFIAR provides a forum for regulators to share knowledge of the audit market and share the practical experience gained from their independent audit regulatory activity. During 2015, IFIAR challenged the global audit networks to reduce the percentage of listed public interest entity (PIE) audits that have inspection findings by at least 25% over a four-year period using the 2015 survey results as a baseline. We are making consistent progress towards achieving the IFIAR challenge.

Internal inspections

We also perform internal inspections on our engagements. The results for our internal inspections for the IFIAR regulated countries in 2016 and 2017 are as follows:

In addition to meeting the IFIAR benchmark, we have established an internal goal to increase our compliant engagements 10% per year. Through 2017, 74% of our geographic Regions have met this 10% target or the IFIAR challenge percentage of reducing overall firm significant deficiencies by 25% by 2019. The percent of our Regions that met the 10% target in 2016 was 59%.

Managing our risks

An essential way in which we manage our risks and serve the public interest  is to work continuously to improve the quality of all EY services. This includes and goes well beyond the SAQ program.

Across our service lines, we invest in recruiting, training and retaining highly qualified people in their respective disciplines. We also invest in strong Quality functions and Professional Practice functions in our geographies to advise, support and enable our people, and to implement our quality initiatives to a consistently high standard around the world. These functions advise on engagements in real-time, and operate our global quality review program, which evaluates engagements for quality as well as compliance with EY policies and professional standards. Findings from the quality review program are reported to the Risk Management function and the Global Executive.

The EY Risk Management function teams with all parts of our organization to help us identify, monitor and manage risk and enable and support responsible growth. We provide coordinated advice and assistance to our engagement teams on independence, policy, business continuity, conflicts of interest, compliance, security, ethics and other key risk matters.

Risk Management also provides global processes and tools that support our people in evaluating, accepting and serving the right clients with approved services, in accordance with our commitment to objectivity and independence, and while protecting our brand. The EY Global Code of Conduct governs the ethical and professional behavior of all EY people. Risk Management helps to draft, and monitors compliance with, the Code.

Independence is also an integral part of the EY Global Code of Conduct. We are each responsible for our own personal independence and the independence of EY. We are mindful of our own personal financial interests and EY’s relationships with our clients.

We maintain other policies and procedures to help and support our businesses with the appropriate level of risk mitigation and management. In this transformative age, in which business and individuals rely so heavily on technology and data, among our most important is our data protection and information security framework. We protect information assets, personal data and client information, through their creation, transmission and storage, in accordance with the requirement of applicable laws, regulations and professional standards.

The most important way we build our brand is through our people’s daily interaction with clients — our high-performing teams providing exceptional client service and fulfilling our purpose of Building a better working world.

Back in 2013, we launched our new brand name, logo and tagline — and the reaction has been great among EY people and in the market. Based on our purpose of Building a better working world for our people, our clients and our communities, we developed a distinctive idea around how to do that — by asking better questions that help shape dialogue. Because by asking better questions we help solve our clients’, and the world’s, toughest challenges and build a better working world.

Since then we have amplified our purpose and diverse service offerings through the Better Questions campaign online and in print in places such as The Economist and The Wall Street Journal, integrated with our own digital and social channels, as well as in major airports around the world including Frankfurt, New York, London, Hong Kong and San Francisco. Across the digital ecosystem, we are communicating to multiple audiences our purpose, diverse services and high-impact events such as Innovation Realized and World Entrepreneur Of The Year™.

We are making progress toward our ambition of becoming the best professional services brand globally. Our own Global Brand Survey, which interviews over 4,600 C-suite and business decision-makers helps track our progress. When EY’s global strategy, Vision 2020, launched in 2013, EY was second in brand favorability and improved in 2017 to tie most favorable brand among the Big Four. In addition, our survey measured that EY has the leading brand in 12 of our 26 geographic Regions. This sustained improvement in our brand metrics suggests the exceptional client service our people deliver every day and efforts to build a more distinctive brand are making a positive impact on how EY is perceived.